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The Year in Cleantech IPOs: Horrible!

There is no other way to say it. This year has been a terrible one for cleantech firms hoping to access the public markets to fund commercialization. Investors seem to be allergic to the very idea of owning stock in a cleantech firm.

Cleantech Chemistry thinks that one might still squeak through before the end of the year – SolarCity just slashed its offering price and number of shares and may now raise $92 million in an upcoming IPO, down from an initial expectation of $151 million. New York Times Dealbook blog has the details. [Update: CC was correct - SolarCity is live and trading up]

SolarCity is not pushing some obscure technology – it buys industry standard solar panels, and leases them to residential homeowners. This business model has become a common way for homeowners to get around the high up-front costs involved in generating their own power.

Should SolarCity decide instead to withdraw its IPO, it will join a long list of cleantech firms that had second thoughts this year including BrightSource Energy (solar), Enerkem, Fulcrum Bioenergy, Coskata, Elevance, Genomatica (all biofuels and biochemicals), and Smith Electric Vehicles. (Hat tip to Cleantech Group for helping with the list).

The good news is that many of these firms are successfully raising money from private investors including venture capitalists, corporate partners, bankers, and the Federal Government (sometimes in combination as when a loan guarantee is offered from DOE or USDA).

Two firms did go public in 2012, though both raised less money than originally hoped. Ceres, a plant biotechnology company focusing on proprietary energy crops, and Enphase, a maker of a new type of solar inverter, clipped their wings a bit but made it out of the gate.

Moving to the New Year, the true effect of a lost year for IPOs may be mainly one of image. True believers will continue to invest in cleantech firms, but for the general investing public, it seems that the bloom is off the rose for pre-commercial companies in the sector. That means fewer stakeholders to help spread the risk of new technologies, and increasing competition to appeal to deep pocketed private investors such as chemical firms and oil and gas giants.

Energy Crops: the sweet and the sour

Switchgrass, miscanthus, hybrid poplar – these are just the first three plants I think of when I hear the term “energy crop.” But I heard of a new one a few weeks ago when I attended a conference (story fortcoming) about commercializing biobased chemicals and fuels. Let me introduce you to a very big “weed” called Arundo donax

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Arundo donax is a giant reed from Asia. Credit: USDA

While most energy crops produce a few tons of dry biomass per acre, Arundo – a tall bamboo-like reed – can produce several. Like switchgrass, it is a perennial. Like Kudzu, however, it is self-propagating and possibly horribly invasive.

It looks like the huge plant (it’s a weed when it grows where it isn’t wanted, like in California), may become a lot more well-known in biofuels circles. Chemtex will use it, along with wheat straw, in its first commercial facility in Crescentino, Italy. This plant is already humming, and commercial ethanol production is expected to begin early next year.

Chemtex plans to construct another ethanol plant in eastern North Carolina. Through a USDA program intended to promote rural development through the cultivation of energy crops, the company was offered a $99 million loan guarantee to plant “high yielding energy grasses, including miscanthus and switchgrass.” According to a fascinating look at Arundo cultivation – and eradication – by the Associated Press, it looks like the giant weed may also be part of the mix.

Meanwhile, a much sweeter crop, a high-sugar variety of sorghum, may be edging its way into Brazil’s famous sugar-growing regions. Plant biotech firm Ceres, and agribusiness firm Syngenta plant to run test plots of hybrid sweet sorghum destined for ethanol production. The press release says that Brazil’s ethanol industry has created a shortage of sugar cane, and the country views sorghum as a strategic crop.

While Arundo would be harvested just for its biomass, sorghum is usually grown for its seed which is used in animal feed.

Giant Gobs of Algae Coming From Solazyme

Starting soon, oil-producing algae will be replicating at B-horror-movie quantities. Imagine a lab coat-wearing scientist running into the street shouting “300,000 metric tons!” while scores of screaming people run by, pursued by a giant wave of green slime.

But be not worried, the algae in question will be safely confined to fermentation tanks thanks their overlords at Solazyme. And many of those tanks will be in Brazil (so the people would be screaming in Portuguese, I guess.)

Earlier this week, Solazyme says that it has agreed with its sugar-producing partner Bunge to increase the production capacity for algal oils from an original 100,000 metric ton amount to 300,000 metric tons. It seems from the press release that Bunge will have a hand in marketing the tailored oils to the edible oil market in Brazil.

If you happen to live in the U.S. and have a craving for oil derived from algae, you’ll be pleased to learn that another large blob will be coming to Clinton, Iowa, starting in early 2014. Solazyme and its little green workers plan to ooze into the idle Archer Daniels Midland plant formerly occupied by Metabolix’s bioplastics operation. The plant will start out making 20,000 metric tons, but aims to grow to 100,000 metric tons.

 

Soon You’ll be Thankful for #foodchem Microbes

Cleantech Chemistry dives into the #foodchem carnival this week!

This is a good time to get your Thanksgiving menu planning started. This time of year I use a lot of spices. Have you ever noticed how expensive they are? I’ve paid $14 for two vanilla pods. The problem with vanilla is that it comes from the seed pod of a kind of orchid. Having tried to grow orchids, well, let’s just say I can imagine this is not an easy crop. Also, vanilla is commonly grown in Madagascar. Not exactly a locavore treat.

Natural vanilla. Credit: Shutterstock

I’ve had better luck with growing crocuses, but I’ve not grown my own saffron. Maybe I should, because saffron, which comes from the flower of the saffron crocus, sells for about $2,000 per kg.

Microbiologists and chemists are ready to come to the rescue of cooks (and food makers) who love spices but don’t want to break the bank. One start-up, based in Switzerland, is Evolva. Evolva plans to use biotechnology to make high value ingredients for health, wellness, and nutrition. Two of its first target products are vanilla and saffron.

So far, it’s been a rather quiet company, but its CEO, Neil Goldsmith, came over to Philadelphia this week to talk about the firm to attendees of the first gathering of SCD-iBIO. This group was formed to promote a strong value chain for biobased products in order to commercialize the output of industrial biotechnology.

In the context of the meeting, Goldsmith said the firm’s background in pharmaceuticals (the company started with ideas of supplying the drug market) means it is well positioned to deal in the regulated food industry. As a small company, Evolva has purposely targeted high-value, non-commodity products. Also a the meeting were Solazyme and Amyris. Both are larger and public biobased companies that are targeting the pricey wellness market (personal care and fragrances). Both firms had initially said they would target biofuels.

Evolva says flavor molecules like those in vanilla and saffron can be made much more cheaply by fermentation. Most vanilla-flavored foods are made with synthetic vanilla, a product called vanillin. But natural vanilla is a complex mixture of flavor molecules and Evolva says it can make more than just vanillin. In addition, using sugar as a feedstock helps in an industry looking to avoid synthetic ingredients derived from petroleum.

The stevia plant also contains a number of molecules that produce its characteristic sweetness. Stevia sweeteners, which are derived from the plant, are now a $300 million per year market. The sweeteners are commonly used in beverages, but are pricier than sugar, HFCS, and synthetic sweeteners.

Goldsmith pointed out that the best stevia molecules for use in sweetening beverages (without the characteristic bitter aftertaste of some stevia products) occur in very small amounts in the natural source (the plant). So Evolva plans to make those less-common molecules via fermentation. The implication is that this version of the biobased sweetener could also be made more cheaply than the plant-based version.

Read more:

About making flavors and fragrances with microbes: Sweet Smell of Microbes

About sweeteners made from stevia

Moving to Missoula: Rivertop’s new CEO

The cleantech industry is taking executives to some interesting places lately.

Earlier this month, renewable chemicals firm Rivertop Renewables, based in Missoula, Mont., named Michael J. Knauf as Chief Executive Officer. Mike Knauf is a 30-year veteran of the bioindustrial industry, having held executive level positions with Genencor and Codexis.

Rivertop makes chemical intermediates through oxidation of sugar feedstocks. Its first platform of products is based on glucaric acid. On Oct. 26, the company opened its new labs and semi-works facility in Missoula.

Cleantech Chemistry spoke with Knauf about his new job, and Rivertop’s future plans.

CC: What attracted you to Rivertop?

MJK: Rivertop is a startup with a promising future. Codexis had moved past start-up mode and was starting to form up as a company with products and services and a revenue line. This is a pre-revenue opportunity –  it builds on a solid breakthrough technology and was built by a great group of people. It couldn’t be a better opportunity for someone like me – a seasoned – in Montana they might say, grizzled, veteran. It’s really a great fit. I’m hoping my skill set will be what this company needs to propel it forward beyond startup phase.

My mantra is always listen to your customer. We’re are in the process of developing our market strategy – we’ve been talking to customers to really understand their needs. This company’s technology was originally applied to a market pull; a company was looking for a unique polymer and our founder identified glucaric acid polymers to meet their need.  Our  platform product is glucaric acid and other sugar acids generally broaden the range of applications for the company. The fact that Rivertop was founded on a market need is the key.

CC: What was it like to move to Missoula from San Francisco?

MJK: It’s funny – on a personal note I grew up in a town almost exactly the same size as Missoula. You’ve heard of it – Green Bay Wisconsin, but now Green Bay is maybe three times the size of Missoula today. My wife and I grew up in the same town.  We’re so excited to be part of this community. It has a great quality of life and lots of nature. The University of Montana is in Missoula and provides a tremendous amount of cultural richness you wouldn’t find in towns this size everywhere. It’s just plain beautiful. And no, we’re not worried about winter.

And the home we’ve purchased – well, there’s no stoplight between our home and the Rivertop offices and labs. When you’re from the Bay Area… that puts a big smile on my face.

CC: What are your plans for growth – production, product line, partners …?

MJK: So far, we’ve shipped product to a number of customers but we are not in full launch mode. We’ve been producing for customer testing. I’ve just started so I don’t have all the answers all right now. The plans are to continue with our product and market development. In some cases that will take us to partnerships and collaborations – with consumer product companies, chemical companies, and potential manufacturing partners too. We’re working on a detailed strategy that we will roll out when it’s formed up.

One aspect is different that I’m happy to talk about. When it comes to Rivertop versus other companies in the renewable chemicals space, our technology is based on chemistry rather than biology. The R&D timeline and manufacturing cost of capital is considerably less problematic. Biology takes time, chemistry is usually pretty quick. With biology you have to develop the microbe, along with all the aspects of fermentation and recovery of the product. Our chemical process development has been quick, and is well developed for a number of applications; it is a platform chemistry.

We’ll ultimately produce more than glucaric acid, though glucaric acid is a good example of an oxidized sugar with a number of promising applications. It was on the DOE’s original list of biomass derived chemical targets. It’s a platform chemical we can develop with our platform chemistry.

Our primary market opportunity for glucaric acid is the detergent market, which has many applications of interest to Rivertop. Glucaric acid-derived products have long been considered as potential builders for dish and laundry products. With product reformulations, such as to remove phosphates, the detergents can be made more sustainable and better performing – and that plays right into our strengths.

The other markets we are looking at begin with corrosion inhibition for deicing applications. That is an area the team found early on and is fairly far along, we are shipping product to transportation departments in the Mountain states, including Montana.

Right now this new guy says the sky’s the limit, but we have to focus on some particular opportunities.

LanzaTech: Now experimenting with CO2

It’s not too often that I get a press release with a New Zealand embargo time. Waste gas to fuels and chemicals firm LanzaTech got its start in New Zealand, but is currently headquartered in Illinois. Still, the company’s larger projects are all in Asia, and being on the opposite side of the world from Cleantech Chemistry blog HQ is not a problem for them.

Yesterday (which is today in New Zealand), LanzaTech CEO Jennifer Holmgren spoke to a conference of oil refiners in New Delhi. In her remarks, she announced that the firm has a new joint development agreement with Malaysia’s national oil company Petronas.

The two firms will work to produce chemicals from carbon dioxide – the first one being acetic acid. LanzaTech already has two facilities that make ethanol from CO. In all cases, the CO or CO2 comes from waste gases. LanzaTech’s proprietary microbes ferment the gas into various end products. The Petronas deal will get its CO2 from refinery off gases and natural gas wells.

Earlier this year, the venture arm of Petronas contributed to LanzaTech’s third round of venture funding. And it seems the two companies have been in cahoots ever since.

C&EN profiled LanzaTech this summer.

And there is another cleantech firm that aims to make acetic acid – Zeachem. Zeachem is building out its plant that will produce acetic acid – as well as ethanol – from hybrid poplar grown in Oregon.

A Graphic Illustration of the Target on the Back of the Chemical Industry

Several days ago I received an e-mail from the press office (press person?) at the Energy Information Administration (EIA). At the time I looked at it, thought “hmm… interesting” and set it aside. Been thinking about it off and on since. The crux of the information was this graphic:

 

 

 

 

 

 

 

 

 

 

 

 

A few thoughts that came to mind immediately were 1) Wow, look what a monster recession did to our industrial energy consumption and 2) That brick-colored stripe is rather tall.

The other two categories of energy consumers aside from industry are residential (people at home), commercial (businesses) and transportation. In 2011, industry was responsible for over 30% of total energy consumption, according to the EIA. Transportation is approximately a similar amount, and residential and commercial users split the rest.

The more I thought about it, though, the more I reflected on basic chemicals’ place in the lifecycle of a finished good – maybe a shampoo, or a carpet or a car – and the chunk of energy use it represents. A branded goods manufacturer that does a lifecycle analysis – say to measure energy use or emissions – would no doubt zero in on chemical inputs as a large contributor to its overall footprint.

Of course, mining and agriculture have their own energy footprints, as shown in the graphic. Obtaining any raw material will bring energy baggage with it.

The graphic also reinforced a message that my C&EN colleague Alex Scott recently wrote about in the magazine. He attended an event in Brussels called the Global Chemical Industry Sustainability Summit. In his report, he writes that chemical industry representatives were chided for their “business-as-usual model” and told that other industries, including customers of the chemical industry, were beginning a trek toward zero targets for things like oil use and CO2 emissions. Should someone hold a similar event in the U.S., this illustration might appear in the presentation.

 

SoloPower, Gevo: Can a capital-light strategy save cleantech?

I wish I could be in Portland, Oregon today to watch SoloPower start up its first production line of thin film CIGS solar panels. The company says it can manufacture in a continuous process to make its solar material in strips as long as one mile.

The company asserts that its thin, flexible modules are a good fit for building-integrated solar, especially in locations where heavier, traditional glass panels cannot be installed such as on warehouse roofs. The modules are certified to an efficiency rate of 9.7 to 12.7%.

But it’s not so much the technology itself that is interesting, but rather SoloPower’s business model and whether it can succeed in selling what it admits is a premium-priced product while the traditional silicon modules continue to drop in price, taking down many efficient producers with them.

SoloPower is already having to bear up under scrutiny because it will be able to tap into almost $200 million in DOE loan guarantees, under the same program that was behind the Solyndra kerfuffle. NPR did a nice job this morning interrogating SoloPower CEO Tim Harris. Read or listen to the short piece here.

NPR rightly points out that Solyndra was backed by $1 billion in private funding and accessed half a billion dollars in its own DOE loan before going bankrupt. But SoloPower doesn’t have a billion bucks to lose, and perhaps that is a good thing.

Instead of comparing SoloPower to Solyndra I’d like to compare it to Gevo, a maker of biobased isobutyl alcohol (what it calls isobutanol). Both firms are pursuing a capital-light strategy.

SoloPower’s first production line will have a small eventual annual capacity of 100 MW. So far, it has spent only its own investors’ dollars. Gevo, a now public company, is spending somewhere around 25% to one-third the cost of a new fermentation plant by converting existing corn ethanol plants.

When a company that has a technology without a track record wants to build its first large plant, it faces financing risk on top of technology risk. Range Fuels built a shiny new plant in Georgia to make ethanol from wood chips. But since the technology did not work upon start-up, Range could not pay its monthly loan overhead, and the factory was repossessed by its financing bank and sold at auction (Range also had a DOE loan guarantee).

Early this week, Gevo told investors that it had stopped making isobutyl alcohol at its facility in Luverne, Minnesota. Instead, it turned the switch back to ethanol. Gevo’s plan to convert an ethanol plant in Redmond, South Dakota is on hold. The company said though it successfully made isobutyl alcohol in Luverne, to reach its target run rate would require more work. Meanwhile, both locations can still produce ethanol.

Though Gevo’s investors weren’t happy with this news, Gevo has given itself plenty of time to fix its problems, saying it would reach its target run rate in 2013 (it could take a year and still make this deadline).

Reducing a company’s financing risk doesn’t do much to reduce its technology risk – or in SoloPower’s case, its market risk – in either the short or long term. But it may help a company last beyond just the short term. Given the pitfalls of technology scale-up, that could make all the difference.

And More Coming in Biobased Chemicals

I’m very pleased my story about biobased chemicals commercialization occupies this week’s cover, not because it sports a lovely image of poplar trees but because it’s Rudy Baum’s last official issue as Editor In Chief. Not that he’d ever toss his back issues of C&EN, but if he ever decided to clean out his home office I know he’d sure keep the Sept. 17 issue.

Anyway, I’m already off topic – sorry about that. The biobased chemicals story was fun to write because it’s a nice change of pace from the normal “experts say commercialization will take five to 10 years” concept. This one features actual photos of actual facilities making actual stuff.

One thing that is an issue in tracking this industry, and is only hinted at in the story, is that any report of upcoming capacity is based on company announcements, and there are promising product areas that just aren’t at that stage yet. (while some announcements may be a bit … premature). Luckily the wonderful C&EN online team made up a Google Map which I can update periodically.

Biobased acrylic acid is one product area that is not yet at the commercial announcements phase. OPX Bio and partner Dow recently presented an update on their two track effort towards scale up and commercialization. You can examine the details on the OPX Blog. And we’ll certainly be watching the BASF, Cargill, Novozymes effort.

I’d love to hear your thoughts about what else should appear on the map – whether it’s happening now or soon. Put it in the comments section or drop me an e-mail .

 

Algae Ponds: the lovers and the haters

This week’s issue of C&EN includes some news from algae-based biofuels firm Sapphire Energy. The company is reporting its first harvests of algae biomass from a large, outdoor algae farm in New Mexico.

Sapphire’s outdoor raceway ponds in New Mexico. Source: Sapphire Energy

Sapphire has grown and gathered 21 million gallons of algae biomass totaling 81 tons. Eventually, the plan is to make a kind of crude oil from the algae. They grow the stuff in very large outdoor ponds. According to the press release, “the cultivation area consists of some of the largest algae ponds ever built with groupings of 1.1 acre and 2.2 acre ponds which are 1/8 of a mile long.”

You’d think that the promoters of algae for biofuels would be clinking glasses filled with spirulina-enhanced juice at the news. But you’d be wrong.

In fact, a trade group of algae firms calling itself the National Algae Association says the kind of ponds used by Sapphire – known as raceway ponds (you can see why looking at this image) – will not scale up commercially. Instead the NAA supports the development of photobioreactors (PBRs for short). Similarly, algae researcher Jonathan Trent, writing in a New Scientist magazine piece that also appears in Slate is arguing in favor of photobioreactors. Specifically, Trent says PBRs should be deployed offshore. I’ll quote from his article where he summarizes the raceway/PBR tradeoffs:

There remains the question of how and where to grow the algae. A few species are cultivated commercially on a small scale, in shallow channels called raceways or in enclosures called photobioreactors (PBRs). Raceways are relatively inexpensive, but need flat land, have lower yields than PBRs and problems with contamination and water loss from evaporation. PBRs have no problems with contamination or evaporation, but algae need light, and where there is light, there is heat: A sealed PBR will cook, rather than grow, algae. And mixing, circulating, and cleaning problems send costs sky high.

Trent doesn’t mention what industry analysts complain about the most. When it comes to algae, though PBRs might be the best bet, they require too much capital expenditure for the equipment.

Meanwhile, Solazyme, which started life as an algal fuels firm but now is manufacturing oils for use in skin cream and other high value applications, grows its algae in a third way – its algae live in bioreactors, but in the dark. They eat sugar and make oil. Is there a best way to commercialize algae for fuels and chemicals? Is there any way? It seems that it is still too early to tell.