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Fulcrum Promises 75 Cent Ethanol

With plans for advanced biofuels facilities appearing – and disappearing – with some frequency, it can be difficult to evaluate the exciting claims made by companies that analysts kindly refer to as “pre-revenue.”

Here’s one such claim:

Fulcrum’s engineering and technology teams have recently made numerous enhancements to the design of Sierra [CC note: this is a first commercial facility] and to its proprietary MSW [municipal solid waste] to ethanol process. The Company expects these improvements will dramatically reduce its cost to produce renewable fuel to less than $0.75 per gallon at Sierra, down from approximately $1.25¬†per gallon as previously disclosed. The cost of production at future Fulcrum plants is now expected to be less than $0.50 per gallon, down from $0.70 per gallon as previously disclosed.

Now, 75-cent ethanol is very cheap. Corn ethanol prices are usually about $2 per gal and thus it costs somewhat less than that to make (or not – many facilities are idle as corn costs are high). Chemtex – an engineering firm based in Italy – is now turning on its cellulosic plant in Cresentino. It plans to make ethanol for $1.50 per gal from 10 cent per lb cellulosic sugar.

Fulcrum plans to make ethanol at its plant near Reno, Nevada from municipal solid waste. Its feed costs are known – it will get free trash from waste handling partners including Waste Management. C&EN recently reported on Waste Management’s involvement in this space. The process is: sort waste, shred waste, gasify it, catalyze it to make ethanol, and separate/purify the ethanol. If the feedstock cost is the same as before, we can speculate on which part(s) of the process has been optimized to take 50 cents off the original cost estimate.

The new cost estimates may also just be something the firm has put out to distract from other thoughts/questions about the process and business model. For one, Fulcrum says it has withdrawn its IPO filing. It will proceed with its first plant using project financing (including a $105 million USDA loan guarantee). The other questions are – will the plant actually be built, and will it produce ethanol at all? These are the kinds of questions facing all the players in the advanced biofuels industry.

And as for the promise of 75-cent or cheaper ethanol – industry watcher Erik Hoover of Cleantechdata responds “More cautious¬†language would help everyone.”

2 Comments

  • Dec 4th 201219:12
    by Chad

    The lack of an IPO can mean one of two completely contradictory things.

    1: The company couldn’t withstand the scrutiny and its numbers don’t add up

    or

    2: The company really does have something, and the insiders don’t want to cash out yet because of high expected future returns. Remember, the modern purpose of an IPO is no longer to obtain money from markets, but to give early investors a way to turn their winnings into cash, at the expense of little-folk suckers who think they can catch the wave that has already come ashore.

    If Wall Street is selling you something, you should always remind yourself that there is a reason THEY ain’t buying.

  • Dec 5th 201215:12
    by Melody Bomgardner

    Chad-
    Well, to your point 1, Many cleantech firms – and even chemical firms – have withdrawn planned IPOs lately. Some analysts blame it all on Facebook. Pre-revenue tech firms are not getting good value from the public markets lately. That doesn’t mean they’re all hype though (but it doesn’t mean they aren’t, either)

    Though to your point 2, I did think that investors would really be missing an opportunity if Fulcrum can make ethanol for 50 cents!

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