By Andrew Nusca
Posting in Energy
Renewable products company Amyris announced on Friday that it entered into an agreement with energy giant Shell for the supply of its diesel fuel.
Under the agreement, Shell will purchase the renewable fuel from the Emeryville, Calif.-based company at pricing relative to a defined biodiesel price index.
Founded in 2003, Amyris makes hydrocarbon products such as farnesene by using industrial synthetic biology to genetically modify microorganisms to produce the fuel. In essence, it uses yeast and other modified microorganisms to convert plant-sourced sugars -- primarily Brazilian sugarcane -- into thousands of "target molecules" with which it can derive diesel fuel.
Amyris' resulting fuel has a 20 percent blend rate, according to the U.S. Environmental Protection Agency. It's also the the first hydrocarbon-based fuel made from plant-derived resources to be registered for commercial sale.
The advantages of such fuel?
According to Amyris:
- Unlike biodiesel and ethanol, Amyris' diesel is a hydrocarbon, like existing petroleum fuels, allowing it to blend with petroleum diesel at higher levels than typical biofuels without performance issues.
- Amyris' diesel works well at extremely low temperatures without the need for engine modification.
- The fuel complies with ASTM D-975 Table 1 specifications for petroleum diesel fuels.
- The fuel contains zero sulfur and "virtually no" harmful aromatics.
- When blended with petroleum diesel, the fuel has less particulate matter, NOx, hydrocarbon and carbon monoxide emissions than petroleum fuels.
The deal is a positive one for the company, which recently announced that it had raised $138.6 million in funding.
But there's a hurdle to those IPO plans. Despite plenty of investment from such marquee cleantech VCs as Khosla Ventures and Kleiner Perkins -- as well as Total, which took a 17 percent equity stake in the company this month -- the company has yet to demonstrate that it can profitably expand its fuels to commercial scale.
Here's a rundown of its April 2010 S-1 filing with the U.S. Securities and Exchange Commission, which pegged the value of the company at $100 million:
- To date, it had never turned a profit selling its own renewable products.
- It plans to start manufacturing synthetic organism-based biofuel at commercial scale in 2011.
- Success hinges on the company's ability to increase its yield -- that is, the efficiency with which it produces target molecules from feedstock.
- It reported a loss of $16.3 million in the first quarter of 2010. That's up from $12.4 million, year-over-year.
- Revenues for the quarter increased from $11.6 million to $13.7 million, year-over-year.
- Total revenues increased from $13.9 million in 2008 to $64.6 million in 2009, "primarily the result of the $51.0 million increase in sales of ethanol purchased from third parties."
That last point is a big one: The company may be reselling others' fuel to demonstrate that it has the framework and clients ready for when the company finally produces its own fuel.
Jun 27, 2010