The Sugar Producers

Sweetwater Energy and Proterro, two companies using widely different approaches, aim for low-cost sugar that may give today’s corn ethanol plants a glide path into advanced ethanol production. They're in different stages, but share similar promise.
By Susanne Retka Schill | March 07, 2014

Fundamentally, ethanol production is about feeding the insatiable sweet tooth of the actual ethanol producer—yeast. Two companies using widely different approaches, Sweetwater Energy Inc. and Proterro Inc., are pursuing business models to supplement fermentation broths with sugar water. Sweetwater promises to soon deliver C5 and C6 sugars derived from cellulosic feedstocks while Proterro intends to bring ethanol producers sucrose produced by its patented cyanobacteria.
Sweetwater is reaching the commercialization stage, with a demonstration plant in place at its Rochester, N.Y., headquarters. The company has teamed up with Naturally Scientific Technologies Ltd. to build a commercial facility in the Eastman Business Park in Rochester. The details of the project are close to finalization and construction could begin soon.

Simultaneously, Sweetwater expects to break ground this spring on a commercial-scale facility in Wisconsin, followed by two others. The company has signed long-term offtake agreements with Ace Ethanol LLC in Stanley, Wis., Front Range Energy LLC in Windsor, Colo., and Pacific Ethanol Stockton LLC, in Stockton, Calif. It has completed the permitting process for a facility to be located on 10 acres next to Ace Ethanol, and the land purchase was being finalized in January. A petition to create a pathway for the cellulosic sugars-to-ethanol process has been filed with the U.S. EPA. 
CEO Arunas Chesonis says the Wisconsin project represents $25 million in capital investment and will employ around 15 people, producing cellulosic sugars that will displace up to 7 percent of Ace Ethanol’s corn purchases. Permitting for the other two projects will begin this spring. While the facility in Colorado will be in the same business park as Front Range, a site has not been finalized in California, although it will be within 50 miles of the Stockton-based ethanol plant. All of the plants are located in areas with multiple feedstocks. “You want to be in places where you can get different kinds of woods and the climate allows different feedstocks,” Chesonis says, explaining that Sweetwater’s process is feedstock neutral.

Sweetwater is using cellulosic pretreatment technology from Denmark-based BioGasol ApS that uses a dilute acid, he explains. “It’s a pretty good system for reducing particle size that allows us to not to have to use heavy acids or very high temperatures.” That is followed by enzymatic hydrolysis, using enzymes developed by others. Sweetwater’s proprietary technology lies in the separation of C5 and C6 sugars. “We squeeze out the C5s right in the first hour of the process, and then spend the next two or three days breaking out the C6s from the fiber and the lignin,” Chesonis says.  Ethanol producers are expected to initially use just the easily fermentable C6 sugars. “If Ace doesn’t have a cofermenting yeast it is comfortable with, getting the same economics as the one used today, and it doesn’t have the acceptance by the folks who they sell their DDGS to, then we’ll take the C5 out,” he explains. That will drop the corn displacement from 7 to about 5 percent, he adds. The C5 fraction will initially be shipped to New York to be used in the Naturally Scientific process, until a customer base for cellulosic sugars is built. Sweetwater intends to build production facilities to serve multiple customers.

The $250 million joint venture with Naturally Scientific has other synergies. For one, Sweetwater will be supplying its cellulosic sugars to Naturally Scientific to convert into higher-value oils for use as feedstocks for diesel or jet fuel production or in biochemical facilities. Both companies have tested their processes at demonstration scale––Naturally Scientific’s demo plant in Nottingham, U.K., has been operational for two years, and Sweetwater completed its demo in Rochester, N.Y., about a year ago. They also plan to build a commercial facility in Rochester, which Naturally Scientific will use to scale up its other new technology that converts carbon dioxide into C3 sugars.

As the final details for both the Wisconsin and New York projects are finalized, Chesonis says his team is making the final push on raising money. The company also expects to receive a loan guarantee through the export bank of Denmark, due to the use of Danish technology. 

Raising capital and launching startups is not new to Chesonis. “My [chief financial officer] and I raised $4 billion in our last company,” he says, but then adds, “Any time it’s a new technology that hasn’t been proven at scale yet, it’s always a challenge.” Chesonis comes from the telecommunications sector, where he led and sold two successful companies. He brought key executive officers with him when he took on the leadership at Sweetwater as they decided to shift focus to cleantech. One reason, he explains, was to avoid the sort of market dynamics that drove the telecomm prices down 75 percent over a decade, although commodity markets have their own headaches, he admits.

The company’s goal is to be able to produce its sugars for 10 to 12 cents per pound and, including the return to investors, sell them for 17 to 18 cents per pound, Chesonis says. That will be competitive with the price of dextrose, which is in the low 20-cent range, although he adds his company is currently paying 25 to 30 cents per pound for dextrose to supplement its cellulosic sugars for Naturally Scientific’s development work. 

Mimicking Nature
Proterro’s ambition is to provide an even lower-cost sugar. Its unique sugar platform harnesses the power of the sun in a photobioreactor where microbes convert carbon dioxide and nutrients into easily fermentable sucrose. CEO Kef Kasdin says the company’s economic projections indicate a production cost around 5 cents per pound. A pilot facility with four full-size reactors has been in operation since fall in Orlando, Fla., collecting data to confirm those projections.

The Proterro bioreactor mimics a leaf by growing cyanobacteria microorganisms on a fabric surface, providing maximum exposure to sunlight while a thin layer of water and nutrients flows across the surface. The fabric is enclosed in a polyethylene balloon filled with air and carbon dioxide. At ambient temperatures, the cyanobacteria secrete sugars which are carried away in the flowing water. “That sugar water could go directly into ethanol production or we may need to further concentrate it,” Kasdin explains.

Using off-the-shelf components—plastic, the special fabric and plumbing—the capital cost for the photobioreactors is very different from the typical biorefinery system. The photobioreactors are low cost, and the entire investment in the research and development program has cost $9 million to date, according to Kasdin. “It looks more like agriculture and not at all like a chemical plant,” she adds. While the modular system is relatively simple, what will contribute to the cost is the number of photobioreactors needed and the land area to support them. Current estimates are that a system of photobioreactors would produce the same amount of sugar as sugarcane on one-thirtieth of the land.

With a minimum temperature of 50 degrees Fahrenheit needed for the microbes to be productive, the outdoor systems are not meant for winter climates. Power or chemical plants would be able to utilize waste CO2 in the systems. Kasdin says the sugar water produced in the South can be concentrated for shipment to northern ethanol plants, plus the company is looking at the Brazilian industry for potential customers. The advantages to the Proterro system will be its low cost and the modular approach that will allow incremental expansion, plus the ability to use waste carbon dioxide to produce a clean sucrose that contains no inhibitors.

As the pilot work continues, Proterro is now raising capital to finance a demonstration-scale project and looking for potential partners with waste carbon dioxide to host it. Proterro’s R&D efforts to date have been backed by Battelle Ventures, Braemar Energy Ventures, Cultivian Ventures and Middleland Capital.
With patents in place on the latest designs and the demonstration phase approaching, the company is laying the groundwork to clear the regulatory hurdles. The use of a genetically modified organism requires preparing a Microbial Commercial Activity Notice for review by the EPA. The company will have to describe any potential problems should there be an accidental escape of organisms, although Kasdin says the cyanobacteria are quite safe, producing sugar and no toxins, and multiple conditions would have to be just right for them to survive outside the reactor.

Future Thinking
Both executives say that while the ethanol industry is their initial target, they are looking toward broader applications in the future. “Ethanol’s the big existing market for turning sugar into an industrial product,” Kasdin explains. Others would include a number of second-generation fuels, biochemicals or even the production of amino acids for the feed market.

“The people who have the volume now that can use cellulosic sugar on a drop-in basis are the ethanol guys,” Chesonis agrees. While the ethanol industry can provide a base to build a supply and establish a price, the ultimate target is biobased chemical production. His vision is that his ethanol customers will be part of that transition. The initial agreements with the three ethanol producers call for displacing 7 percent of their feedstock with sweetwater, but he expects that will grow to 30 to 50 percent within a few years, and ultimately, the ethanol producers will redirect production into higher value chemicals. “That’s the program for us, but that takes time,” Chesonis says. “We’re doing an aggressive research program here and at MIT where we come up with customized products with our sugars so that we can have that as [intellectual property], so we can convert people from ethanol to chemicals in the future. But that’s another story.”

Author: Susanne Retka Schill
Senior Editor, Ethanol Producer Magazine
sretkaschill@bbiinternational.com
701-738-4922