Financing Breakthrough

Mascoma gains support from Valero, DOE
By Holly Jessen | January 11, 2012

Mascoma Corp. received some early holiday presents that will help the company construct its commercial-scale hardwood cellulosic ethanol plant in Kinross, Mich. Two weeks before Christmas, it settled with Valero Energy Corp. for the oil refiner and ethanol producer to provide the majority of the funding for the $232 million project to construct, commission and start up the facility. Less than a week later, Mascoma announced up to $80 million in funding from the U.S. DOE, in addition to $20 million previously awarded.

Kinross Cellulosic Ethanol LLC is a joint venture of Frontier Renewable Resources LLC, a subsidiary of Mascoma, and Diamond Alternative Energy LLC, a subsidiary of Valero. Construction on the 20 MMgy cellulosic ethanol plant is expected to begin this spring and should be completed by late 2013.

Valero will hold a majority interest in the joint venture, provide project management during construction and operate the completed plant. The oil refiner will also market the ethanol and has the option to expand the facility to up to 80 MMgy. A minority interest holder, Mascoma developed the proprietary consolidated bioprocessing (CBP) technology over the past five years and will also receive royalties based on ethanol yield milestones for a certain time period. The two will partner on additional cellulosic ethanol facilities.

 “This partnership provides an exciting opportunity to combine Mascoma’s innovative CBP technology platform and expertise with Valero’s project management, operating, distribution and marketing capabilities,” says George Stutzmann, Valero vice president of alternative energy. “We view this first commercial-scale cellulosic ethanol facility in Kinross and our partnership with Mascoma as an important foundation for potential expansion beyond Kinross.” —Holly Jessen