Gevo discusses DOE loan guarantee, Red Trail Energy acquisition
Gevo Inc. reported a conditional $1.6 billion loan guarantee from the U.S. Department of Energy for its Net-Zero 1 alcohol-to-jet project. The company is also set to close its acquisition of Red Trail Energy in early 2025, which includes a corn ethanol plant and carbon capture site. Gevo’s renewable natural gas (RNG) operations performed well, though revenue from RNG sales decreased due to lower environmental attribute sales. The company expects a lower carbon intensity pathway for its RNG business in early 2025.
November 12, 2024
BY Erin Voegele
Gevo Inc. released third quarter financial results on Nov. 7, discussing the impact of the conditional commitment for its U.S. Department of Energy loan guarantee and confirming the company’s acquisition of Red Trail Energy remains on track to close in early 2025. The company also expects to receive a lower carbon intensity (CI) pathway for its renewable natural gas (RNG) business during the first quarter.
Gevo during the third quarter received a conditional commitment from the DOE for a loan guarantee with borrowing capacity of $1.6 billion to support the development of its proposed Net-Zero 1 alcohol-to-jet project in South Dakota. Gevo CEO Patrick Gruber said the company believes the conditional commitment validates the strength of the NZ1 project, reduces the company’s execution risk and supports its financing plan. Due to DOE requirements, Gruber said the company is currently unable to disclose specific details related to the development of the plant.
Gruber also confirmed that the acquisition of Red Trail Energy in North Dakota is currently expected to close during the first quarter of 2025. The acquisition will bring Gevo a well-operated corn low-carbon ethanol plant along with an active carbon capture and sequestration (CCS) site. According to Gruber, Gevo is exploring the possibility of adding sustainable aviation fuel (SAF) production capabilities to the Red Trail plant. Acquisition of Red Trail Energy also provides NZ1 with potential access to a wholly owned CCS site, Gruber added.
Lynn Smull, chief financial officer at Gevo, said the company’s RNG business in Iowa has been operating well, generating more than 100,000 MMBtu of RNG sales during the third quarter. The company said it currently expects to receive a lower CI pathway under the California Low Carbon Fuel Standard during the first quarter of 2025.
Other developments that occurred during the third quarter include the acquisition of Cultivate Agricultural Intelligence LLC and the receipt of two patents for Gevo’s ethanol to olefins process from the U.S. Patent and Trademark Office.
Gevo reported $5.8 miliion of revenue for the third quarter. The RNG subsidiary generated $2 million, consisting of RNG sales of 101,101 MMBtu for $200,000 and $1.8 million of net proceeds from the sales of environmental attributes. RNG revenue was down when compared to the previous year due to lower sales of environmental attributes, which Gevo said resulted from a buildup of environmental attributes inventory in anticipation of the lower CI LCFS pathway. Loss from operations was $24 million.
Source Link : https://ethanolproducer.com/articles/gevo-discusses-doe-loan-guarantee-red-trail-energy-acquisition
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