Equity investors are standing by for Gevo’s Net-Zero 1 alcohol-to-jet fuel facility to reach terms on a DOE loan guarantee that would help finance construction of the plant in Preston, South Dakota.
Colorado-base Gevo is working with the DOE and independent experts to structure the guarantee, and once terms are finalized, the company will “ramp up the third-party equity capital raise and work towards a close of funding necessary to finance the project construction budget and all the project finance elements such as interest during construction, various reserves, and transaction costs,” Gevo CEO Patrick Gruber said on an earnings call last week.
“Equity investors are standing by for a clear line of sight to the debt terms, which is underway and will be announced when the DOE term sheet is agreed,” he said.
Gruber said the company plans to spend between $125m and $175m of additional capital to reach FID on the project, in addition to over $100m already spent. He added that the capital from Gevo will be reimbursable upon FID, but that the company would likely reinvest that money to take a big chunk of the equity in the project.
Gevo expects that Net-Zero 1 would have the capability to produce approximately 60 million gallons per year (MGPY) of liquid hydrocarbons in the form of jet fuel and renewable gasoline, using corn as feedstock. It plans to use green hydrogen produced onsite as well as CCS that flows out through the proposed Summit Carbon Solutions CO2 pipeline. Executives at the company have previously said the Net-Zeto 1 project would not work if the Summit pipeline is not built.
The company is partnered with Zero6, a Minneapolis-based renewables developer, which in February 2024 launched a process to raise $340m in project capital for its portion of the project: 20 MW of green hydrogen production adjacent to Net-Zero 1 powered by a 99 MW wind farm located 10 miles from the SAF site.
Gruber, citing a report from McKinsey, emphasized that the alcohol-to-jet pathway is the cheapest form of carbon abatement, at about $450 per ton of carbon abated, compared to the next-cheapest HEFA process fuels at between $600 – $700 per ton (all before federal and state incentives).
Publicly listed Gevo in February received notice it was not in compliance with NASDAQ listing requirements as its stock price has remained below $1 for 30 consecutive business days.
