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This month, Range Fuels, one of the first companies in a wave of startups that promised cheap biofuels made from sources such as wood chips rather than corn, shut its doors for good and was forced to auction off its assets.

The company failed for many reasons, but the biggest seems to be that its technology proved too expensive, something that experts say shouldn’t be a surprise, since it was similar to other technologies with well-known problems.

Range Fuels benefited from being an “early mover” in the field, says David Berry, a partner at the venture capital firm Flagship Ventures. “It got a lot of attention, and so it was well positioned to raise a bunch of money. The reality was, the technology couldn’t quite keep up with the attention,” he says. “That led to the company’s demise.”

Range Fuels, which had planned to turn wood chips into ethanol, received substantial attention in 2006, after President Bush declared in his State of the Union Address that the United States was “addicted to oil” and pointed to “cutting-edge methods of producing ethanol, not just from corn, but from wood chips and stalks, or switchgrass.”

By the following year, Range Fuels had received a $76 million grant from the U.S. Department of Energy and had broken ground on a commercial-scale plant in Soperton, Georgia. That plant was designed to produce 20 million gallons of fuel a year at first, and eventually 100 million gallons.

At the time, Range Fuels said its plant could produce fuel by 2008, but it still wasn’t finished in 2009, when it received an $80 million loan guarantee from the U.S. Department of Agriculture to help with construction. In addition to government funding, over its history, the company received over $150 million in venture capital.

The Range Fuels plant produced some methanol in 2010, but it operated at a loss, and it was shut down in 2011. By December 2011, the company had received just over $40 million of the full grant awarded by the DOE (the rest was to come at the next phase of construction). David Aldous, the CEO of Range Fuels, says $37 million of the loan guarantee is outstanding.

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Credit: Gerfriedc

Tagged: Energy, energy, biofuels, ethanol, Range Fuels, Khosla

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