Virdia’s funding includes $20 million in venture capital equity and $10 million in a venture debt, which will go toward continued operations at the company’s pilot plant, and funding the development of 50,000- and 150,000-ton-per-year demonstration plants. The state of Mississippi has provided a $75 million low-interest loan package to fund construction of a plant in the state. It has also offered $155 million in tax incentives.
The money is not enough to build a commercial-scale plant that could produce competitively priced sugar, Lavielle says. “It’s a good start,” he says, “but it takes more than that. It takes a chemical firm that will want to build it to have access to sugars for their own conversion processes.”
Lavielle estimates that it will cost $380 million to build a commercial plant that can produce 500,000 tons of sugar per year, enough to supply a 25-million-gallon ethanol plant, the size of a small conventional ethanol plant. The cost could be much less, however, if the plant can be located near a paper mill or chemical plant, so that it could use existing power infrastructure or wood-handling equipment from a paper mill. Lavielle estimates it could be two to three years before such a plant can be built.
Lavielle says the company calculates that it can compete with corn sugar provided corn costs more than $4 a bushel—it’s about $6.50 a bushel now, driven by high demand. But there’s a chance corn prices will fall below $4 a bushel or lower, where it has been in the past.
The calculations include revenues—eight cents per ton—from selling the lignin to be burned in wood stoves. The economics get better if the company can sell the lignin as a source for higher-value products, such as liquid fuels or chemicals. The process also produces a type of sugar called xylose, which is derived from the hemicellulose part of wood chips. The current cost calculations don’t include sales of xylose, which is often used in chewing gum and toothpaste. Lavielle says such sales could significantly boost revenues.
But the overall cost estimates also assume there’s a large supply of wood chips nearby. It will still be cheaper to use corn in areas where corn is plentiful, but wood chips aren’t. One of the remaining challenges with cellulosic biofuels is that wood chips and grasses are bulky and costly to ship.