Fiberight-Blairstown Operating LLC has received a $2.9 million grant to help build a cellulosic ethanol plant in Blairstown, Iowa. The award was given by the Iowa Power Board Fund yesterday. Fiberight is developing technology to convert municipal solid waste into cellulosic ethanol, bio-chemical and other processed fiber products.

The company has plans to bring the plant to commercial scale levels by 2011 and expects the total project cost to be more than $7 million. It began the project by purchasing bankrupted corn ethanol plant Xethanol, LLC for $1.65 million and from there has begun the conversion project. The first phase of the project was completed in May of this year. Ultimately, the Virgina-based company has committed to investing $20 million of its own funds on the project. Prior to beginning the plant in Blairstown, Fiberight had successfully produced cellulosic ethanol in it’s Virgina pilot plant.

Once the plant moves to full-scale production using its proprietary conversion process, it expects to produce early 6 million gallons a year of cellulosic ethanol from waste materials collected in nearby Cedar Rapids, Iowa.