Ethanol Production & Crush Margins Improve

Joanna Schroeder

According to forecasts published in Biofuelscan, a daily report from Platts that covers the global biofuels industry, U.S. ethanol production data, to be reported on October 23, 2013 by the U.S. Energy Information Administration (EIA), ethanol production for the week ending October 18, 2013 was 861,000 barrels/day (b.d). This number would show an increase of 0.58 percent from last week’s Bentek Energy ethanol production forecast.

Corn futures prices have hovered near three-year lows and rising crush margins – the price difference between a gallon of ethanol and gallon of corn — have combined to boost ethanol production in recent weeks. As a result, ethanol production figure has risen for four of the past five weeks, and it is expected to rise further, given the projections of a bumper U.S. corn crop during the 2013 harvest season.Screen Shot 2013-10-21 at 8.47.48 PM

According to calculations from Kingsman, the sugar analytics unit of Platts, the crush margin will rise to 24.4 cents/gal for the reporting week, up 6.3 cents/gal from the prior week.

Platts began publishing its Bentek Energy and Kingsman forecasts of ethanol production and crush margins, respectively October 4, 2013 to fill a data gap during the temporary shutdown of the U.S. government related to lack of budget appropriations.

“We are pleased to meet a market need for independent estimates of this important government data series,” said Simon Thorne, editorial director of agriculture at Platts. “The advance forecasts are aimed at helping the marketplace better estimate price-sensitive data and assist customers in making better and timelier business decisions.”

The Bentek Energy forecast of U.S. ethanol production utilizes data from approximately the past three years and is calculated on actual consumption figures at ethanol production plants.

“When comparing the Bentek production forecast alongside the actual government production data, our estimate is within an average 0.06% – a very strong correlation since the records began in 2011,” concluded Thorne.

biofuels, corn, Ethanol, Renewable Energy

BioEnergy Bytes

Joanna Schroeder

  • BioEnergyBytesDFDyadic International has announced that it has entered into agreements with all of its outstanding promissory note holders to extend their maturity dates to January 1, 2015. The convertible portion of the debt, representing $6.8 million of the total $8.2 million outstanding principal, may be prepaid by Dyadic at any time in whole or in part, without penalty, after March 31, 2014 with 30 days notice. In all other respects, the terms and conditions of these promissory notes remain unchanged and in full force and effect.
  • The largest tracking solar plant acquired by Southern Company subsidiary Southern Power in partnership with Turner Renewable Energy, the Spectrum Solar Facility, has begun commercial operation. The 30-megawatt (MW) solar photovoltaic (PV) installation utilizes tracking technology that enables greater operating efficiency by optimally directing solar panels to track the sun as it moves across the sky. Both the Spectrum Solar Facility and the partnership’s second-largest tracking solar plant – the 20-MW Apex Solar Facility – are located in Clark County, Nevada.
  • Panasonic Eco Solutions North America (Panasonic Eco Solutions) and Coronal Management, LLC (Coronal) have acquired 16.2 MW of California CREST (California Renewable Energy Small Tariff) projects from Macquarie Capital. The Panasonic Eco Solutions and Coronal platform provides financing for the development and construction of utility scale and distributed generation solar systems to help companies and organizations reduce the complexity of implementing solar installations. The portfolio consists of nine solar projects located in Tulare and Kings Counties in central California, and will provide enough energy to Southern California Edison’s grid to power approximately 14,500 homes annually.
  • U.S. Energy Secretary Dr. Ernest Moniz will deliver the keynote address at the 2013 Platts Global Energy Outlook Forum “Bridging the U.S. Boom: Global Markets Prepare” on Thursday, December 12, 2013 in New York City, New York.
Bioenergy Bytes

Evonik Opens New Biodiesel Catalyst Plant

John Davis

evonikGerman-based Evonik Industries opened a new biodiesel catalyst production plant in Argentina. This company news release says Evonik hopes to take advantage of what it sees as a growing South American market.

“As one of the world’s leading providers of biodiesel-production catalysts, we wish to continue consolidating and expanding our position,” [Patrik Wohlhauser, the member of the Evonik Executive Board responsible for the South America Region] remarked at the plant opening. He then added, “The investment is both a clear acknowledgment of our commitment in South America, as well as part of our strategy, which we hope will allow us to participate in the region’s growth.”

With an annual capacity of over 60,000 metric tons, the new production plant will supply ready-to-use alkoxides for use as catalysts in biodiesel production from renewable raw materials. The new facilities will serve primarily the Argentine and Brazilian markets. Evonik located the plant on the same site as Terminal 6 S.A., which operates a large biodiesel facility.

As Jan Van den Bergh, president of Evonik’s Advanced Intermediates Business Unit, explains, “Our aim in building the plant in Puerto General San Martín in the Rosario Region—in the heart of Argentina’s biodiesel industry—is to supply our South American customers with locally produced, high-quality catalysts.”

Evonik is one of the world leaders in biodiesel catalysts, with facilities in Argentina, Germany, and Mobile, Alabama, in the United States.

Biodiesel, International

Biodiesel Supply Curve Key to RIN Price Structure

John Davis

A new analysis from the University of Illinois shows that the biodiesel supply curve is key to the the price of Renewable Identification Numbers (RINs). Building on earlier work that showed that biodiesel production responds positively to profitability, Scott Irwin presents a new analysis to show the relationship between the biodiesel supply curve and the RIN prices.

The estimated supply curve for biodiesel in Figure 3 has several interesting characteristics. First, the slope of the curve increases as production increases, and in particular, relatively large price changes are required to move production above 2 billion gallons…
biodieselsupplycurve1

Second, the curve can be used to compute the elasticity of supply, which is simply the percent change in production for a one-percent change in price, all else held constant. The elasticity changes at each point along the curve for this functional form, so two examples are provided. At a production level of 1 billion gallons, the elasticity of supply is 8, implying that a 1 percent increase in price prompts an 8 percent increase in production. At a production level of 2 billion gallons, the elasticity of supply drops to 1.5, implying that a 1 percent increase in price results in only a 1.5 percent increase in production. The declining elasticity of supply as production increases makes sense since less and less excess capacity is available. Readers may also recall that much smaller production elasticities were reported in the September 25th post. This simply reflects the fact that a given cents per gallon increase in net returns is a much larger percentage increase relative to net returns as compared to price.

Third, the supply curve will shift if any of the variables held constant (price of soybean oil, natural gas, methanol, and glycerin) is allowed to change. By far the most important of these variables is the price of soybean oil since soybean oil feedstock costs represent over 80 percent of the total variable costs of biodiesel production for the type of plants assumed in this analysis.

The analysis concludes that the biodiesel supply curve declines rapidly as the level of biodiesel production increases, a reflection of capacity limits. And that all plays key roles in setting prices tradable RINs credits.

Biodiesel, RINS

Must Know Ethanol Trends – Part I

Joanna Schroeder

The Biofuels Benchmarking 2012-13 Annual Report is out and in addition to identifying past, current and future biofuel trends, the report identifies some emerging trends for the ethanol industry. During an interview with John Christianson, partner with Christianson & Associates, PPLP (C&A), I asked him what trends they have been seeing and he noted five in particular of importance.

Biofuels Benchmarking Report coverChristianson noted that spinning corn oil off the back of the plant has had a big impact on the industry and to date, nearly 75 percent of all ethanol plants are using a corn oil extraction technology. He also noted that 2012 was a very difficult year for the ethanol industry, very tight margins, and with the high feedstock costs, it really squeezed margins for the year. He said that when looking at the Benchmarking report the industry was hovering over break-even and the laggards were losing money and the leader plants were making money.

“In the first two quarters of 2013 we’re seeing a really nice trend where we’re getting upward into the areas where we have some positive grind margins,” said Christianson. “This is due to ethanol net-back prices staying strong in 2013 first two quarters and our feedstock costs dropping off and having better margins.” He anticipates this will continue into 2014.

The last year also saw ethanol yields drop a bit due to the drought-ridden 2012 harvest; however, Christianson said based on forecasts for the 2013 harvest, yield should go back up once the ethanol plants start grinding 2013 harvest corn and the industry should go back on the trend of increasing yield each year.

Other trends include the sophistication of the ethanol industry on their grind margin management, improved risk management practices and improved environmental sustainability. “So enhanced risk management and enhanced production efficiencies going forward are going to allow plants to squeeze out as much profitability as possible,” said Christianson.

Listen to John Christianson discuss current ethanol trends in detail here: Must Know Ethanol Trends

Audio, biofuels, corn, Ethanol, Research

Genscape Invokes NASA for Updated Corn Yield Forecast

Joanna Schroeder

Genscape Landviewer Oct 2013 corn forecastAs the federal government and its agencies begin to ramp up from a mandated furlough, Genscape is filling the gap by using NASA satellite data. The company has released an updated October corn yield forecast of 13.3 billion bushels. The company has noted that other analysts, including the U.S. Department of Agriculture (USDA), have wide gaps in their predictions ranging from 13.2 billion bushels of corn produced during the 2013 growing season, to 14.2 billion bushels of corn.

Genscape noted a unique combination of spring floods and flash droughts, coupled with an unusually and long growing season, have conspired to make this year’s annual corn forecast the most difficult on record. However, the company said through its Landviewer technology, is able to simplify the complexity of predicting forecasts.

“Given the unusual circumstances around this year’s growing season, we feel our NASA satellite and big data initiatives are even more important,” said Dr. Steffen Mueller, director of spatial grain analytics at Genscape.  “We are back to our original prediction of 13.3 billion bushels, and we have the hard data to back it up.”

The gap in USDA data has created delays in many modeling efforts. Genscape said its LandViewer model offers next generation data acquisition techniques, integrates NASA satellite imagery, and the industry’s most unified ground-based crop yield verification – called “ground truthing – with extensive analysis by experienced soil/agricultural scientists.

Normally at this time of year, the USDA incorporates Farm Service Agency (FSA) lost acreage data; however, this year that analysis has not available to market participants because of the temporary government shutdown. Genscape said because it is able to incorporate NASA satellite imagery with best-in-the-industry ground truthing data, their latest forecast is the only known model to account for this market intelligence.

biofuels, corn

BioEnergy Bytes

Joanna Schroeder

  • BioEnergyBytesDFVivint Solar has announced it has raised two more rounds of residential solar financing. The funds total $540 million and are provided by two major undisclosed financial institutions. The $540 million announced is in addition to the $200 million of tax equity financing that Vivint Solar announced in August of this year.
  • JinkoSolar Holding Co., Ltd. has announced that it has signed a strategic agreement with the local authority in Electromechanical Industrial Park, Zhenjiang New Area, Jiangsu Province, to develop 120 MW distributed PV power plant within 3 years. It will be the largest distributed PV power plant in China upon its completion.
  • Trina Solar Limited and Argand Energy have announced the completion of a 453 kW solar PV system on the rooftop of Exhibit Resources in Raleigh, North Carolina. This project, commissioned in July, is one of the few third-party owned commercial rooftop projects completed in North Carolina without the SunSense incentive.
  • GridPoint, Inc., a company focused on energy management and sustainability solutions that help customers maximize operational and energy savings, has appointed Board of Directors member Todd M. Raba as Chief Executive Officer to scale the business in its next phase of growth. Raba brings over 30 years of experience leading large, highly competitive organizations, including two Berkshire Hathaway Inc. companies: Johns Manville, where as Chairman he reported directly to Warren Buffett, and MidAmerican Energy Company.
Bioenergy Bytes

SMUD Enters Space-Time Continuum

Joanna Schroeder

The Sacramento Municipal Utility District (SMUD) has implemented Space-Time Insight’s geospatial and visual analytics software. According to Space-Time Insight’s, their software facilitates faster and more informed smart grid decisions. The system, which correlates, analyzes and visualizes data in smart grid, distribution, outage, fire and weather systems, is the primary “face” of SMUD’s new Distribution Operations Center.

STI - SMUD-PR-3The situational intelligence solution was implemented as part of SMUD’s Situational Awareness and Visual Intelligence (SAVI) initiative which is designed to improve the speed and quality of data analysis and decision-making throughout the organization’s Grid Planning and Operations department and partially funded by a federal smart grid grant awarded by the Department of Energy (DOE).

SMUD is the nation’s sixth-largest community-owned electric utility, serving a population of 1.4 million across 900 square miles. For years, the company has relied on paper maps—including a 100 x 25 ft. wall map – and the experience and knowledge of its personnel to manage the electric grid.

But according to Space-Time Insight, the recent adoption of smart grid devices generated an exponential increase in the volume of data, making manual operations infeasible and creating opportunities for real-time insight into grid performance. Now, the Space-Time Insight system quickly synthesizes numerous streams of disparate data and provides on-the-fly assessments of grid and asset health, weather, wind and fire conditions, and power supply and demand among other features.The system helps managers and operators respond more quickly to outages, rapidly develop switching plans, and make more-informed decisions regarding equipment maintenance and investments.

“The volume of data generated by our smart assets made it clear that we had to continue to innovate to improve the reliability and safety of service to our customers,” said Paul Lau, Assistant General Manager, Power Supply and Grid Operations at SMUD. “With common operational views, personnel across our organization can now implement more cost-effective asset planning and maintenance practices, collaborate as one team to respond rapidly to emergency situations and outages, and more readily understand the real-time impact of weather and fires on our daily operations.”Read More

Electricity, Smart Grid

KiOR Receives $100M in Equity Financing

Joanna Schroeder

KiOR, has announced the execution of $100 million in committed equity related financing in two separate private placement transactions to support the Company’s recently announced expansion of production capacity in Columbus, Mississippi, called the Columbus II Project. Once completed with the planned technology enhancements for both Columbus facilities, the Columbus II Project is expected to achieve overall positive cash flow from operations for KiOR.

KiOR Columbus I projectIn the first private placement, KiOR has received $85 million of committed equity related financing from Khosla Ventures III, and various other Khosla entities. This financing consists of the immediate issuance of $42.5 million of Senior Secured Mandatorily Convertible Notes (“Notes”) plus the conversion of $53,197,308 of the Company’s existing senior debt held by the Khosla entities. The Notes will convert into Class A Common Stock at a price of $2.897 per share.

Also as part of this transaction, the Company has received commitments to purchase up to an additional $42.5 million of Class A Common Stock, either through the direct issuance of such equity or conversion of Notes. The conversion of the Notes and the future equity related commitments are contingent upon, among other things, the Company fully funding the Columbus II Project, which it expects to complete through a debt offering, and certain timing restrictions.

“Khosla Ventures and I have reviewed independent reports on the assessment of the technology and conducted our own significant due diligence as part of this commitment. We are pleased to invest in KiOR with Gates Ventures in this equity financing for the Columbus II Project,” said Vinod Khosla.

“I believe that KiOR’s technology for production of cellulosic biofuels can not only serve as the foundation for a successful and sustainably profitable long-term business but can also scale because of the hundreds of saw, pulp and paper mills that have been shut down and have local feedstock available, providing a much more stable and less price volatile feedstock than oil, while fueling the world’s transportation requirements with significantly less geopolitical risk and greenhouse gas emissions on a life cycle basis,” Khosla added. “I expect, as the technology matures over the construction and operation of multiple facilities, it will achieve cost parity with many traditional oil sources such as new deep offshore projects and oil sands, without subsidies.”

In the second private placement, KiOR has received $15 million of committed equity financing from new investor Gates Ventures, LLC, an affiliate of Bill Gates. Read More

advanced biofuels, Alternative energy, Cellulosic

Biogas Project Added at Middlesex Water Company

Joanna Schroeder

A new biogas system designed to optimize the production of electricity from methane has been completed in the Village of Ridgewood, New Jersey. Partners in the project included Natural Systems Utilities (NSU), Middlesex Water Company (MWC) and American Refining and Biochemical (ARB). The biogas project will power the water pollution control plant and reduce its electric demand on the grid, lowering its utility costs.

Middlesex Biogas Project“Our public private partnership with NSU, Middlesex and ARB makes Ridgewood a national leader in sustainable municipal wastewater treatment,” said Village of Ridgewood Mayor Paul Aronsohn. “Producing energy at our facilities reduces cost while powering the facility with 100 percent renewable energy provides environmental benefits for the community. To be able to accomplish this at no capital cost to the taxpayer while realizing environmental benefits for the Village is something we can all take pride in.”

NSU, MWC and ARB, through a 20-year partnership with the Village of Ridgewood, made the up-front capital investment in the retrofit that enables the plant, through a new biogas fueled engine generator, to use an anaerobic digestion process to convert methane gas to electricity. In addition, the production of electricity is enhanced when food wastes such as fats, oils and grease are introduced into the process. The heat required for the anaerobic digester is also generated by the biogas, further increasing plant efficiency and reducing emission of greenhouse gases.

This biogas conversion facility now has the ability to capture the energy from methane gas that was previously flared into the atmosphere, and convert it into renewable power. The project also incorporates four solar installations located throughout the Village: Village Hall, the Fire Department, the EMS Building and the Water Control Pollution Facility. Together, enough energy is generated to power the wastewater treatment plant.

“Many municipalities are struggling with aging infrastructure, underperforming utility facilities and severely constrained municipal budgets. This project demonstrates how partnerships with municipal and industrial leaders can achieve a lower carbon footprint while converting wastes to valuable resources for use in the local community. By repurposing an existing facility in this way, everyone benefits — the environment, the Village residents and our renewable energy investors,” said Dominic Kulik, CEO and Chairman, NSU.Read More

biogas, Renewable Energy