Thursday, June 14, 2012

First Prove Yourself & Make Money -- Then You Can Go Avant - Garde

Sundrop Fuels was forced to learn a basic axiom of business: First create a reliable cash flow. Then you can branch out into more experimental areas.
The decision to use natural gas rather than solar heat reduces costs: in part due to recent low natural-gas prices, it's far cheaper to burn that fuel than to build a field of mirrors to concentrate sunlight. The natural gas, in addition to heating the gasifier, will also provide a source of extra hydrogen. The ratio of hydrogen and carbon in biomass isn't the same as in gasoline—the hydrogen from natural gas makes up the difference, increasing the fuel yield from biomass. The other option would be a reaction that uses carbon monoxide to produce hydrogen from water—but that would lower yields and force Sundrop to truck in more biomass. Switching to natural gas had another benefit. As with the decision to use conventional gasification technology, it has helped Sundrop finance its first plant. It attracted $155 million in funding from natural-gas producer Chesapeake Energy, which was seeking to fund technologies that would increase demand for natural gas. _TechnologyReview
It is relatively easy -- although expensive -- to turn woody biomass into gasoline, using high temperature gasification. Colorado solar startup Sundrop Fuels has a solar powered biomass gasification design for biomass-to-gasoline that could actually work, if they could only get the financing.

But getting a process to work, and making money, are two different things. Before Sundrop can prove its process works, it first has to do something to support itself long enough to provide proof of concept.

And so Sundrop is turning to natural gas to power its gasification process, hoping that the more conventional approach will generate mainstream financing which will then give them time to prove their "solar biomass gasification" approach.
Sundrop plans to start construction on the plant—which will have a 50-million-gallon capacity—later this year near Alexandria, Louisiana. It recently announced a partnership with Uhde Corporation of America, a partner of the German engineering firm ThyssenKrupp Uhde, to develop the detailed engineering plans for the plant. Uhde will also supply a gasifier that turns biomass into carbon monoxide and hydrogen, which can be converted with the help of catalysts into a variety of fuels.

Sundrop had planned to use its own proprietary gasification technology, which operates at high temperatures—over 1,200 ⁰C, or hundreds of degrees higher than some other gasifiers. The heat would be generated by concentrating sunlight, rather than by burning the biomass, the approach taken by other companies. Using heat from the sun would increase the amount of biomass that ends up as fuel, reducing the cost of transporting the bulky material. Operating at high temperatures would avoid the production of tars that can gum up equipment and interfere with later steps in the process.

Sundrop will continue to use high-temperature gasification to avoid tar production, but it will use a design from ThyssenKrupp that requires the introduction of oxygen. ThyssenKrupp's technology is more expensive than Sundrop's gasification technology, says Wayne Simmons, Sundrop's CEO, but it's commercially proven, which makes it easier for Sundrop to get loans to build a plant. Sundrop plans to prove its own technology by installing one of its gasifiers in the new plant, where it will be used to make about 10 percent of the plant's output. Sundrop plans to use its gasifier technology on a larger scale in future natural-gas-powered plants.

_Technology Review

The problem with Sundrop's plan is its timing: Natural gas will not always be this cheap, and there is no guarantee that Sundrop will have perfected its solar gasification technology when gas prices rise.
When gas prices rise, there is at least an even chance the company will be stuck with rising operating costs, with no quick or sure way to recoup their losses soon enough to save the company.

Sundrop's bottom line depends upon the shifting sands of carbon politics. Sundrop needs government mandates, carbon credits, carbon taxes, government subsidies, and all the things that US President Obama promised he would bring to the market when he was first elected.

Let's be honest: It is probably cheaper at this time to turn natural gas into gasoline or diesel than to use natural gas to turn wood into gasoline or diesel. Sometime in the distant future, using solar heat to gasify wood, turning it into liquid fuels, may make sense.

It would be good to have such technology available should the need for it arise.

But the best form of high quality industrial process heat for large scale operations -- even when the sun doesn't shine -- is likely to be HTGRs (high temperature gas cooled nuclear reactors). 24 hour high temperature process heat, anywhere on the planet, any time of year, rain or shine.

The solar sentiment displayed by ventures such as Sundrop is completely understandable. But getting that sentiment to work out in dollars and cents is a very difficult proposition.

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Blogger Hell_Is_Like_Newark said...

Maybe Sundrop should partner with NuScale or Toshiba? A small nuclear power plant might give them the energy they need at the right (and very stable) price.

11:41 AM  

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