Gevo announced the concept of Net Zero Projects in early 2021, and the first of these projects is expected to build a plant to produce energy-dense liquid hydrocarbons using renewable energy and Gevo’s proprietary technology. Gevo has optioned the right to purchase approximately 240 acres of land near Lake Preston, South Dakota, where it is currently developing its Net-Zero 1 Project. This site is attractive because of its abundant sustainable corn supply, high-protein feed demand, rail transportation, and renewable energy potential. We expect to complete front-end engineering work for Net-Zero 1 by year end of 2021.
Gevo expects that Net-Zero 1 would have the capability to produce approximately 45 million gallons per year (MGPY) of liquid hydrocarbons in the form of jet fuel and renewable gasoline. When burned, these fuels should have a “net-zero” greenhouse gas footprint as measured across the whole of the lifecycle based on Argonne National Laboratory’s GREET model.
In addition, Net-Zero 1 is expected to produce at least 350,000,000 pounds per year of high protein animal feed.
To reduce and eliminate the fossil resources used in the plant, it is expected to have an anaerobic digestion wastewater treatment plant that is capable of generating enough biogas to run the plant and supply a combined heat and power unit, capable of meeting approximately 30 percent of the plant’s electricity needs. The remaining 70 percent of electricity to run the plant is expected to come from wind power. Net-Zero 1 may also obtain renewable natural gas (“RNG”) using manure from dairy or beef cows.
Preliminary capital estimates for Net-Zero 1 are $700 million to $800 million, which would include on-site renewable energy generation. Gevo is in the process of completing front-end engineering and project planning to determine capital costs for Net-Zero 1 with more precision.
Gevo now has enough cash to fund 100 percent of the equity investment that is expected for Net-Zero 1. Gevo may bring in appropriate strategic or financial partners as equity investors if it is in Gevo’s interests to do so. Gevo expects to establish Net-Zero 1 in a special purpose entity. The full financing of Net-Zero 1 can only be completed after the front-end engineering phase is completed.
Gevo has approximately 48 million gallons per year of contracts signed for a mix of jet fuel and renewable gasoline products, representing approximately $1.5 billion of revenue across the life of the contracts. If Gevo secures additional take-or-pay contracts, Gevo would have to acquire and develop additional Net-Zero production sites.