By Patricia Simms
Wisconsin has been a good place to start an innovative biofuels business, but competition from other states for the chance to build the first plants could draw away the industry, Virent Energy Systems CEO Lee Edwards says.
But he says Virent isn’t leaving.
Virent, which partners with mega companies like Shell and Cargill, uses biomass — developed from plants such as corn and soybeans — to create consumer and aviation fuels that can be dropped into the existing petroleum delivery system.
“Wisconsin has been a great home and environment to develop the technology, to de-risk it, to get it ready for full commercial construction,” Edwards told WisBusiness.com after a Thursday speech at the 2011 Wisconsin Bioenergy Summit at Madison’s Monona Terrace.
“Now we have to decide and make choices as to where are we going to build the first plant, based on the cost of feedstock, based on access to any incentives that will help us de-risk the overall investment decisions, based on customers who will buy the product. The big opportunity is — does Wisconsin want to be a place for to build commercial-scale plants?”
The alternative fuels business carries enormous risks ranging from weather that affects crops and the high cost of building commercial plants to inconsistent government policies, Edwards told the crowd.
But he said other states are beginning to see the long-term economic advantage of supporting the industry. “Some of these states are clearly putting money on the table to get those first plants going,” he said, citing a recent $100 million revenue bond issue in Mississippi and Michigan’s support for alternatives in the auto industry. “There is a unique opportunity for biofuels. There are great competitive advantages for first movers. Those that are slow will regret it 10 years from now.”
Added Edwards, “We (Virent) have no intentions of going anywhere. Aside from the money, some of the best things we have access to (in Wisconsin) is people. The network and the relationships with the UW System are hugely important, and we hope they continue to prosper.”
Risks aside, biofuels companies need patient investors, he said. Virent was founded in 2002 to explore converting biomass into hydrogen. One of the first funders was Madison Gas and Electric, which was looking for renewable gas for power generation. “Nine years later, almost 10 years later, we have shifted the focus to liquid fuels,” Edwards said. “The same chemistry applies. The markets are there. The opportunity is great. But that fundamental science has taken nine years. Now we are just getting into the commercialization phase.”
Earlier in the day, experts said the process of getting an alternative biofuel idea from the lab to the market is complicated. Jim Wynn, director of bio-based technology de-risking for a Michigan company called MBI, said his firm of roughly 30 scientists vets ideas that are likely to make it to market.
MBI’s mission: to commercialize one new bio-based technology every two years.
But, Wynn said, MBI has only 30 people and limited resources.
A number of ideas will fail, he said. “That doesn’t bother us. If it’s going to fail, we want it to fail quick, and we want it to fail cheap. That’s a part of development.”
See more on the Summit: