Construction of Gevo’s Iowa RNG plant to begin
The company announced it has closed a $68.15 million (€56.5 million) Green Bond to finance the construction of the project, which will generate RNG captured from dairy cow manure.
The feedstock will be supplied by three dairy farms located in north-west Iowa totalling over 20,000 milking cows. When fully operational, the RNG project is expected to generate approximately 355,000 MMBtu of RNG per year.
Gevo is working with a major RNG dispenser to finalise an agreement to sell the RNG into the California market. RNG sale revenues are expected to benefit from California’s Low Carbon Fuel Standard (LCFS) programme and the US Environmental Protection Agency’s Renewable Identification Number (RIN) programme. Some RNG may be used by Gevo as process energy in its Net-Zero 1 Project, or Gevo’s other future Net-Zero projects.
Patrick Gruber, CEO of Gevo, said: “The RNG project is expected to serve as an important component of Gevo’s Net-Zero strategy, and I want to thank president and chief operating officer Chris Ryan and his team for their hard work and commitment that allowed us to accomplish this goal, and chief financial officer Lynn Smull and his team, and Citigroup, for getting the debt deal done.
“We have a good team that has shown they can develop and finance RNG projects. We expect to use these capabilities going forward to develop additional RNG projects.
“We are also pleased that our dairy partners will reap benefits from the RNG project given that the manure digesters should improve the farms’ sustainability and lay the groundwork for more efficient recycling of nutrients and better soil health.”
Gevo fully funded the project’s development costs and 100% of its equity capital from cash reserves. The company received around $9.3 million (€7.7 million) in reimbursement for development, long lead equipment, and financing costs incurred during the development period upon closing of the Green Bond offering.
Construction is expected to begin at the end of April and start-up is expected in early 2022. Gevo will submit an LCFS pathway application to the California Air Resources Board and expects to realise full cash flows from LCFS credits and RINs in the second half of 2022.
The RNG project is expected to generate cash for Gevo of approximately $9-16 million (€7.4-13.2 million) per year.