Gevo advances plan for South Dakota net-zero renewable fuels project

Gevo Inc. is continuing development activities for its proposed Net-Zero 1 (NZ1) project that aims to produce sustainable aviation fuel (SAF) using the operator’s proprietary technology on a 245-acre site near Lake Preston, SD (OGJ Online, Jan. 27, 2023).

As it progresses to a final investment decision (FID), Gevo is proceeding with value engineering, detailed engineering, and capital-cost updates for NZ1, which would produce about 65 million gal/year of total renewable fuels, including 60 million gal/year of SAF, Gevo said in its latest quarterly earnings report on Aug. 10.

Based on Gevo’s current estimate of about $850 million for the project’s installed cost, the operator said it has undertaken extra engineering work on the proposed plant’s design that focuses on increased modularization of component parts to help reduce that amount.

The announcement follows the US Department of Energy’s (DOE) Aug. 7 invitation to Gevo’s NZ1 to the formal due-diligence and term-sheet negotiation phase for a $950-million loan guarantee under the US Title 17 Clean Energy Financing Program based on the agency’s determination of the project’s qualifications and suitability.

While DOE’s invitation to this next phase of the potential funding process does not guarantee the project will receive the loan guarantee, obtaining a DOE-guaranteed loan would have the benefit of reducing the overall amount of third-party equity required to finance NZ1, Gevo said.

With the DOE loan application process likely to carry into 2024, the operator said it is continuing to explore financing NZ1 with alternative third-party investors.

With no firm date in place for when it might reach FID for NZ1, Gevo anticipates startup of the NZ1 plant to occur 24-36 months following the close of project financing.

Despite the pending FID, the operator confirmed it is proceeding with development activities for NZ1, with water and wind energy development agreements for the project executed during third-quarter 2022, as well as other key milestones on track for completion in the coming months.

In late July, Gevo entered a master services agreement (MSA) with McDermott International Ltd. under which the service provider will deliver engineering, execution planning, and pricing for the engineering, procurement, and construction (EPC) phase of the NZ1 project, which could convert to a final EPC contract award following FID on the project, McDermott said on July 24.

First announced in January 2021 and designed to include carbon capture and storage (CCS) as well as on-site renewable electricity generation via a combined heat and power system, the NZ1 project, if realized, will use a feedstock of renewable materials to produce SAF as well as renewable gasoline and diesel that—when burned—will have potential to achieve net-zero greenhouse gas (GHG) emissions across the entire lifecycle, Gevo said.

The operator told investors on Aug. 10 that it also is evaluating and performing early site-development work at several other yet-to-be-identified US sites for a proposed second Net-Zero 2 (NZ2) project. Further details regarding the potential NZ2 project have yet to be disclosed.