Gevo announces intent to apply for DOE loan guarantee for NZ1

Gevo Inc. on May 10 reported it has entered into a technology access agreement with Phillips 66 and ADM. The company also announced progress with its renewable natural gas (RNG) operations, but said plans for its Net Zero 1 (NZ1) sustainable aviation fuel (SAF) project will likely be delayed. Gevo CEO Patrick Gruber discussed these developments during a first quarter earnings call, held May 10.

Gevo entered into a technology asset agreement with Phillips 66 and ADM on May 5. Under that agreement, Gevo waived its exclusivity rights to Axens technology to allow Phillips 66 and ADM to evaluate and potentially license Axens technology for use in the production of sustainable aviation fuel (SAF). Gevo and Axens North America Inc. in October 2021 entered into a strategic alliance aimed at accelerating the commercialization of alcohol-to-jet (ATJ) projects.

According to Gruber, the May 5 technology asset agreement could provide up to $125 million in revenue to Gevo. “I like that we aren’t expected to deploy Gevo capital in these projects, and we stand ready to assist ADM and Phillips 66 if they need our assistance,” Gruber said. “We want them to be successful. We believe it reinforces the view of the readiness of the technology. I think it’s a great outcome for Gevo.”

Regarding the development of Gevo’s proposed Net Zero 1 project in South Dakota, Gruber said several things have impacted the company’s thinking since its fourth quarter earnings call. “Interest rates are high and expected to go higher,” he said. Following discussions with potential equity investors, Gruber said Gevo believes that the correct approach is to secure financing using a U.S. Department of Energy loan guarantee. The process to secure a DOE loan guarantee, however, is expected to delay financial close into 2024, based on the company’s current expectations and assumptions. That would mean startup of Net Zero 1 would be delayed until at least 2026, Gruber said.

Lynn Smull, chief financial officer of Gevo, discussed the company’s RNG business, noting it has moved into normal operations. The Iowa-based project is expected to expand capacity from 355,000 MMBtu to 400,000 MMbtu later this year.

Gevo reported $4.1 million in revenue for the first quarter, up from $200,000 during the same period of last year. Loss from operations was $20.9 million, compared to $16 million. Net loss per share was 7 cents, compared to 8 cents during the first quarter of 2022.