Friday, June 03, 2005

Biomass getting closer to commercialization

Think of it as another form of solar energy.

Wired has a good article on the potential for biomass-to-ethanol approaches, which could provide renewable sources of fuel, better energy security, and income for the American farmer. Much of the article focuses in on the debate between corn-based biomass and other sources such as switchgrass.

For cleantech venture investors it is often not clear how VCs can participate in this potential market. Most of the investment opportunities are going to be at the ethanol plant facility-level, or in new biomass-tailored agricultural products developed by big players. However, cleantech investors should be on the lookout for opportunities such as biotech-based developers of new strains of crops that are well-suited; for developers of new technologies for more efficient production of ethanol; and -- depending upon investment model -- for service providers and financial developers who specifically target servicing and/or developing fleets of biomass producers and ethanol plants.

The timing and political factors are highly uncertain, and the investment opportunities for technology-focused venture investors are not obvious. This may be a market generally better suited for project financing investors than VCs. However, at 10:1 energy yield ratios and $25/barrel crude oil equivalent prices, there may be something there, and it is worth tracking.


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