Tuesday, February 28, 2012

Joule Pay-to-Play Ticket Costs $70 Million

No less than an eclipse of known alternatives to fossil fuel is promised by the corporate website of Joule Unlimited, a private developer of renewable fuel technologies based in Massachusetts.  Joule has been working a process using genetically engineered microorganisms  -  the exact nature of which is kept close to the Joule company vest  -  that will directly convert waste carbon dioxide to fuel such as ethanol or other chemicals.

Last month several unnamed investors bought “tickets’ totaling $70 million to see this eclipse take place.  The private placement brings total capital raised to $110 million.  Joule has a pilot plant in Leander, Texas but needs to demonstrate its process can scale to higher levels.   The proceeds from the capital raise will be used to build a demonstration scale plant in Hobbs, New Mexico.  Ultimately, the Hobbs site could be expanded to commercial production levels.

Note that both Leander and Hobbs are located in sunny climates, a key element in Joule’s SolarConverter system where its Helioculture platform is put to work.  The company claims its direct production approach is more economical because it eliminates the expense of feedstocks.  Perhaps more importantly the process is touted as lower cost because energy-intensive steps are eliminated and there is supposed to be no downstream processing required. 

Joule claims to get 15,000 gals of diesel and 25,000 gallons of ethanol per acre. The company estimates its system can bring renewable fuels to market at $0.60 per gallon.  However, in the fine print the company admits that this cost level is achievable only after subsidies are recognized. 

Several private investors have paid-to-play so to speak in Joule’s game.  The rest of use can play vicariously with no risk.  We have placed Joule Unlimited in the Crystal Equity Research Beach Boys Index in the Biofuel Group and will be watching for an eclipse from Hobbs, New Mexico.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

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