According to a recent report from alphaDIRECT Advisors, it just might get there. Gevo’s business pipeline has expanded rapidly, with more than 17 million gallons per year (MGPY) worth of offtake agreements with marquee customers set for delivery in 2023.
Additionally, the firm noted, regulations like the European Green Deal as well as environmental social growth principals are driving demand for renewable fuels around the world.
READ: Gevo hires Citigroup to drum up financing for expanding its hydrocarbons production capabilities
As a result, Gevo is projecting that revenue will grow from $33 million in 2018 to between $46 million and $56 million by 2021 and between $330 million and $413 million by 2023/24, assuming the capacity is in place.
In the meantime, the intermediate step of producing and selling low-carbon ethanol is almost complete, which should improve cash flow, alphaDIRECT wrote.
Along the way, Gevo will need to deal with the convertible notes it has outstanding due at the end of 2020, in addition to obtaining growth capital for capacity expansion.
“Gevo is working on procuring equipment finance for Phase 1 and Phase 2 would need approximately $250 million based on 20MGPY in hydrocarbons but has flexibility to adjust plant size and capital needs,” alphaDIRECT wrote. “The company believes that project finance at the plant level will resolve this and is currently exploring options and partners.”
The firm called Gevo a market leader in drop-in biofuels and chemicals.
“Gevo believes the only way to make very low carbon fuels (zero or negative GHG footprint) is to use renewable feedstocks, such as plant matter or “biogenic” raw materials for the carbon source as well as using renewable sources of energy to operate the production facility replacing incumbent fossil fuels based energy sources for electricity and heat,” alphaDIRECT wrote.
“Gevo has already proven that its proprietary process works at commercial scale and as such the company believes it has been de-risked in many aspects and at a key inflection point to move into commercial scale production serving a significant total available market.”
The firm also noted the breadth of Gevo’s engagements with the airline industry and the potential for carbon credit in California.
“Gevo has supplied many airports (Brisbane in Australia, O’Hare in Chicago, Farnborough in the United Kingdom and Van Nuys in California) and airlines (Alaska, Emirates, Korean Air, Lufthansa and United, to name a few) in establishing the supply chains, and for developing the commercial market,” alphaDIRECT wrote. “Delta, SAS, AvFuel and Air Total have agreed to purchase SAF under long term agreements.”
“We believe that Gevo jet fuel will provide a competitive carbon intensity (CI) reduction compared to fossil fuels as well as other routes used to produce . Gevo has plans in place to drive the score down further, in pursuit of the goal of net neutral on emissions.
“Currently, each point of carbon reduction is worth approximately $0.16 per CI point. Assuming a low-carbon fuel product with a 40 CI, a 58-point reduction would equal approximately $0.93 per gallon.”
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