Sweetwater to Supply Cellulosic Sugar to Wisconsin Ethanol Plant

Sweetwater Energy Inc., a closely held company that extracts fermentable sugars from biomass, agreed to supply a standard corn-ethanol plant in Wisconsin that plans to produce renewable fuel from non-food crops.

The deal with Ace Ethanol LLC is worth as much as $100 million over 16 years and the plant expects to shift as much as 7 percent of its 46 million-gallon (174 million-liter) annual production capacity away from corn, Rochester, New York-based Sweetwater said today in an e-mailed statement.

Producing biofuel from the sugars will let Ace diversify its product line, according to Sweetwater President Jack Baron. Demand for cellulosic fuel, made from non-food sources, is guaranteed by federal regulations, and shifting away from standard ethanol will be “a major hedge against high priced corn,” he said.

“Most ethanol producers that we speak to would like to consider options beyond ethanol,” Baron said today in a phone interview. Closely held Ace may eventually use the sugars to produce other higher-value products such as biochemicals or bioplastics, he said.

U.S. gasoline and diesel producers are required to blend 36 billion gallons of biofuel a year into their products by 2022, including 16 billion gallons of cellulosic biofuel.

Sweetwater will build and operate systems adjacent to Ace’s plant in Stanley, Wisconsin. It will convert about 100 tons a day of hard woods into sugars beginning in mid-2014, and the technology can also run on agricultural waste and energy crops, Baron said.

Sweetwater expects to have three additional facilities operating next year, said Baron. He wouldn’t name any potential new customers and said the company might “have more announcements later this month.”