Joint venture formed to fund sweet sorghum ethanol project

By Erin Voegele
Posted November 17, 2009, at 2:02 p.m. CST

EPEC Biofuels Holdings Inc. and DPG Investments LLC have announced the establishment of a joint venture. The two entities have formed a platform company, EPEC Finance LLC, which will provide project financing to EPEC Biofuels and select financing initiatives in the biofuels and renewable energy sectors. EPEC Finance has been granted the exclusive rights to fund up to $376 million of project financing for EPEC Biofuels. According to Philip Herman, EPEC's president and chief technology officer, his company owns 20 percent of the joint venture. DPG Investments holds ownership of the remaining 80 percent of EPEC Finance.

EPEC Biofuels plans to use the funds to manufacture and deploy its proprietary ethanol production units (EPUs) on select sweet sorghum farms throughout the country. In addition, the joint venture will also serve as a specialty finance and investment company that will seek to provide financing for various strategic acquisitions, partnerships and investments in the renewable energy and biofuel sectors.

According to Herman, the mission of EPEC Biofuels is to capitalize on the untapped potential of ethanol production using sweet sorghum. "We have a proprietary technology for a small farm-integrated ethanol production unit," he said. "We are strictly a farm-integrated production enterprise."

Each of EPEC's facilities will have a production capacity of approximately 1 MMgy and will be located on a farm where sweet sorghum feedstock is grown. Herman said EPEC will own and operate each of its facilities. The company will pay the host farmer for feedstock. In addition, the host farmer will be paid a royalty based on the amount of ethanol produced. "Effectively, the farmer can participate financially in the ethanol business without having to invest in the plants, understand the technology or have additional expertise," Herman said.

Although EPEC has not installed any of its EPUs to date, Herman said the company will be conducting technology demonstrations in early 2010, followed by the actual deployment of the technology.

The technology utilized by EPEC's EPUs is pre-existing. The company acquired a patent for the technology. Herman said production units that utilize the patented technology were in existence in the 1980s and 1990s. "Many of the machines that were out there previously are not defunct," he continued.

EPEC has been working to improve the technology it has licensed, and has made several alterations to optimize the process for sweet sorghum feedstock. This includes eliminating the front-end cooker, and creating a hybrid in-field, or HyFerm, module. The HyFerm module is designed to be used in the field. "We bring the fermentation module out into the field, so that we can juice the crop and start fermentation immediately," Herman said. The fermentation module is then returned to the main facility for final processing and finishing. "By splitting up the machine and creating this hybrid in-field model, it gives us the ability to store some of the crop through producing mash, which is very stable," he said. "It also enables us to optimize the farm operations and separately optimize the ethanol finishing operation."

According to Herman, the farming community has expressed strong interest in these systems. "We have a very favorable outlook," he said. "Farmers are really starting to line up."

EPEC's initial installations are expected to take place in Florida and Louisiana.