Gevo secures DOE conditional commitment for $1.46 billion loan guarantee to build South Dakota SAF plant

Gevo Inc. announced Oct. 16 that it received a conditional commitment for a loan guarantee with disbursements totaling $1.46 billion from the U.S. DOE Loan Programs Office for its Net-Zero 1 project in South Dakota.

With capitalized interest during construction, the DOE loan facility has a borrowing capacity of $1.63 billion.

The NZ1 facility is being built in Lake Preston, South Dakota.

It will use 100 percent U.S.-sourced feedstocks and is designed to produce 60 million gallons of sustainable aviation fuel (SAF), 1.3 billion pounds of protein and animal feed products and 30 million pounds of corn oil per year.

The design capability of the NZ1 facility, when combined with the Gevo business system, is expected to yield SAF with a net-zero carbon footprint on a lifecycle basis, including through the burning of the fuel.

Gevo said its net-zero SAF projects are expected to catalyze the accelerated adoption of climate-smart agricultural practices, support rural jobs and economic development, and reinforce domestic energy security.

NZ1 is the first-ever large-scale alcohol-to-jet (ATJ) project to receive a DOE LPO conditional commitment and is expected to provide critical new opportunities for South Dakota workers, farmers and residents, according to Gevo, which added that its plant design represents the lowest cost per ton of carbon abatement among all the current SAF production technologies.

“This marks a watershed moment for the Net-Zero 1 project and a critical step forward in Gevo’s mission to transform the aviation industry by providing a scalable, sustainable and economical renewable-carbon-based jet fuel—SAF,” said Gevo CEO Patrick Gruber. “This valuable commitment to help finance NZ1, if finalized, should also attract other capital investments to unlock SAF commercialization given the robust due diligence conducted by the agency. The due-diligence work by the DOE has been incredibly detailed and thorough, and the benefit is a substantially reduced execution-risk profile for the project. We are grateful for the support from the DOE’s Loan Programs Office.”

Lindsay Fitzgerald, Gevo’s senior vice president of public affairs, added, “NZ1 is the largest economic development project in South Dakota history. We expect that NZ1 will kickstart new growth in the economy, create jobs and present additional opportunities for the agricultural community in the region around Lake Preston, across South Dakota, and even reaching other states.”

According to a recent report from Charles River Associates, Net-Zero 1 is projected to generate significant economic and climate benefits.

Specifically, the plant is expected to create more than 1,300 indirect jobs during its construction phase and 100 permanent jobs at the plant itself.

This is in addition to hundreds of local indirect jobs created across the agricultural, manufacturing and transportation industries, generating an annual economic impact of over $100 million.

The company said the project design and engineering, and the operating and financing model, should serve as a template for future Gevo net-zero projects—potentially accelerating the timeline of SAF commercialization.

Gevo also expects to track and verify the sustainability and carbon intensity of its products through its wholly owned subsidiary, Verity Holdings LLC.

“We believe this conditional-commitment milestone reduces execution risk for securing the remaining large-scale equity investors who would accompany the proposed DOE-guaranteed debt and Gevo equity,” the company stated. “Currently, the project is projected to generate high-teens returns to equity investors.”

While this conditional commitment indicates DOE’s intent to finance the project, DOE and the company must satisfy certain technical, legal, environmental, commercial and financial conditions before the department can enter into definitive financing documents and fund the loan guarantee.