Green Tech

It's March Money Madness in clean tech these days.

Range Fuels, which says it can produce cellulosic ethanol out of wood scraps, has raised $100 million to build a 100-million-gallon-a-year plant in Georgia, according to VentureWire, which posted the news first. Investors in the round include Khosla Ventures (a previous investor) and an unnamed energy company.

Earlier, the company received grants from the U.S. Department of Energy worth up to $76 million, as well as other venture funds.

CEO Mitch Mandich, a former Apple guy, told us last year that the plant would cost around $150 million. Unlike Web 2.0 start-ups, energy companies require a lot of capital to get off the ground. The company is trying to get the plant running this year to the point where it can produce 20 million gallons a year.

Range Fuels uses thermochemical processes to convert forestry wastes into ethanol. The alcohol can be mixed into gas, or be turned into E85, which is 85 percent ethanol. There are only a few cars on the road that can run on E85 and only about 1,400 stations in the U.S. that sell it, but both numbers are expected to climb.

The process devised by the company is similar to the Fischer-Tropsch process for converting coal to liquids. First, the solid is turned into a synthetic gas, which then gets combined with other gases and converted to a liquid. Fischer-Tropsch, invented in 1920, can be somewhat expensive. Countries invested in coal-to-liquids when they couldn't get fuel otherwise. The Third Reich was a fan, and so was the Apartheid regime of South Africa. (You can also call it the Hans and Franz process after Franz Fischer and Hans Tropsch.)

But with oil prices climbing, synthetic liquid fuels are becoming more attractive. Many cellulosic companies say they can make fuel and sell it for $1 to $1.50 a gallon once it's in mass production. Efficiency, however, is paramount in this market, and companies are racing to see who can get the most fuel out of a ton of scraps. ZeaChem, a rival, says it can get 160 gallons per ton. Others have claimed more than 100 gallons.

While most of the cellulosic companies are start-ups, an influx of cash and interest is coming in from traditional fuel vendors. Chevron and Weyerhauser, for instance, have created a biofuel company. Although big companies can threaten start-ups, partnerships are inevitable: building large-scale refineries takes more time, capital, and distribution heft than most start-ups can muster.

Range Fuels isn't the only outfit getting money these days. Coskata, which wants to make cellulosic ethanol out of garbage, got $19.5 million. And in the solar world, rumors swirl that Nanosolar and Solyndra are trying to raise money for factories and telling investors they are worth $2 billion and $1 billion respectively. Neither company is in mass production.