A US$68.2 million green bond has been closed by Gevo Inc in private activity bonds to fund the construction of its new renewable natural gas (RNG) project in Northern Iowa. The RNG Project will generate RNG captured from dairy cow manure. The feedstock for the RNG Project will be supplied by three dairy farms located in Northwest Iowa totaling more than 20,000 milking cows. When fully operational, the RNG Project is expected to generate approximately 355,000 MMBtu of RNG per year. Gevo is working with a major RNG dispenser to finalize an agreement to sell the RNG into the California market.
Also Read: Iowa’s largest solar energy facility completed
Gevo fully funded the RNG Project’s development costs and 100% of its equity capital from cash reserves. Gevo received approximately US$9.3 million in reimbursement for development, long lead equipment, and financing costs incurred during the development period upon closing of the Green Bond Offering. Construction of the RNG Project is expected to begin by the end of April 2021 and start-up is expected in early 2022. Gevo will submit an LCFS pathway application to the California Air Resources Board and expects to realize full cash flows from LCFS credits and RINs in the second half of 2022. The RNG Project is then expected to generate cash for Gevo of approximately US$9 to US$16 million per year.
The proceeds of the Green Bond Offering, combined with Gevo equity, will be used to finance the construction of the RNG Project which comprises: Three anaerobic digesters and related equipment situated on dairy farms located in Northwest Iowa that will produce partially conditioned raw biogas from cow manure, gathering pipelines to transport biogas to a centrally located gas upgrade system, and centrally located gas upgrade system located in Doon, Iowa that will upgrade biogas to pipeline quality RNG and interconnect to Northern Natural Gas’ interstate pipeline.
