New Generation Biofuels Holdings announced its inaugural biofuels sales contract with Dynegy, a wholesale power generation provider. Should the renewable fuels provider have waited before delivering its big news? As of last week, the company had not procured commodity feedstocks sufficient for production, according to a recent stock registration filed with the SEC. In addition, the contract calls for New Generation to supply up to 1.7 million gallons per year of recycled vegetable oil for use at Dynegy's power plant in Oakland, California, with anticipated sales up to $13 million over the next two years.
In August 2007, New Generation placed into service its only plant, a three million gallon-per-year pilot facility in Cincinnati, which means that until management can build a planned 25 million gallon facility at a former shipyard in Quincy, Mass., production is limited to this one processing site.
Nonetheless, this milestone validates New Generation's proprietary technology in the power generation industry, and should open doors necessary financing to build a second, full-scale facility.
Subject to receipt of additional working capital, tax credits, and necessary regulatory approvals, execution of New Generations long-term strategy involves successfully finding other buyers for its biofuel in the power generation and heating fuel markets. In addition, fleet operators of trucks and other diesel-powered vehicles represent an opportunity for additional fuel sales.
All that is required is plenty of vegetable oil. Who said the grease used in making French fries was not healthy?