Fresno, Calif.-based Pacific manufactures a corn-derived ethanol that can be mixed with gas to power cars or, potentially, in hydrogen fuel cells. The company also sells chemical byproducts created in ethanol production, a key sideline for the profitability of ethanol companies.
The investment will help Pacific fund the construction of a plant in Madera County, which is slated to open in the fourth quarter of this year, and subsequent plants. By the end of 2008, Pacific expects to be operating five plants in the Western U.S. capable of producing 200 million gallons of ethanol.
Two years ago, only a few venture investors were dabbling in alternative energy, but high oil prices and fears about global warming have prompted a rush of investors. Two of the more popular areas for investment are solar technology and biofuels, which derive energy from animal or vegetable matter.
The ideas for biofuels range all over the map. Microgy says it will harvest natural gas out of cow manure, while others plan to create it from algae.
Further out, it may become possible to develop microbes that produce natural gas or hydrogen.
Many investors, however, warn that it could prove tough to make money on these investments. Start-ups may get trampled by industrial conglomerates like Shell and General Electric.
A lot of alternative energy ideas may also turn out to be uneconomical. Some researchers have noted that producing ethanol is expensive and not very efficient, prompting some companies to look at different plants that can be used to produce the stuff. Demand for solar technology exists in part because the governments of Japan, Germany, California and other places subsidize the cost of buying and installing solar panels.