(Bio)refining the future and doing it their way: my tour of Piedmont Biofuels, Pittsboro, NC

On Friday, April 6th, I took a tour of Piedmont Biofuels, located approximately 35 minutes from Raleigh, North Carolina.  Piedmont is one of 5 biodiesel refineries in central North Carolina, but is the only one to attain a BQ9000 rating from the National Biodiesel Accreditation Program.  This accreditation is important, because North Carolina state fuel contracts are incumbent on the BQ9000 rating.  This accreditation places Piedmont as the only biodiesel producer in the state of North Carolina that can be awarded a state biodiesel fuel contract.

The accolades for Piedmont don’t stop there. 

Piedmont Biofuels is one of only 521 national companies organized as a B-type corporation.  Certified B Corporations are a new type of corporation which uses the power of business to solve social and environmental problems.

On June 22nd, Piedmont Biofuels will become the first US biodiesel refinery to produce biodiesel through enzymatic catalysis at commercial scale.  They are using Novozyme’s enzymatic components in a process branded as FAeSTER.

Piedmont Biofuels is a cooperative, which requires that customers become members prior to purchasing biodiesel from Piedmont.

  Piedmont Biodiesel Quick Facts:

  Production Output: 1,000,000/gallons per year

  Conversion processes used: transesterification, enzymatic

  Process Inputs: Methanol, KOH

  Saleable products: Biodiesel/Glycerine

 Employees: 15

(Bio)refining the future – the tour:

The facilities

Piedmont stores B100 biodiesel on site, outdoors.  B100 requires thermal insulation, so the storage tank is encapsulated by a greenhouse-type structure.

Piedmont’s facilities are located in what was an abandoned industrial park that housed a Cold War era materials manufacturer.  In 2006, Piedmont began constructing their biorefinery.  Over the next six years, as their operations evolved, small firms who could benefit from Piedmont’s refining process or byproducts began basing their operations on the Piedmont Biofuels campus.  Today, 50-60 employees of multiple green companies are working on the Piedmont Biofuels campus on any given day.

Piedmont’s facilities consist of an external methanol tank with input streams into their bioreactor, water tanks with input streams, and export streams for methanol, water, and glycerine.  Their bioreactor is versatile, and can handle reactions with multiple feedstocks.  Some of the feedstocks used historically have been soybean, canola, waste vegetable oil (WVO), animal fat and almond oil.

Refining Process

Piedmont employs two main refining processes, transesterification via methanol, and enzymatic catalysis.  To enhance process efficiency, Piedmont employs both a methanol recovery process and a closed-loop agroponic waste water recovery process.  The result is a production process with virtually no waste of inputs, and biodiesel and glycerine as production products.

Piedmont’s production processes are efficient.  100 gallons of water are used for every 4000 gallons of fuel produced.  In enzymatic catalysis, no water is used in the process, and enzymatic components can be used for as many as 10 process runs.  Lyle Estill, VP of Piedmont Biofuels insists that enzymatic catalysis is the future of the biodiesel industry, due to the positive economics.  Enzymes add 16 cents a gallon in processing costs, but save 20 cents in feedstock procurement and water costs.  

There is much enthusiasm on the Piedmont campus of the full-scale enzymatic production poised to begin on June 22nd.

Piedmont has also commissioned the construction of several mobile biorefineries, which consist of an small scale refinery housed in a trailer, which is towed by a truck or tractor trailer.  These mobile refineries have the power to fuel the vehicle towing them for an entire cross country trip, without having to add additional petroleum fuel.  I though about the potentially positive implications in the transportation and military sector, especially after reading about the Marines recent exploration of green energy in Afghanistan.

Emphasis on Quality

Piedmont Biofuels places a tremendous emphasis on quality control, and the lab was active during the tour.  Piedmont relies on terminal lots, which identify specific batches of biodiesel, the formula and feedstock used to create that batch.  Terminal lots allow customers to trace their fuel back to Piedmont in the event they have an mechanical issue.  The emphasis on quality has been beneficial, as Piedmont has not had a quality issue with their fuel since they were established in 2006.

Customers

The majority of business comes from oil companies who purchase biodiesel for various uses.  Profit margins are higher on biodiesel sold directly via retail distribution.  Glycerine that results from the production process is also sold.

Challenges

Piedmont Biofuels has persevered over substantial challenges in their 6 years of operations.  They have had to re-engineer the plant and facilities 3 times, mainly due to feedstock compatibility.  Piedmont fuel is distributed via 9 locations in 2012.  Their persistence is beginning to yield dividends.  After years of operating losses, Piedmont boasts low but positive profit margins, and became operationally profitable in 2011.  Feedstock volatility, both in sourcing and in pricing, may be the largest challenge to the company in the future.

According to Lyle Estill, the unpredictability of feedstock price movements or availability forces the company to shift sources, formulas, and operational schedules on short notice.  Competition over feedstock, particularly from the rendering industry, is another feedstock-related challenge that has resulted in litigation, of which Piedmont has been on the winning side, thus far.  If upstream markets mature and stabilize biorefiners may be able to use  financial hedging strategies via local commodities contracts.  But until then, stable demand from the rendering industry over animal fat will drive up that feedstock price, and competition over best use, food or fuel, will continue.  Cellulosic biomass may address the food versus fuel issue, though cellulose has not been proven as a viable commercial scale feedstock to date.

Other challenges noted by Piedmont are the political environment, on both a Federal and State level.  While North Carolina has been progressive in some ways, like setting state targets for biofuel production and displacement of petroleum fuel over the next 8 years, state subsidy for fuel production has wavered year-t0-year and recently disappeared.  This is despite nearby states stepping up their subsidy programs.  South Carolina, Pennsylvania and Kentucky boast a .20, .50 and 1.00/gallon incentive, respectively for biodiesel produced in those states.   It is challenging to attract new biorefiners to the state when, they can locate within an hour drive and receive a .20/gallon subsidy.   Federal support for the industry is there via EISA 2007 and the Clean Air Act/Renewable Fuel Standards, though biofuels appear to be heading to partisan battleground between Democrats and Republicans in this presidential election year.

Conclusion

Piedmont Biofuels is providing biofuels industry leadership through their innovative use of process technology, their ability to rapidly evolve their operations to overcome market challenges, and their overall creativity.  Their plant is testament to their scientific aptitude, do-it-yourself mentality and unique culture.  Most importantly to them, they’re doing it (queue the Sinatra music) “their way” with a dedication to ecological sustainability, creativity and community cooperation.

It is becoming clear to me that in order to create a favorable investment climate in the biodiesel industry, investors and entrepreneurs must focus on improving and evolving processes and the supply chain upstream and downstream from biorefiners like Piedmont, in order to maximize the value of biorefineries.  For example, if upstream entrepreneurs focus on minimizing feedstock volatility by making supply more predictable and standardizing financial transactions, biorefineries can spend more resources on improving their production operations and quality control practices which should result in higher margins.  If downstream entrepreneurs focus on improving the distribution network by creating biodiesel compatible pumps and credit card meters, adoption should increase, which will “pull” demand through the biorefineries.

If you are anywhere near Raleigh or Durham, North Carolina, you absolutely have to take a tour of Piedmont Biofuels.  The allure of seeing the first commercial-scale enzymatic catalytic producer of biodiesel in the US (World?) should be enough to get you there.   Tours are given on certain Fridays of each month.

If you can’t make it in person, take a virtual tour, available on Piedmont Biofuels website: http://www.biofuels.coop