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Biofuels initiative creates service company to best leverage state investment

Leveraging the funding that investors place in their enterprise and producing a return on that investment is the goal of any start-up, and nothing is different in the case of a new entity called Genera Energy Inc. (GEI).

What is different is that GEI, as a for-profit entity, has been created to leverage public investments that the State of Tennessee made in the Tennessee Biofuels Initiative (TBI) more than four years ago. The concept from TBI’s inception was to jump start both an economic development project (a new cash crop for farmers growing switchgrass) and a leadership initiative in alternative energy (producing cost-efficient biofuels from crops that are not destined for the dinner table).

During a recent interview with teknovation.biz, Kelly Tiller, GEI’s President and Chief Executive Officer, described how the conversion of the former Genera Energy LLC into TennEra LLC and the subsequent creation of Genera Energy Inc. is a natural evolution to realize the goals that then Governor Phil Bredesen visualized when he made the $70 million investment.

She noted that the TBI project was more than just the very visible pilot-scale biorefinery located on Highway 411 in Vonore.

“Our goal from the outset was to pull all of the pieces together to build a biomass industry,” Tiller said, citing everything from securing farmers to grow crops in the field to getting the feedstock to the refinery. “Commercialization has been a part since the beginning and will be going forward.”

With the one-time public investment ending next June 30, the leadership team explored the best way to carry forward with the original State vision which has been strongly supported by successive General Assemblies and the Haslam Administration.

The resulting next step is to rename Genera Energy LLC, which has managed the TBI work as a subsidiary of the University of Tennessee Research Foundation (UTRF), to TennEra LLC, to reflect its broader mission and future plans. TennEra will continue as a wholly-owned subsidiary of UTRF and will retain complete ownership of all of the TBI assets such as the pilot biorefinery.

“Leveraging the assets (that the State of Tennessee invested in the University of Tennessee) and the knowledge gained from the TBI has allowed us to be commercially ready” for this next step, Tiller said.

To move from a pilot or demonstration project to a full commercial entity, Tiller said they determined that the best model was the creation of GEI “as a start-up, for profit entity” that is majority-owned by TennEra.

“It is an agricultural supply company with stakeholders on both sides,” she explained, citing ADM and Cargill as examples of companies that provide a menu of services in the agricultural sector and Schlumberger in the oil and gas industry.

For Tiller, it’s about “bringing value to both,” and she believes that GEI will achieve this goal by serving as a “one-stop shop” for both landowners and the biomass conversion facilities that will use the material.

The integrated menu of services available from GEI includes feedstock feasibility assessment and implementation planning, seed procurement, crop establishment, crop production and maintenance, harvesting and collection, transportation, aggregation and storage, pre-processing, and delivery to the biomass conversion facility.

Over the next year, Tiller and her team will primarily focus on the growth of the new for-profit enterprise, but their expertise will also be available on a contract basis to help with the completion and winding down of the $70 million TBI project.

The native of Greenback, which is just north of Vonore, has played a leadership role in the TBI effort since its inception. She exudes pride in what the team has accomplished over the project’s life, but she is clearly focused on the future and the opportunities that a start-up brings to the landowners, the biomass facilities and the region.

Tiller sees GEI playing a “strong leadership role” in the development of one or more investment grade biomass conversion facilities. She notes that GEI has the feedstock and the knowledge of the variety of biomass conversion plants needed.

“We will do whatever it takes to drive that goal to the benefit of rural economic development in Tennessee” adds Barry Davis, GEI’s Chief Financial Officer.

Tiller uses the evolution of personal computers – from the early models with floppy disks only to today’s mobile devices – to drive home the point that the biomass industry is still young. “We will learn and improve over time,” she explains.

And, while the pilot project was focused on the East Tennessee region as are GEI’s initial activities, Tiller notes that an expanded geographic base is a possibility.

“We will build our business around meeting the evolving industry’s needs, wherever those are,” she says. “But at the same time, we want to make sure that the industry and its investors recognize all the advantages we have to offer in Tennessee.”

“We are not limited to Tennessee, but the low hanging fruit is here,” Tiller adds.

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