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May 06, 2015 | Tom Ballard

PART 2: Jeff Kanel offers thoughts on successful SBIR proposals

RAE-tekno(EDITOR’S NOTE: This is the second article in a two-part series examining a Johnson City-based company’s successful use of Small Business Innovation Research Grants to scale its business model.)

By Tom Ballard, Chief Alliance Officer, Pershing Yoakley & Associates, P.C.

Jeff Kanel, Chief Executive Officer of Renewable Algal Energy, LLC (RAE), has been very focused and purposeful in using the Small Business Innovation Research (SBIR) program to strategically advance the company.

The Johnson City-based enterprise has developed and demonstrated patented technology that provides an economical and sustainable route for algal products to serve the nutraceutical, animal nutrition, and renewable fuels markets.

Over a roughly six-year period, RAE has successfully won Phase I, II and III awards that have proven the viability of the technology, helped fund work to validate the financial model and scalability of the technology, and deploy a semi-works facility.

Today, RAE has strategic relationships, customers, and a technology proving ground in Arizona as well as a North-American developer with a site that is permitted for the deployment of RAE Technology. .

“By going through the SBIR Phase I, we matched-up a proof on concept (that showed) what we were doing had a chance of success,” Kanel said. The proposal was submitted to the U.S. Department of Energy (DOE) in 2007. The award and work were conducted in 2008.

Phase II, again funded by DOE, ran from 2009 to 2012, with RAE collecting considerable amounts of data to show financial viability and technology scalability.

“We were moving the proof of concept to commercialization,” Kanel says in describing that period.

Phase III, which ran from 2012 into 2014, was an accelerator period when RAE deployed the technology in a semi-works scale effort designed to reduce the technology risk. This final phase helped RAE to secure contracts with interested partners.

In mid-2014, the company announced two strategic partnerships. One was an off-take agreement with Neste Oil Corporation, the world’s largest producer of renewable diesel fuel. Under the arrangement, Neste can purchase RAE’s crude algae oil on a commercial scale for use as a feedstock for producing renewable fuel.

“This is a significant contract for us,” Kanel said.

The other agreement is with ABB, a global power and automation firm based in Switzerland. RAE’s business model calls for it to produce equipment that harvests and extracts algae and its co-products – oil for renewable fuels and proteins and carotenoids for animal feed and nutritional supplements. ABB will supply control systems, instrumentation, low voltage electrical equipment and variable speed drives that will help RAE’s integrated algal production systems operate efficiently and reliably.

“ABB has support facilities around the world,” Kanel says. This allows us to deploy our technology globally and leverage ABB’s world-wide technical support.”

It is expected that the first commodity-scale deployment of RAE technology will be at a site in North America that covers thousands of acres and that is being developed by a RAE member.

“This was a nice first step in our commercialization efforts,” Kanel said.

For those considering pursuit of SBIR grants, it’s clear that the federal funding source had a solid impact on RAE’s development.

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