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Presenting Ventures: Spokane 2/15

Posted by John Martin at Wed Feb 22 06:00:00 +0000 2012

Flyback Energy, SpokaneValley

Illinois Clean Fuels, White Salmon/Bingen WA

AgEnergy, Spokane/Pullman

Gasohol Systems Technologies, Coeur d'Alene ID

The first presentation by the suburban Spokane company Flyback Energy, Inc. was a great exemplar of several strategic points. First, great business opportunities often come from reprising the old advertising slogan of "not making the products you buy, but making the products you buy better". Components can be a good business. Energy saving retrofit equipment and high value components are a great businesses. Second, we often seek to have less of a desirable output like light, heat, electromotive force because we simply accept what it consumes, when a better question can be -- why should that consumption level be a 'given' ?

FE applies sophisticated and complex electronic switching to address the 'given' that the electromagnetic systems driving lighting ballasts and electric motors -- technically called "inductive loads" -- will always waste a certain amount of energy through the voltage flux of their magnetic fields. If you can significantly recover those heat and EMF losses, the energy savings potential is huge. Inductive loads are all around us and the savings are claimed to be significant. I won't attempt an engineering précis here but will refer you, as a warm-up, to check out these Wikipedia entries on

flyback convertersbuck-boost converters, and flyback transformers, so, the company's name is based on technical terms, not some anime reference or other.

John Overby, Flyback's CEO gave the pitch. FE’s technology has been in development for years and took advantage of the venture acceleration services of the Spokane Intercollegiate Research Technology Institute (SIRTI)*, where Mr. Overby was a client services Director and senior advisor. As often happens in professional service engagements, Flyback liked John so much, they decided to hire him. And John was sufficiently impressed with the market potential that, 1 year ago, he accepted the CEO position.
*now recast as the statewide agency “Innovate Washington”.

A few quick notes. First, Flyback sees potential to have their widget "applied to every inductive load in the world" by using a four tier business model strategy. But they are taking a wise step-by-step invasion plan that someday, when fully disclosed, I am confident will make an excellent case study.

Secondly, they've decided their first beachhead will be in commercial lighting. That was partly affected by there being a complementary and innovative luminaire engineering company right in Spokane with whom they can partner - Eco-Lite.

In these venture forums, one often sees multiple start-ups that, in the old romantic phrase, seem to "complete each other", yet it's frustrating that more of them don't team up to make common cause. It's gratifying to see a good partnership enacted, where Flyback is working with Ecolite in a spare warehouse they're dubbing "EcoLab" to optimize lighting, motor and mini-grid applications. And it's great that they did not even have to leave Spokane County to find each other !

Bio-energy generation-----------

Flyback is part of a long tradition of electro-mechanical manufacturing in the Spokane region from Itron and ReliOn to Schweitzer Engineering. The other natural lynchpin of Inland NW business is biomass (agriculture and forestry), so it's stands to reason that the other 3 ventures presenting to this CLEEN | NW forum all had to do with turning biomass into energy.

From west to east we started with Stephen Johnson's company, currently billed as “Illinois Clean Fuels” –ICF- due to a facility siting, but headquartered in the Columbia Gorge twin-villages of White Salmon and Bingen in Klickitat County, WA, most famously home to the Boeing-acquired InSitu Corporation, a leading engineer and producer of those pilotless drones so much in the news today, also across the river from the wind-surfing mecca of Hood River, OR.

Next we heard from Philip Appel's venture, AgEnergy Products LLC, with operations in Spokane. Both Johnson's and Dr. Appel's companies are developing variations of biomass gasification, generally analogous to Dynamis Energy of Idaho which I heard present earlier February in Boise -- all three are very different from 20th century “incineration” which is more raw combustion than complete chemical breakdowns and conversions into safer, basic elements.

AgEnergy and Dynamis both use the outputs of their gasification processes to drive attached generators to provide electricity to be independent of, or augment, a power grid. ICF is using theirs to fuel a Fischer-Tropsch process to generate liquids that can be direct substitutes for high-density fuels from diesel to aviation. ICF’s process uses coal as an initial feedstock mixed with agricultural biomass and combined with deep-earth-injection carbon-sequestration - primarily because of the cost-effective availability of coal and the lack (so far) of a deep biomass supply chain. As that supply-chain evolves, they can shift, within their existing technology, to an entirely biomass-fed process – their firm long-term goal.

ICF will base its processing facilities on technology used for over half-a-century in South Africa at the world's largest commercial-scale coal-to-liquid-fuel plant: SASOL.      And ICF has retained as their Technology Director the former head of technical operations for that SASOL facility !      Johnson, the founder, is a former hedge fund manager from Portland (hence the Gorge business site) and probably the lead strength of ICF’s pitch is his own knowledge in navigating the finance labyrinth necessary to build large scale manufacturing facilities. Johnson would say their lead strength is being competitive with petroleum down to $35/bbl with a claim of producing his fuel for $1.25/gallon.    Stay tuned.

While Dynamis in Idaho is focused on municipal rubbish as the raw input to thence generate electricity, Dr. Appel's AgEnergy uses farm-biomass waste, primarily after-harvest stubble or field residue. AgEnergy has miniaturized their gasification/generation equipment to fit a twenty-foot container unit (TEU) to enable their product to move seasonally to the high bio-mass fields. Dynamis prepares both TEU-scale and larger fixed facilities, while ICF is doing only very large fixed facilities because of the scale-economies needed for Fischer-Tropsch.

Dynamis looks at a variety of end-users. True to it’s name, AgEnergy LLC is focused solely on the farm market, especially, those with forced irrigation, where such irrigation pumping alone accounts for 15% to 25% of the farm’s operating budget. Off-season, the power would be sold back to a grid eager to offset urban loads - unlike earlier eras when utilities coveted selling power to farms.

It turns out that consuming the residue or stubble has secondary "sustainabiilty" impacts. Modern grain crops produce more biomass than the soil can breakdown in a single season by sometimes 5x! Plowing all that back into soil actually requires additional tons of nitrogen fertilizer to accelerate the natural breakdown process. By shaving off the bio-mass for AgEnergy's power generator, farmers can reduce 4-6 tillage passes (average) at about $15 per pass per acre savings. And they can also reduce nitrogen fertilizer both a cost and environmental savings.

The traditional method of dealing with excess bio-mass is burn-off, which authorities have mostly banned for sound environmental reasons. AgEnergy's system gives farmers:

  • a legal way to "combust" the straw
  • reduce tractor fuel
  • reduce fertilizer expense
  • reduce irrigation expense
  • make money on off-season grid sellback

AgEnergy's financial model includes sharing of savings and grid-sellback with the farmers, an increasingly cited method for lowering acceptance barriers for cleantech, recently popularized by the success of the Seattle efficiency engineering firm McKinstry.

And finally, we heard from two rocket scientists (literally), Pablo Diaz and Don Law who are now based in Coeur d'Alene, Idaho and who have developed a new strain of the tropical grass SORGHUM which can survive and prosper in cold, northern climates like... ... the inland Northwest.

sorghum can be

  • a good feedstock for biofuel refineries
  • is not nutritional  and
  • this northern strain would often grow where no other crops would be placed

so it avoids all of the food-substition issues. Stephen's and Philip's companies have already been through one round of angel funding and are looking for additional tranches. Diaz and Law's venture is earlier stage and just starting to seek out fuel-processing demos of its new strain of sorghum.


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