Cambridge's GreatPoint taps into $100m in VC
Funding round is one of biggest for a clean-energy firm
GreatPoint Energy Inc., a Cambridge-based start-up that has developed technology for converting coal to natural gas, yesterday said it had raised $100 million - one of the largest venture-capital rounds ever in the clean-energy field - to fund construction of a demonstration plant.
The funding round, co-led by an arm of Citi Alternative Investments and Dow Chemical Co., includes several other financial firms and such powerhouses from the traditional energy field as AES Corp. and Suncor Energy Inc. It marks the third round of financing for the "clean coal" company, bringing its funding total to $137 million.
Andrew Perlman, president and chief executive of GreatPoint, said the company is looking at potential sites in Massachusetts, Canada, and along the Gulf Coast to build a demonstration plant for turning coal into a vapor that is 99.5 percent methane, or natural gas. He said GreatPoint is planning to make a decision soon and will reveal it this fall.
"For us, this round is hugely significant," Perlman said. "It gives us the capacity to go out and build a demonstration plant, which is the only thing standing between us and being fully commercial."
GreatPoint's aim is to turn one of the dirtiest energy sources into one of the cleanest by removing from coal the properties that cause global warming, acid rain, asthma, and mercury poisoning in fish. The company uses a patented catalyst that reacts with coal and steam to produce natural gas and nonhazardous solid-waste byproducts.
Its process, if commercially success ful, also has the potential to reduce energy bills in Massachusetts and other states with a heavy dependence on natural gas. The company has 41 employees, divided between Kendall Square and Des Plaines, Ill., outside Chicago, where it has been running a pilot program at a coal gasifier it has leased.
Several energy companies, including Shell Group and ConocoPhillips Co., have experimented with technology that converts coal into syngas, or synthesis gas, a combination of carbon monoxide and hydrogen, but GreatPoint and its backers think their process will create an energy solution that is more environmentally sound. The participation of Dow, AES, and Suncor, which all will take seats on the newly expanded GreatPoint board of directors, signals their interest in the technology.
"Eighty-dollar oil came up on these companies pretty quickly," said Ian Horowitz, alternative energy analyst with Soleil Securities Group Inc., a New York research firm. "Now they're all trying to lock in relationships with people who have differentiating technology, so they'll be well positioned when it comes time to commercialize."
Perlman said GreatPoint's goal is to build an independent company in Massachusetts rather than seek an acquisition by a larger energy conglomerate. But one test will be whether the company can reach an agreement with state officials to build its demonstrator plant in this region rather than down South or in Canada.
"We certainly think the technology we've developed represents a great opportunity for the natural gas industry," Perlman said.
"Our goal is to build this company up. We think it fits in very well with the needs of Massachusetts."
Robert Weisman can be reached at weisman@globe.com.
