Aemetis Allocated $10.5 Million IRA Section 48C Tax Credits by DOE and IRS for Biofuels Plant Efficiency Projects

Rhea-AI Summary

Aemetis, Inc. (AMTX) receives $10.5 million in IRA tax credits, with a total projection of $450 million, to support renewable fuels projects. The company completed a $63 million sale of tax credits in 2023, receiving $55 million in funding. The allocation will support energy efficiency projects at the Aemetis Keyes ethanol production facility in California.

Insights

Renewable Energy Analyst

The allocation of $10.5 million in Inflation Reduction Act tax credits to Aemetis, Inc. is a significant indicator of the federal government's support for renewable energy initiatives. This funding, earmarked for energy efficiency projects, including the Mechanical Vapor Recompression (MVR) at the Aemetis Keyes ethanol production facility, underscores the strategic shift towards low and negative carbon intensity products. The MVR technology is designed to reduce energy consumption by compressing and reusing vapor produced in the distillation process, thereby improving the overall energy efficiency of the plant.

The anticipated long-term impact of such an investment is twofold. Firstly, it could lead to a reduction in operational costs due to increased energy efficiency, which may result in improved profit margins. Secondly, it positions Aemetis favorably within the renewable fuels market, which is increasingly influenced by environmental, social and governance (ESG) criteria among investors. However, the benefits must be weighed against the costs of implementing such technology and the company's ability to effectively integrate it into existing operations without significant disruption.

Financial Analyst

Aemetis's announcement of receiving $10.5 million in tax credits and the projection of a total of $450 million to support its renewable fuels projects is a robust signal to investors about the company's potential growth trajectory. The completion of the sale of $63 million of IRA tax credits last year, with $55 million in funding received, already reflects a strategic monetization of these credits. This approach can enhance the company's balance sheet by supporting long-term debt financing and potentially increasing operating cash flow.

Investors should note the company's ability to convert tax credits into liquid assets, which can be a critical factor in evaluating Aemetis's financial health and investment viability. While the direct impact on the stock price is uncertain, the news does provide a positive outlook on the company's financial strategy. The effectiveness of this strategy in translating into tangible financial results, such as improved cash flow and return on investment, will be important for long-term shareholder value.

Market Research Analyst

The renewable energy sector is highly competitive and sensitive to policy changes. The U.S. Department of Energy's (DOE) involvement in the allocation of IRA tax credits indicates a rigorous selection process, suggesting that Aemetis's projects have met high standards for energy efficiency and innovation. The company's focus on the MVR project aligns with market trends that favor technological advancements in energy conservation.

It's important for stakeholders to understand that these credits are part of a broader federal initiative to stimulate the economy and promote clean energy. The market's response to such news typically reflects optimism about the future of renewable energy and the companies leading its development. However, the actual market impact will depend on the successful implementation of the funded projects and the company's ability to leverage these advancements to capture market share and drive revenue growth in the burgeoning renewable fuels industry.

CUPERTINO, CA, April 09, 2024 (GLOBE NEWSWIRE) -- via NewMediaWire -- Aemetis, Inc. (NASDAQ: AMTX), a renewable natural gas and renewable fuels company focused on low and negative carbon intensity products, today announced that it received an allocation of $10.5 million of Inflation Reduction Act (IRA) tax credits by the U.S. Department of Energy (DOE) and the Internal Revenue Service (IRS) under the first phase of IRA Section 48C awards.

The Aemetis Five Year Plan projects that Aemetis will receive a total of $450 million of IRA tax credits to support funding of its renewable fuels projects. In October 2023, Aemetis completed the sale of $63 million of IRA tax credits to a single buyer and received $55 million in funding.

Aemetis was awarded the $10.5 million allocation of transferable tax credits to support the Mechanical Vapor Recompression (MVR) energy efficiency project and other energy efficiency projects at the Aemetis Keyes ethanol production facility in California. The competitive process for funding was managed by the DOE as an advisor to the IRS which selected recipients based on an extensive and detailed review of each project.

“The Inflation Reduction Act funds new job creation and supports new investment in projects in almost every state,” stated Eric McAfee, Chairman and Chief Executive Officer of Aemetis, Inc. “Late last year we demonstrated the conversion of IRA tax credits into funding for our projects, so monetization of the tax credits supports long term debt financing and, in the case of the MVR project, is expected to significantly increase operating cash flow from our existing biofuels plant in California.”

The MVR project and related upgrades are expected to cost about $30 million, with design engineering already completed and equipment procurement underway for planned installation in the first half of 2025. In addition to the $10.5 million of IRA tax credits, Aemetis already has been awarded $6 million of grant funding by the California Energy Commission (CEC) and has been approved for up to $3.2 million of additional funding from the Pacific Gas & Electric Energy Efficiency Program, pending project completion and verification of energy savings.

The MVR project is expected to reduce fossil natural gas use at the Keyes plant by 80% and lower the carbon intensity of the biofuels produced by the Keyes plant by more than 20%, which together is expected to substantially improve operating cash flow.

The Inflation Reduction Act established Section 48C tax credit grants to fund energy efficiency and low carbon intensity renewable energy projects. The Section 48C tax credits are transferable from project developers to entities with income tax liabilities in order to provide funding to projects.

About Aemetis

Headquartered in Cupertino, California, Aemetis is a renewable natural gas, renewable fuel and biochemicals company focused on the acquisition, development and commercialization of innovative technologies that replace petroleum-based products and reduce greenhouse gas emissions. Founded in 2006, Aemetis is operating and actively expanding a California biogas digester network and pipeline system to convert dairy waste gas into Renewable Natural Gas. Aemetis owns and operates a 65 million gallon per year ethanol production facility in California’s Central Valley near Modesto that supplies about 80 dairies with animal feed. Aemetis owns and operates a 60 million gallon per year production facility on the East Coast of India producing high quality distilled biodiesel and refined glycerin for customers in India and Europe. Aemetis is developing the sustainable aviation fuel (SAF) and renewable diesel fuel biorefinery in California to utilize renewable hydrogen, hydroelectric power, and renewable oils to produce low carbon intensity renewable jet and diesel fuel. For additional information about Aemetis, please visit www.aemetis.com.

Safe Harbor Statement

This news release contains forward-looking statements, including statements regarding assumptions, projections, expectations, targets, intentions or beliefs about future events or other statements that are not historical facts. Forward-looking statements include, without limitation, projections of financial results in 2024 and future years; statements relating to the development, engineering, financing, construction and operation of the Aemetis ethanol, biogas, SAF and renewable diesel, and carbon sequestration facilities; and our ability to promote, develop and deploy technologies to produce renewable fuels and biochemicals. Words or phrases such as “anticipates,” “may,” “will,” “should,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “showing signs,” “targets,” “view,” “will likely result,” “will continue” or similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on current assumptions and predictions and are subject to numerous risks and uncertainties. Actual results or events could differ materially from those set forth or implied by such forward-looking statements and related assumptions due to certain factors, including, without limitation, competition in the ethanol, biodiesel and other industries in which we operate, commodity market risks including those that may result from current weather conditions, financial market risks, customer adoption, counter-party risks, risks associated with changes to federal policy or regulation, and other risks detailed in our reports filed with the Securities and Exchange Commission, including our Annual Reports on Form 10-K, and in our other filings with the SEC. We are not obligated, and do not intend, to update any of these forward-looking statements at any time unless an update is required by applicable securities laws.

External Investor Relations
Contact:
Kirin Smith
PCG Advisory Group
(646) 863-6519
ksmith@pcgadvisory.com

Company Investor Relations/
Media Contact:
Todd Waltz
(408) 213-0940
investors@aemetis.com

FAQ

How much did Aemetis receive in IRA tax credits?

Aemetis received $10.5 million in IRA tax credits.

What is the total projected amount of IRA tax credits for Aemetis?

Aemetis projects to receive a total of $450 million in IRA tax credits.

What was the amount of the sale of IRA tax credits completed by Aemetis in 2023?

Aemetis completed a $63 million sale of IRA tax credits in 2023.

How much funding did Aemetis receive from the $63 million sale of tax credits?

Aemetis received $55 million in funding from the $63 million sale of tax credits.

Which project will the $10.5 million allocation of tax credits support?

The $10.5 million allocation will support the Mechanical Vapor Recompression (MVR) energy efficiency project and other energy efficiency projects at the Aemetis Keyes ethanol production facility in California.

Who is the Chairman and CEO of Aemetis, Inc.?

Eric McAfee is the Chairman and Chief Executive Officer of Aemetis, Inc.