Fittingly for the day of the Iowa caucuses – a day when presidential wannabes pay obeisance for the last time of the year to the ethanol gods – a high-profile renewable energy company announced a setback.
Imperium Renewables, a Seattle company founded by a former executive at Microsoft (MSFT), the noted energy company, withdrew its plans for an IPO, citing poor “market conditions.” The company didn’t elaborate on just what market conditions it referred to. But clearly it’s not the market for IPOs. NetSuite (N), despite early criticism from ill-informed pundits, proved that the market always is receptive to the right kind of IPOs. No, the market conditions Imperium must mean are the markets for alternative fuels, like ethanol and biodiesel, Imperium’s particular blend of non-petroleum elixir.
Imperium had hoped to raise $345 million, which would add to the gusher of money flowing into ethanol and other alt-fuel projects. (Reuters has lots of good details in its dispatch on the withdrawal.)
It’s been clear for some time now that the renewable fuels investment craze is a classic bubble. That’s not to say ethanol and biodiesel make no sense. They do make sense at some scale and over some time period. But it means that not every project makes sense and that a whole lot of investors will lose plenty of money.
For Imperium’s part, it had intended to use $240 million for three additional biodiesel plants. One wonders if the market conditions will be right for those either.