Branson to Invest $400M in Renewable Energy; Puts $60M into Corn Ethanol Company

10 September 2006

The Sunday Times. Richard Branson, the founder of the Virgin Group, will invest up to $400 million in renewable energy projects through his Virgin Fuels subsidiary, announced earlier this year.

Virgin Fuels’ first investment is $60 million in Cilion, a new joint venture between Western Milling, California’s largest grain milling company, and Khosla Ventures, a venture assistance and venture capital firm led by Vinod Khosla. (Earlier post.)

Cilion plans to build and operate modular, standardized ethanol plants of about 55 million gallon annual capacity that intend to be cheaper and greener than standard corn-to-ethanol plants, with a substantial reduction in the need for using fossil fuels in the production process.

When fully operational, ethanol produced by Cilion is expected to be price competitive per mile driven with gasoline even if oil prices drop to $40 per barrel, assuming normal gasoline distribution margins.

—Kevin Kruse, Western Milling President

Cilion plans to have 7 to 8 plant units in production by 2008 for a total of 440 million gallons per year capacity. The first three plants are expected to be in California.

Branson’s investment was part of a $160-million second round financing. Khosla Ventures, Western Mining and Yucaipa, an American private-equity business led by Burkle, provided the other $100 million.

Branson said he plans to expand the investment program, which will also target other forms of alternative energy, into the UK, Europe and other parts of the world.