Last week we looked at the smallest and most important part of the industrial biotech industry: microbial production metrics. It is impossible to be profitable and successful without optimizing the microbes that power your platform. It is also critical to optimize the construction, commissioning, and ramp-up phases of a biorefinery to become profitable as quickly as possible. What is commissioning? How long does ramping up take? Why can't Solazyme investors expect 120,000 metric tons of oils to be produced by the end of 2014? Let's dissect these terms and lose the confusion. 

Industry round-up to ramp-up
The list of public industrial biotech companies is growing quickly, although some of the best companies remain in private hands. Here are some companies to keep your eye on that are either currently undergoing ramp-up or looking to do so soon at their first facilities:

Company

Annual Capacity

Commissioning Date

Products

Amyris (AMRS 50.00%)

50 million liters

4Q12

Farnesene

BioAmber (NYSE: BIOA)

50,000 metric tons

2014

Bio-succinic acid

Genomatica and Novamont

40 million pounds

2013

Butanediol

Gevo (NASDAQ: GEVO)

18 million gallons

2Q13

Isobutanol

Solazyme (TVIA)

100,000 metric tons

4Q13

Various oil profiles

Source: Company websites  

There will be dozens of announcements this year and next on progress from the commercial operations of these industrial biotechnology pioneers. While it is the responsibility of the companies to provide investors with a complete view of their bio-based chemical platforms, I fear that many investors may be isolated by unfamiliar terms. After all, these are the first companies hitting prime time. Getting lost during this important chapter of development for these disruptive companies could have disastrous results.

Shake, stir, wait 12-18 months (or longer)
Completing the construction of a biorefinery is not the end of the story. Commercial operation of facilities goes through three major phases:

  1. Commissioning
  2. Ramp-up
  3. Nameplate operation

During commissioning all equipment is tested and measured to ensure that it operates as designed. This usually consists of taking a biorefinery's upstream equipment (microbial seed trains, bioreactors, holding tanks, injection units, and the like) and downstream equipment (holding tanks, separation equipment, and the like) through several consecutive production runs. After successfully commissioning a facility, the doors are sprung open, engineers are stuffed into the control room, interns are banned (they just screw things up anyway), and the next phase begins.

Amyris' first commercial scale Biofene facility in Brazil may have come on line six months ago, but it will take nearly three years to reach full nameplate capacity of 50 million liters. Source: Amyris

Production at a biorefinery does not start from the often-quoted numbers, much to the chagrin -- or surprise -- of investors. In fact, it can take 12-36 months to reach the final production capacity, or nameplate capacity, of a facility. The time between start-up and nameplate operation is called ramp-up, which gradually raises the amount of product created. This gives engineers time to work out kinks that were not encountered during commissioning or conceived of previously while optimizing the facility's process scheduling -- the carefully orchestrated schedule of every piece of equipment in the facility.

Not all ramp-up is created equally, however, because companies choose to upgrade equipment on different schedules. For example, the jointly operated facility between Solazyme and Bunge in Brazil will take 12-18 months to reach 100,000 metric tons of capacity, while Amyris' first facility will gradually be ramped to 50 million liters of annual capacity over the course of 36 months. Similarly, Gevo is gradually bringing all of its production trains on line, so ramp-up will occur in multiple phases for the same facility.

That means that operating at less than nameplate capacity is a consequence of ramp-up. Despite having an annual nameplate capacity of 100,000 metric tons of renewable oils and beginning operations in the second half of 2013, Solazyme Bunge will not produce 100,000 metric tons of products between start-up and the second half of 2014.

Nameplate is the end, right?
Eventually, ramp-up reaches full nameplate capacity. Even this phase is not the end of the story, however. Engineers will continually improve the process to improve efficiency, lower manufacturing costs, and even increase annual production capacity. Of course, building biorefineries is only half of the commercialization equation. Products -- you know, the stuff actually generating cash -- must also be commercialized independently of equipment.

Foolish bottom line
There is a difference between bioreactor volumes and realized product volumes, but the interesting thing with synthetic biology is that we still don't know the ceiling. In 20 years from now, Solazyme's heterotrophic algae could be much more efficient at producing tailored oils and Amyris' will be producing more than one end product with the same strain of yeast. Their original facilities in Brazil, in Moema and Brotas, could eventually have their nameplate capacities raised on the heels of scientific advancements alone. No extra bioreactors required!