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Driving along a red dirt road on Oahu’s North Shore, Will Kusch, manager of the agriculture startup TerViva, surveys rows of scrubby trees descending toward the ocean and muses on his company’s future.
Can pongamia, an obscure plant TerViva is growing on 50 acres of former sugar cane land near Haleiwa, really be Hawaii’s next big cash crop?
“It’s more than a crop,” says Kusch. “This is a new industry.”
It all comes down to the tree’s seeds, which are rich in oil that can be refined to make fuel, such as biodiesel and jet fuel, according to Kusch. What’s left of the seeds after pressing can be turned into feed for beef cattle. Even the husks can be burned to fuel electricity generators, he said.
If the idea of using fallow Hawaii agriculture land to “grow oil” seems like a quixotic quest, consider some of TerViva’s business partners.
Its North Shore orchard is being developed on land owned by Kamehameha Schools, the state’s largest private landowner. And the company over the summer signed a lease to set up shop on 250 acres on Maui owned by the staid Alexander & Baldwin. There’s a possibility to expand to 2,000 acres or more, A&B said in a statement.
The company’s president and chief executive, Chris Benjamin, said TerViva presents A&B a “great opportunity” to use its former sugar lands to grow more energy crops locally.
TerViva has also landed grant money from the Elemental Excelerator, a nonprofit established with the Emerson Collective, the philanthropic endeavor founded by Laurene Powell Jobs, the widow of Apple founder Steve Jobs.
The startup has gotten attention from national media like Forbes, which listed the company as one of the nation’s 25 most innovative ag-tech startups, and Fortune, which glowingly reported that “TerViva’s Business Is Saving the Earth.”
With Hawaii’s energy policy calling for 100 percent of the state’s electricity to be produced from renewable resources by 2045, it appears there’s likely to be a need for things like biofuel to feed power generators providing a solid base of electricity to supplement wind and solar.
“Biofuels will play an important role in the Hawaiian Electric Companies’ fuel mix as we move toward 100 percent renewables,” said Shannon Tangonan, a HECO spokeswoman. “We have talked with TerViva about its product, and we look forward to further discussions.”
Hawaii’s energy policy and high costs for electricity have made it attractive as an incubator for alternative energy startups, said Lauren Tonokawa, head of communications for the Elemental Excelerator.
The organization’s partners include the U.S. Navy’s Office of Naval Research, which provided $30 million for the Elemental Excelerator to support startups through grants.
When assessing potential grant recipients, the Elemental Excelerator looks at three main factors, Tonokawa said: the company’s technology, team and whether it is a good fit for Hawaii and the Pacific region.
“TerViva,” she said, “is strong in all of those categories.”
Tonokawa declined to say how much grant money the Elemental Excelerator had provided to TerViva.
But the economics of pongamia oil production are intriguing. The company can produce fuel oil at a cost in the ballpark of petroleum, Kusch said.
What makes TerViva a high growth potential company that could produce big returns for investors, he said, is the additional products it produces beyond oil: the biomass husks to burn for fuel protein meal made from the pongamia seeds after the oil is extracted.
The company hopes to develop the seed meal into feed for poultry and dairy cattle, which it can sell for more than the beef cattle feed it now makes, Kusch said.
He likened the potential to the model of soy producers and processors, who sell both oil and the more valuable meal, used for everything from tofu to veggie burgers.
“Protein from soy is used in an astonishing variety of foods,” Kusch said.
The hope is pongamia someday can be a new plant protein for people as well as livestock, he said.
Touring the North Shore orchard in a white pickup truck Monday, Kusch was a talkative guide, sharing trivia about the locations of big pongamia trees – there’s one on the University of Hawaii Manoa campus near Bachman Hall – and the tree’s range – from India to Australia.
The seeds are so bitter that cattle won’t normally eat them, Kusch says, so TerViva has worked with researchers from Texas A&M University to create a recipe the cows will eat.
TerViva can harvest the beans using low-tech pistachio harvesters, which drive down the rows of trees shaking them with booms and catching the falling beans in nets, Kusch said.
Perhaps most important, he said, pongamia needs little water to grow, an important feature in a place where water is a scarce commodity. Because of pongamia’s hardiness and tolerance to soil salinity, TerViva, which is headquartered in Oakland, is also working to develop pongamia orchards in Florida to help replant orange groves wiped out by citrus blight.
Kusch said he doesn’t know just how much water pongamia trees need – the company is still working to figure that out — but he said, “It’s an order of magnitude less than sugar.”
In the end, what makes pongamia most attractive is the world’s insatiable demand for fuel. If a farm planted too many acres of a commodity like tomatoes, the supply would begin to outgrow demand causing prices to drop too low to justify farming, Kusch said. With fuel, he said, there’s little chance of producing too much.
“From our perspective, the energy market is infinite,” he said.