28/07/2008 (Bloomberg), Houstan - New Generation Biofuels Holdings Inc., the Houston-based company that uses vegetable oil and animal fat to make renewable energy, may build four production plants as it ramps up sales to power generators.

The new facilities could be rolled out over three years and have a combined capacity of 100 million gallons a year, Chief Executive Officer David Gillespie said today in a telephone interview. He said the company, which is in discussions with three dozen companies, targets sales to plants that run on fuel oil during times of peak demand.

“What we offer the owners of these plants is a simple fuel switch, no capital costs, no significant or maybe even any modifications to their plant,” Gillespie said.

“Just a simple fuel switch and immediately those plants have a better emissions profile on a competitively priced fuel and they're now making renewable energy.”

The company creates biofuel using components such as vegetable oil, water and other additives. Possible sources include soybeans and palm oil, and new feedstocks may include algae and jatropha.

New Generation in June announced a sales contract with a subsidiary of Houston-based Dynegy Inc. for as much as 1.7 million gallons a year of biofuel for use at a California power plant.

The company also has demonstrated its technology to Atlanta-based Mirant Corp. and Akron, Ohio-based FirstEnergy Corp. and would like contracts with those companies, Gillespie said.

New Generation, formerly H2Diesel Holdings Inc., changed its name in March and began its listing on the American Stock Exchange in April.

The company also plans to sell products to college campuses and industrial plants to run heaters, Gillespie said. The company has incurred losses since it began operations in 2006.

“We’re hopeful that 2009 gets us to a profitable state, or at least a break-even state” in terms of cash flow, said Gillespie, 47. He previously worked for Charlotte, North Carolina-based Duke Energy Corp. and said he supports regulation of carbon dioxide.

New Generation rose 6 cents to $4.30 in American Stock Exchange trading. The stock has dropped 3.4 percent this year.

The company has a pilot production facility in Cincinnati that was developed with Twin Rivers Technologies LP. Gillespie said the project’s capacity of 3 million gallons a year could be expanded to 10 million gallons a year.

“We sort of look at that as the backstop if for some reason our commercial-scale facilities run behind,” he said.

New Generation has used test agreements with power companies to gather data on its products. “Our lab data’s all great and we love that,” Gillespie said. “But nothing beats a real live customer test.”