Dow and Solazlyme enter contingent agreement for dielectric insulating fluids
New algal oil to provide higher flash point and increased functionality to dielectric insulating fluids for transformers and other electrical applications.
San Francisco—The Dow Chemical Co. (NYSE: DOW) and Solazyme Inc. (NASDAQ: SZYM), a renewable oil and bioproducts company, announced that they have entered into a contingent offtake agreement in which Dow has agreed to purchase from Solazyme all of its requirements of non-vegetable microbe-based oils for use in dielectric fluid applications through 2015, contingent upon Solazyme’s ability to supply such oils within agreed specifications and certain terms and conditions of the sale. These new, renewable and biodegradable bio-based dielectric insulating fluids offer increased fire safety thanks to higher flash points and provide additional functionality that may improve the operating efficiency and extend the useful life of transformers.
Concurrently, Solazyme and Dow have entered into a Phase 2 Joint Development Agreement (JDA2), an exclusive, multi-year extension of the current joint-development agreement including accelerated commercialization timelines based on Solazyme’s rapid progress in the production of tailored algal oils. JDA2 enables additional application development work to be conducted by Dow, due to Solazyme’s accelerated ability to scale up their uniquely tailored algal oil feedstocks. Consumption of Solazyme’s algal oil feedstocks is expected to significantly exceed the minimum estimated volumes of 8.5 million gallons (29,000 metric tons) starting in the second half of 2013 and through 2015. The offtake agreement contemplates that final pricing for the oil will be linked to certain items including Solazyme’s sugar-based feedstock costs.
“Solazyme’s unique biotechnology-based oils platform has created a new market opportunity to develop and produce the next-generation of safe, renewable, dielectric insulating fluids that provide increased performance benefits,” said Jonathan Wolfson, CEO, Solazyme. “We have continued to reach technological advancements ahead of schedule with Dow, enabling us to further progress our commercial relationship.”
"Solazyme is a leading company in the industrial biotechnology space and its renewable oil technology platform provides a unique opportunity to significantly accelerate the development of next-generation, bio-based, non-vegetable dielectric insulating fluids,” said Tim Laughlin, General Manager, Dow Electrical & Telecommunications. "In the fast-growing space of bio-based dielectric insulating fluids, Solazyme’s tailored algal oils will serve as a technology platform for our continued efforts to bring innovative solutions to the power industry. Advanced field trials in transformers will be initiated to further prove the technology and value proposition of these new products in the near term. Based on the application work we have already completed to date, we are confident we are positioned to commercialize these oils in timelines consistent with Solazyme’s planned ability to manufacture the quantities we need.”
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