US-based renewables fuel company Gevo Inc., closed its deal to buy land near Lake Preston, South Dakota, allowing it to go forward with its first commercial-scale operation to produce sustainable aviation fuel that will be used to meet airline supply contracts already in place.

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Gevo plans to start construction of the Net-Zero 1 facility in September 2020. The facility is named that in reference to the net-zero emissions expected over the life of the fuel produced at the plant, Gevo previously said.

"The local availability of low-carbon corn as a feedstock for our process makes Lake Preston a favorable location for this operation," said Tony Wells, Gevo's site leader and general manager, in the company's July 25 statement."Additionally, the local wind conditions are ideal for the wind power that will provide electricity to our plant, and there is a good local market for the high-protein animal feed product that we will be selling," he added in the statement.

The wind energy project associated with the plant is already in development. The plant's project schedule anticipates that Gevo will be able to deliver initial volumes of SAF in 2025 to fulfill a portion of existing supply agreements.

Gevo expects Net-Zero 1 to produce 55 million gallons/year of SAF initially and 62 million gal/year when fully completed. The company uses Axen's ethanol-to-jet technology in the US to create SAF.

Gevo has said previously that it expects to fulfill its supply agreement with Delta Air Lines with SAF from its Lake Preston facility beginning in 2025. The seven-year contract is for 75 million gal/year of SAF. Gevo also has SAF-making capabilities at its facilities in Silsbee, Texas, and Luverne, Minnesota.

In October, Gevo signed a memorandum of understanding with Archer Daniels Midland where the agricultural giant would provide about 900 million gallons produced at ADM's plants in Columbus, Nebraska, Cedar Rapids, Iowa, and Decatur, Illinois, which Gevo would process into about 500 million gallons of SAF.

Ethanol prices are averaging $2.49/gal so far in the third quarter, down from the Q2 average of $2.72/gal, Platts assessments showed. The price of US dried distiller grains—used as animal feed—has also fallen, averaging $241.36/st so far in Q3, down from the Q2 average of $279.51/st.