AE Biofuels, through its subsidiary AE Advanced Fuels Keyes, has secured a $4.5m financing from Third Eye Capital (TEC) for the repair, restart and operation of an existing 55 million gallon per year ethanol plant located in Keyes, California.

The $130m Keyes plant, which AE Keyes came to possess under a project agreement with renewable fuel company Cilion in March 2010, closed in early 2009 due to technical and market issues and AE Keyes now plans to retrofit the plant to get it ready for operation by first quarter of 2011.

AE Biofuels intends to introduce its patent-pending enzyme-based cellulosic ethanol technology at the Keyes facility, powered by natural gas and steam powered turbine cogeneration units, in 2011.

Recently AE Biofuels has received approval from California Energy Commission for the Keyes plant to participate in the California Ethanol Producer Incentive Program, which has been designed to provide price assurance for low-carbon intensity California ethanol producers.

The approval follows the new development resulting in the increase in California’s permissible per gallon ethanol blend from 5.7% to 10%, expanding the state’s ethanol market to approximately 1.5 billion gallons annually.