Build it Yourself

Ethanol producers take blender pumps into their own hands
By Kris Bevill | July 22, 2011

Infrastructure expansion continues to be a major concern for the ethanol industry. Recent assistance in the form of grant and loan guarantee offerings from the USDA to assist retailers have been welcome, but there seems to also be a growing trend among industry members to offer their own financial incentives. In Marcus, Iowa, Little Sioux Corn Processors, a 108 MMgy farmer-owned facility, decided in June to pony up $150,000 to assist in the installation of 10 blender pumps in its area. “There is a strong need for E85 and midlevel blends in this area,” Ron Wetherell, LSCP chair, says. “Little Sioux’s board decided that in order to expand the availability of high-blend ethanol to northwest Iowa motorists, they needed to get involved by investing in future markets for ethanol.” Steve Roe, LSCP general manager, said in early July that money had not yet been dispersed to retailers because it was contingent upon USDA loan guarantee or grant approval. Retailers must also present proof that the equipment has been installed at their station, he said.

Blender pump expansion efforts are not restricted to just ethanol plants. In northern Iowa, a group of ethanol supporters and board members including Dave Sovereign, chairman of the board of directors at Golden Grain Energy LLC, decided to apply for grants on its own to install three blender pumps. Sovereign says the group first approached retailers in the area to install the pumps, but was unsuccessful in gaining their cooperation. He believes the biggest constraint holding retailers back from installing blender pumps is the cost of the system. “There isn’t very much of a margin to be made in selling fuel. Unless you can demonstrate it will bring in more sales inside to their profit centers, it’s very difficult to substantiate that type of a business investment,” he says.

Sovereign admits there is a learning curve associated with the blender pump build-out, both for retailers and consumers, but says he’s aware of several other ethanol plant boards who are crafting plans to work with local retailers to install the pumps, and his own experience has shown ethanol plant stakeholders view the incentives as a worthy investment. “I’ve found quite a bit of support on several different boards from several different plants as well as from our shareholders,” he says. “Everybody wants to have access to it and that’s what we’re after. Let’s get the access out here to be able to use these homegrown renewable products and showcase what we can do with them.”

As of July, 142 retail outlets in Iowa offered E85 and only 30 blender pumps were located in the state, according to the Iowa Renewable Fuels Association. The state recently passed legislation that includes $50,000 grants for retailers to install biodiesel, E85 and blender pumps, an extension of a previous program which, according to Lucy Norton, managing director for the Iowa Renewable Fuels Association, was quite popular. “In fact, the infrastructure funding was exhausted in March of this year so we were fortunate that the Iowa legislature renewed funding as of the first of July,” she says. As part of its retailer outreach program, an IRFA representative is responsible for contacting retailers to explain blender pumps and the infrastructure program. That person will also complete grant applications and submit them on behalf of the retailer, making the process as easy as possible for the retailer, she says.

—Kris Bevill