The Quest for Maximum Yield

Ethanol producers who don’t relentlessly focus on yield may be leaving precious revenue on the table
By Holly Jessen | August 15, 2011

In 2010, plants with higher-than-average ethanol yield brought in $1.6 million in revenue over and above what the average plant earned. On the flip side, plants that lagged in ethanol yield performance failed to capture $1.7 million in revenue compared to the average.

At a time when every penny in profit counts, those are startling numbers as reported in the “Biofuels Benchmarking Annual Report 2010” prepared by Christianson & Associates PLLP. On average, a typical 60 MMgy ethanol plant squeezes 2.724 gallons of ethanol out of a bushel of feedstock adjusted to 15 percent moisture. The top 25 percent producers, however, ratchet that number up to 2.778 gallons while the laggards in the bottom 25 percent bring in only 2.671 gallons. From leaders to laggards, there’s a $3.4 million spread in revenue with just a 1 percent difference in ethanol yield, clearly outlining why yield is such a vital component of a profitable ethanol plant. “Things that we are seeing come through for improvements for yield really have the potential to add a lot of profit to a plant’s bottom line,” says Brad Saeger, a business analyst for Christianson & Associates.

While a plant should always be aware of its rate of conversion, that doesn’t necessarily mean ethanol plants should aim for the highest numbers possible 365 days a year. “If there are large margins in the ethanol industry, people will push their plants for production, and not worry about yield,” says Jon Buyck, also a business consultant for Christianson & Associates. “When margins tighten, yield becomes a bigger player. The difference between profitably and loss will be in the yield.”

Neal Jakel, general manager of Illinois River Energy LLC, a 100 MMgy plant in Rochelle, Ill., spoke on this topic during a panel presentation at the International Fuel Ethanol Workshop & Expo held in Indianapolis in late June. IRE has a serious focus on two things, Jakel says. The first is yield, yield and yield. “We are a commodity based industry. Tight margins are the norm—they’re not the exception in this industry.” The company’s second focus is on uptime, minus scheduled maintenance.

Depending on margins, IRE makes a decision to run for higher yield or more gallons, much like a soybean crusher decides whether it will focus on producing more soybean oil or meal. Basically, running at full capacity isn’t always the right decision for IRE. “If we are presented with a tight forward margin, we may cut back rate to focus on efficiency versus volume,” he says. “We’ll play those two off one another depending on what’s going on in the marketplace.” That doesn’t happen on the fly, though. “We make operational decisions based on executed commercial decisions,” he adds. “In other words, once we’ve locked in for a set margin for ethanol production, we’re going to run those gallons—we won’t speed up, we won’t slow down.”

Traditionally, the first quarter of the year is a tougher time from a margin point of view. That’s when IRE typically works to maximize its yield and produce as much ethanol as possible from the corn it purchases. Quarters three and four, on the other hand, usually offer more attractive margins, meaning the plant runs flat out, focusing less on yield and more on gallons. “This isn’t a dramatic change day to day,” he says, “This is a more gradual change.”

Another thing to think about is accurately calculating yield. “Every facility will have a sweet spot. You need to figure it out and see where it is, if you haven’t,” Jakel suggests. “It takes time. It’s not easy.” That means accurate data plus measurement and calibration devices.  “We spent a lot of money in the last year in terms of improving that measurability at our facility,” he adds. 

Another panel presentation at FEW explored technologies and services offered by companies for maximizing yield. A representative of Fluid-Quip Process Technologies Inc. spoke about a new advance in technology for grinding corn to increase access to starch. Novozymes revealed its new mathematical model for calculating the correct enzyme dosage using plant-specific data. Verenium Corp. outlined the specific benefits four ethanol plants have garnered in using its trademarked alpha-amylase enzyme Fuelzyme.

—Holly Jessen

 

Additional Stories:

The Quest for Maximum Yield: Wet Mill to Dry Mill
The Quest for Maximum Yield: What’s Math Got To Do With It?
The Quest for Maximum Yield: Factoring Out pH
The Quest for Maximum Yield: More Yield Strategies