Ethanol Plant Brings 85 Cent E85 To Minnesota

Ethanol Producer Magazine

Jan 12, 2015

By Holly Jessen

A Minnesota ethanol producer is having success with its efforts to provide E85 directly to gas retailers, bringing lower-priced E85 to Minnesota drivers. In fact, on Jan. 12, the Cenex gas station in Alexandria, Minnesota, was selling E85 for only 85 cents a gallon, exactly $1 cheaper than E10, as part of an E85 price agreement with DENCO II, an ethanol plant in Morris, Minnesota.

The 24 MMgy plant first installed a blending skid in 2011. “It’s definitely the right thing to do for the industry and for the consumers in the local market,” said Carson Berger, commodities risk manager of the ethanol plant.” We have the fuel right here.” 

The company grew its direct sales program from a very small percent of production to about 10 percent. And it's still growing. “Over past year we have more than doubled our E85 sales and we have plans to double it again,” he said, adding that it has provided the company with added marketing flexibility.

In all, DENCO II supplies E85 directly to 45 gas stations. The company sends out its prices in a daily email, direct to station owners and sells E85 on a daily or contract basis, he said. Other Minnesota ethanol plants that provide E85 direct to retailers include Chippewa Valley Ethanol Co., Bushmills Ethanol Inc. and a Poet LLC plant.

Thirteen stations are part of DENCO II’s price promotion, which started April 2013 and will continue at least through March, Berger told Ethanol Producer Magazine. Like the Cenex station in Alexandria selling E85 for 85 cents, the gas stations sell DENCO II E85 for $1 less than E10. As of Jan. 9, three gas stations in Morris, where the plant is located, were selling E85 for 95 cents and E10 for $1.95. Other west central Minnesota gas stations that are part of the price promotion include Glenwood, Hancock and Wheaton.

As a blender, DENCO II separates and sells renewable identification numbers (RINs), which allows the company to sell E85 for less to retailers, enabling retailers to sell E85 for less to consumers. According to the Jan. 12 Atlas Markets daily price email, RINs are currently priced between 71 to 75 cents for 2013 and 2014 D6 RINs. Because DENCO collects 100,000 or more RINs in a month, it can more easily wade into the RINs market than a gas retailer could, Berger said, adding that, “it’s difficult to sell RINs in smaller lots.”

The direct sales program isn’t as simple as just installing a blending skid at the plant, notifying area gas stations about E85 prices from the plant and hoping for success, Berger said. The company has put a lot of work in, developing relationships with retailers and getting them on board with E85. Retailers who are used to selling regular gas need education about new fuel blends and help with marketing. DENCO II works with Growth Energy to supply the stations with the information and material they need to market E85 and other ethanol blends properly.

Selling E85 to gas retailers hasn’t only been successful for the ethanol plants. “We’ve seen stations increase their sales volume by 700 percent,” he said, adding that with the current low E85 prices, retailers are seeing ripple effects. “The consumer has more dollars in their pocket and retailers have found that some of the savings on the fuel side will come into the store and be spent on retail goods, like candy bars and pop,” he said.

Read the original story here : Ethanol Plant Brings 85 cent E85 To Minnesota