Fractionation in the Ethanol Industry Pays

Name:
Chad Hart, Faculty, Department of Economics

POW Number and Title:
106 - Crop processing, quality and distribution

Title of Success Story:
Fractionation in the Ethanol Industry Pays

Situation:
The corn-based ethanol industry continues to mature and evolve to capture new revenue streams and to reduce cost outflows. Fractionation of the corn before entering the ethanol conversion process offers opportunities to meet both of these objectives by separating the corn kernel into its various components, processing only the relevant portion of the kernel during the ethanol process while allowing the other components to enter alternative product streams. Beginning in FY2009 and continuing through FY2010, Josh Parcel (an Economics graduate student and I collected information on various fractionation processes and evaluated the possible returns from employing them to analyze the economic feasibility of adding fractionation processes to existing ethanol plants.

Objective:
To increase the efficiency of the biofuel industry through an analysis of the economic feasibility of adding fractionation processes to existing ethanol plants.

Activities/Output:
The fractionation information that was evaluated contributed to 13 extension/outreach presentations, reaching biofuel industry representatives, government officials, and the general public.  A draft white paper outlining the various processes for fractionation offered by private companies has been prepared.  Grant opportunities at the state and federal levels have been explored to continue research on fractionation’s potential to make the ethanol industry more efficient.

Outcome Statement:
Throughout 2009 and 2010, roughly 15 cents of additional revenue per bushel of corn could be captured by utilizing fractionation.  However, the costs of adding fractionation technology has been seen as prohibitive as those costs are between $10-40 million per ethanol plant.  Analysis shows that fractionation can bring a return upon investment after 5 years for the lower cost technologies.  Work on fractionation technology increases awareness and knowledge regarding the economic tradeoffs with corn fractionation to ethanol plant managers and the agricultural lenders that work with them.  It has the potential to impact future investment decisions at new and existing ethanol facilities by illustrating the potential for reduced processing and energy costs and the increased revenues that can be obtained when fractionation technologies are added to existing ethanol plants.

106 - Crop processing, quality and distribution

Page last updated: January 22, 2011
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