site selection


Site criteria should be identified and ranked in terms of importance. These criteria provide guidance in the selection of a specific plant site and are helpful when evaluating competing locations. Feedstock and energy costs are typically among the highest input costs but other factors are important in determining production cost estimates, profitability and competitiveness of the plant. Proper sitting of an ethanol plant, including the optimum location of the plant on the site itself, is among the most important aspects of project development. This process should be based on a broad range of parameters designed to optimize the economic viability of the plant and the opportunity for successful, sustained operation of the facility. The following criterion should be considered general site location factors. Process technology, feedstock options and other factors that may represent unique location factors or opportunities should also be considered when present.




Grain is the primary feedstock used in ethanol production in the United States. Other feedstocks will vary by region. Any type of grain containing starch can be used to produce ethanol. Biomass materials vary considerably in potential ethanol yield and should be carefully evaluated.


Corn is the predominant grain processed in U.S. ethanol plants. In some areas of the country other grains including wheat, barley and grain sorghum are used as feedstocks for ethanol. Some process technologies allow multiple grain feedstocks to be used in the same plant. Grain fractions, out of condition grain and off-spec grain can also be used for ethanol production in some cases. However, most process technologies are designed to use a single type of grain that meets specific grading parameters.


Careful attention should be given to the cost and availability of the primary feedstock. In many grain ethanol plants, the feedstock cost can account for 50-70 percent of the ethanol input cost depending on the price range. Feedstock price volatility should be examined and strategies should be employed for managing this cost.


In some instances, a plant may be sited to take advantage of other materials that can be used as feedstocks. Starch or sugar containing materials such as food processing waste have been used for ethanol production. The production of ethanol has historically been limited to using sources of soluble sugar or starch. However, new technologies are being developed to allow production from cellulosic biomass. Biomass materials demonstrating potential as ethanol feedstocks include wood, waste, paper, leafy crop materials, rice or wheat straw and other renewable matter. Several process technologies are currently available for conversion of biomass materials into ethanol. Extensive information about cellulose feedstocks, process technology and economics of ethanol production from cellulosic materials, and biofuels from other renewable resources will be evaluated and their price history will be factored in.


Energy Requirements


The energy requirements for ethanol production have improved markedly during the past decade due to a variety of technology and plant design improvements. The energy needed to produce a gallon of ethanol has decreased nearly 50 percent over the past fifteen years and that trend is likely to continue as process technology improves. In modern grain ethanol plants, the critical energy cost is the price of natural gas. It is used in the ethanol production process and in drying the related grain co-products. Due to the significant cost of drying wet distillers grains, some plants are designed to minimize this option provided they are located in an area where this product can be marketed in wet form. A strategy to manage energy cost risks should be considered while evaluating energy options for the plant.


Natural gas may not be immediately available as a process fuel at each prospective plant site. However, the process energy cost must be carefully evaluated since it will likely represent the second largest input cost in an ethanol plant. The historic price of electricity has not varied in most states like the price of natural gas. The operating costs for electricity in a medium size grain ethanol plant may be nearly $2 million annually but this cost can be managed via contract options. Increased demand for coal may also impact the long term price of energy at facilities that opt for coal as a boiler fuel.


Energy expenses are one of the key variables in site selection that can affect profitability. In some instances, ethanol plants are able to lower energy expenses by locating near existing industrial or power generating facilities that produce excess steam. Co-location of the proposed ethanol plant with such a facility should be explored if practical. Other types of co-generated energy are also emerging in some areas of the country. Power co-generation units and integrated methane production from ethanol plants co-located with livestock or dairy production are examples.




The cost of transportation is important to plant input costs and marketing costs. With regard to marketing costs, an initial market assessment conducted during a pre-feasibility or feasibility study phase should identify primary markets for the plant. Depending on proximity of the plant to population centers, marketing costs may be based on a variety of transportation modes. Ethanol has historically been shipped to markets via truck, rail and barge. The location of the plant should take into consideration the modes of transportation by which the bulk of finished products will move to market. Rail access is often viewed as an essential requirement for large scale ethanol plants.


The cost of transportation varies considerably depending on mode and shipment volume. The marketing assessment should help identify primary markets where netback to the plant is greatest, based on transportation cost and value of products in target markets. Access to reliable, cost competitive transportation is an important site factor. Project developers evaluate the modes of transportation necessary to supply materials to the plant and determine the availability and cost of these modes at prospective sites. Ethanol marketing companies can assist with this analysis and with identification of target markets.


Transportation related factors for consideration should include:


Water Requirements


Water quality, quantity and infrastructure for handling water treatment are important factors in site selection. The water requirements factor into capital cost of the plant, operating costs and permit issues that will become important when the plant is constructed. During the past decade, new process technology has reduced the volume of process water required in ethanol plants and has minimized the water discharge volume. An understanding of specific water use and discharge requirements is useful during the site selection process.


Community Considerations


The project development team may include representatives of the community near which the ethanol plant site is located. In this case, the representatives may already be interacting with community officials. Interaction with community officials and representatives can play an important role in determining the extent to which the community will support the project. Project support may be in the form of tax incentives, site considerations, zoning changes or a variety of other concessions that vary in value.


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