Subcontract Report

NREL/SR-6A1-45152

February 2009

Corn Ethanol Industry Process 

Data 

September 27, 2007 – January 27, 2008

BBI International, Project Development Division 

Denver, Colorado
National Renewable Energy Laboratory

1617 Cole Boulevard, Golden, Colorado 80401-3393

303-275-3000 • www.nrel.gov

NREL is a national laboratory of the U.S. Department of Energy

Office of Energy Efficiency and Renewable Energy

Operated by the Alliance for Sustainable Energy, LLC

Contract No. DE-AC36-08-GO28308

Subcontract Report

NREL/SR-6A1-45152

February 2009

Corn Ethanol Industry Process 

Data 

September 27, 2007 – January 27, 2008

BBI International, Project Development Division 

Denver, Colorado

NREL Technical Monitor: Debra Sandor

Prepared under Subcontract No. AEV-7-7638-01
 

 

 

 

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CORN ETHANOL INDUSTRY PROCESS DATA FINAL REPORT 

Table of Contents 

I. EXECUTIVE SUMMARY ............................................................................................. 1
 

II. PROJECT OVERVIEW ............................................................................................... 2
 

III. EXISTING CORN ETHANOL DRY GRIND STATE-OF-THE-INDUSTRY ................ 4
 

IV. FUTURE OF THE DRY GRIND CORN ETHANOL INDUSTRY ................................ 9
 


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CORN ETHANOL INDUSTRY PROCESS DATA FINAL REPORT 

List of Tables 

Table 1 – Typical Capital Cost Breakdown.................................................................................... 6
 

Table 2 – Fixed Costs ..................................................................................................................... 7
 

Table 3 – Typical Depreciation Schedule....................................................................................... 7
 

Table 4 – Operating Costs in $ per Gallon ..................................................................................... 8
 

Table 5 – Technology Overview................................................................................................... 11
 

List of Figures 

Figure 1 – US Ethanol Industry Capacity and Number of Plants................................................... 4
 

Figure 2 – Capital Cost Evolution .................................................................................................. 5
 


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CORN ETHANOL INDUSTRY PROCESS DATA FINAL REPORT 

I. EXECUTIVE SUMMARY 

Capital costs for corn dry grinds have increased significantly with the recent building boom for 

new capacity, but are expected to fall in the coming years due to an anticipated drop in demand. 

Once the plants currently under construction are completed, ethanol production capacity from 

corn will approach 15 billion gallons, which is widely regarded as the maximum feasible. 

Over two thirds of the existing capacity has been built since 2001. New state of the art plants 

have incremental advantages in ethanol yields and energy consumption. We expect future 

construction to be mostly driven by updates and expansions to existing plants, due to the 

difficulty of getting green field projects financed. 

Technological advances for the future will most likely see the adoption of fractionation 

technology by more plants, which will allow the production of higher value co-products than 

DDGS. In addition, new corn strains with higher starch contents will become available. Another 

area of technological innovation will focus on reducing the use of fossil energy and the emission 

of greenhouse gases. 

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CORN ETHANOL INDUSTRY PROCESS DATA FINAL REPORT 

II. PROJECT OVERVIEW 

Purpose of Study 

The objective of this effort is to supply timely data on the historical make-up of the corn ethanol 

industry, and the current best estimate of what the industry is installing now. Any projections of 

where the industry might be able to go will also be useful as the model will carry out the 

expansion of corn ethanol for the next 10-20 years. 

Scope of Work 

The Subcontractor has performed the following tasks: 

Task 1: Existing Corn Ethanol Dry Grind State-of-the-Industry 

The Subcontractor has utilized experience, contacts and involvement in the current dry grind 

corn ethanol industry and has established our best industry average estimate of each of the 

following parameters for new state-of-the-art mills being installed today: 

1) Capital Cost ($/gallon of annual capacity installed)
 

2) Fixed and Variable Operating Cost (less feedstock and by-products, e.g.,
 

DDGS)
 

3) Design, Construction and Start-up Time (Months)
 

4) Capital Recovery Factor (typical)
 

5) Plant Life (yr)
 

6) EtOH Yield (gal/bu)
 

7) DDGS Yield (lb/bu)
 

The Subcontractor has used the following information to characterize the existing installed base 

of corn ethanol production: 

1) Fixed and Variable Operating Cost (less feedstock and by-products, e.g.,
 

DDGS)
 

2) EtOH Yield (gal/bu)
 

3) DDGS Yield (lb/bu)
 

Task 2: Future of the Dry Grind Corn Ethanol Industry 

The Subcontractor has utilized knowledge of historic trends, published ideas for new technology 

being developed and implemented, and theoretical limits as well as own impressions of where 

the costs will go, and forecasted how the following might potentially change over the next 10 to 

20 years, 

1) Capital Cost ($/gallon of annual capacity installed)
 

2) Fixed and Variable Operating Cost (less feedstock and by-products, e.g.,
 

DDGS)
 

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CORN ETHANOL INDUSTRY PROCESS DATA FINAL REPORT 

3) EtOH Yield (gal/bu)
 

4) DDGS Yield (lb/bu)
 

DELIVERABLES 

Deliverable 1: Summary Report on Current State-of-the-Industry. 

Due three months after subcontract execution. 

Deliverable 2: Final Report on expected future trends of the corn ethanol dry grind industry. 

Due upon subcontract completion. 

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CORN ETHANOL INDUSTRY PROCESS DATA FINAL REPORT 

III. EXISTING CORN ETHANOL DRY GRIND STATE-OF-THE-INDUSTRY 

The dry grind industry in the US has undergone rapid change over the last few years, both in 

terms of size and costs. This section provides information on the existing installed base for corn 

ethanol production as well as current new state of the art new installations. Figure 1 below 

displays the build-out of the US ethanol industry since 1999 in terms of overall capacity and 

number of plants. Over two thirds of today’s capacity has been installed since 2001. To the best 

of our knowledge, the last financial close for a corn to ethanol dry grind plants was in October 

2007. 

Figure 1 – US Ethanol Industry Capacity and Number of Plants 

US Ethanol Industry 

-

1,000 

2,000 

3,000 

4,000 

5,000 

6,000 

7,000 

8,000 

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 

mmgy 

0 

20 

40 

60 

80 

100 

120 

140 

160 

Number of Plants 

Ethanol Production Capacity Ethanol Plants 

Source: BBI Analysis using RFA Data 

Capital Costs: 

Figure 2 below outlines the development of the capital costs for ethanol plants over time. The big 

increase in demand for new ethanol production capacity in 2006 triggered a jump in capital costs. 

The run-up in costs is caused, among others, by higher costs for stainless steel and labor, 

shortages of critical pieces of equipment and increased profits along the value chain. Costs for 

plants starting up in 2008 were lower on average than 2007 due to the prevalence of lower cost 

US Bio plants (Ord, Dyersville, Janesville, Hankinson) with pre-existing contracts that reduced 

the average cost. Capital costs are defined here as all-in costs, including items such as working 

capital, inventories, interest, and risk management funds. 

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CORN ETHANOL INDUSTRY PROCESS DATA FINAL REPORT 

Figure 2 – Capital Cost Evolution 

Capital Cost over Time 

($/gal) 

$2.50 

$2.00 

$1.50 

$1.00 

$0.50 

$0.00 

2001 2002 2003 2004 2005 2006 2007 2008 2009
 

Source: BBI Estimates
 

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CORN ETHANOL INDUSTRY PROCESS DATA FINAL REPORT 

Table 1 below shows the typical breakdown for the capital costs for a 100 mmgy denatured 

ethanol dry grind that starts operation in 2009. 

Table 1 – Typical Capital Cost Breakdown 

Nameplate Ethanol Production (gal/year) 110,000,000 

Anhydrous Ethanol Production (gal/year) 104,761,905 

Project Engineering & Construction Costs 

EPC Contract $156,500,000 

Site Development including Water, NG, Electr $10,295,000 

Rail $4,518,000 

Grain Receiving and Storage $10,072,000 

Total Engineering and Construction Cost $190,070,000 

Owners Costs 

Inventory - Feedstock $4,479,000 

Inventory - Chemicals/Yeast/Denaturant $1,000,000 

Inventory - Spare Parts $100,000 

Startup Costs $1,330,000 

Land $792,000 

Other Owner's Costs $0 

Administration Building & Office Equipment $650,000 

Insurance & Performance Bond $525,000 

Rolling Stock and Shop Equipment $675,000 

Organizational Costs and Permits $935,000 

Capitalized Interest & Financing Costs $11,302,000 

Working Capital/Risk Management $14,589,947 

Total Owners Costs $36,377,947 

Total Project Capital Cost $226,447,947 

Source: BBI Estimates 

Yields: 

BBI estimates the ethanol yield of the installed plants to be 2.67 gallons of undenatured ethanol 

per bushel of corn. Assuming 5% denaturant, this equates to 2.80 gallons of denatured ethanol 

per bushel of corn. The DDGS yield is around 18 pounds per bushel at 10% moisture. 

For state of the art new installations, the ethanol yield can go up to 2.7 gallons of undenatured 

ethanol per bushel of corn, with the DDGS yield decreasing to 17 pounds per bushel, depending 

on the starch content of the corn. 

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CORN ETHANOL INDUSTRY PROCESS DATA FINAL REPORT 

Fixed Costs: 

BBI does not see significant differences in the fixed costs between the installed base and new 

installations. However, we assume that the majority of the installed plants that started up in or 

before 2003 are now debt-free. Table 2 below indicates the typical fixed costs for a 110 mmgy 

corn dry grind operating at 119 mmgy. 

Table 2 – Fixed Costs 

Administrative & Operating Expenses $/gal 

Maintenance Materials & Services $0.031 

Repairs & Maintenance, Wages & Benefits $0.006 

Property Taxes & Insurance $0.026 

Admin. Salaries, Wages & Benefits $0.006 

Office/Lab Supplies & Miscellaneous $0.004 

Total Administrative & Operating Expenses $0.072 

Interest - Senior Debt $0.097 

Depreciation & Amortization $0.114 

Source: BBI Estimates 

Table 3 below shows the depreciation schedules usually applied to ethanol plants. 

Table 3 – Typical Depreciation Schedule 

Depreciation 2nd Year 

Method (note1) Operations 

Major process equipment 15 year SLN 8,236,285 

Minor process equipment 15 year SLN 1,816,828 

Process buildings 30 year DDB 2,083,154 

Vehicles 5 year DDB 150,750 

Office building 30 year DDB 25,630 

Office equipment 5 year DDB 55,833 

Start-up cost 20 year DDB 125,242 

Annual capital expenditures 10 year SLN 0 

Total Depreciation 12,493,721 

Note 1: Depreciation Method = DDB (Double Declining Balance) or SLN (Straight Line) 

Source: BBI Estimates 

Operating Cost 

The existing plants will typically encounter operating costs as detailed in Table 4. New state of 

the art facilities will have slightly lower operating costs due to the more efficient use of natural 

gas – reducing the costs to 23.7¢ per gallon at an assumed natural gas cost of $8/mmBTU 

(29,000 BTU per gallon of ethanol). This number assumes that 100% of the DDGS will be dried. 

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CORN ETHANOL INDUSTRY PROCESS DATA FINAL REPORT 

Table 4 – Operating Costs in $ per Gallon 

Chemicals, Enzymes & Yeast $0.067 

Natural Gas $0.261 

Electricity $0.029 

Denaturants $0.102 

Makeup Water $0.002 

Effluent Treatment & Disposal $0.002 

Production Labor & Benefits $0.012 

Total Production Costs (excl. corn) $0.475 

Source: BBI Estimates
 

Design, Construction and Start-up Time 

The time from financial close to start-up of a new plant is between 14 and 20 months. Start-up 

usually takes 30-60 days, with the end of the start-up period being marked by the completion of 

the performance test, which indicates that the plant operates at least at nameplate capacity within 

the guaranteed performance parameters. 

Financing 

Historically, most ethanol plants were able to limit the amount of equity required to around 40%. 

However, with capital costs increasing, lenders now require more equity. Most lenders cap the 

amount of debt at $0.90 per gallon of capacity, or $90 million for a 100 mmgy plant. At a $1.77 

per gallon average all in cost for 2007, 50% would need to be raised as equity. The most recently 

financed ethanol plants raised around 50% of the total project costs in equity, and financed the 

remaining 50% at LIBOR (London Interbank Offered Rates, currently around 4.4%) plus 4% 

with a 10 year loan. 

Plant Life 

The majority of the existing ethanol plants have been built since 2001, so there is only limited 

information available on the actual plant life of this latest generation of ethanol plants. Most 

major pieces of equipment are designed to last about 20 years, actual performance will depend 

on maintenance and other factors. 

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CORN ETHANOL INDUSTRY PROCESS DATA FINAL REPORT 

IV. FUTURE OF THE DRY GRIND CORN ETHANOL INDUSTRY 

BBI expects very few new ethanol plants to be built once the ones under construction are 

completed, due to the amount of ethanol produced (14 bn gallons) and the amount of corn used. 

Instead, we believe that the future of the ethanol dry grind industry will be driven by 

modifications to existing plants. 

The most important trend that will continue in the future is the increased use of fractionation 

technology in dry grind facilities. Fractionation is the process of separating the components 

found in corn to produce different co-products, currently employed in five ethanol dry grinds. 

Traditionally, the starch is used to produce ethanol, and the remainder of the corn kernel ends up 

in the DDGS. Fractionation separates the corn fiber (bran) and germ (protein and oil) from the 

starch. Fractionation technology will reduce the amount of starch that is fermented by 3-5% due 

to separation losses. Fractionation can be done before fermentation, which increases the 

throughput of the fermenters, as a purer starch stream will be processed compared to a typical 

dry grind without fractionation. In addition, this front-end fractionation could easily yield higher 

value, food-grade products. The alternative is back-end fractionation, where the DDGS is further 

processed to remove components such as the oil that may have higher value applications than 

DDGS’ typical use as animal feed, such as the production of biodiesel. 

The separation of the fiber offers the opportunity to produce a limited amount of cellulosic 

ethanol from the corn fiber. Actual production will depend on the cost of and incentives for 

cellulosic ethanol production and the availability of alternative markets for the fiber such as 

dietary fiber. If cellulosic ethanol is produced, the yield per bushel of corn could increase by up 

to 10%. 

In parallel, we expect advances in corn strain development to yield corn strains with higher 

starch contents. Currently, corn contains about 68% starch, and we expect that to reach 74% over 

the next 10 to 20 years. As a result, ethanol yields may reach over 3 gallons per bushel at 74% 

starch content (90% of theoretical limit) without the use of fractionation. Table 5 below 

compares the impact of fractionation and new corn strains on ethanol and co-product outputs. 

We do not expect the use of biomass to increase significantly based on financial considerations. 

The capital investment required for the installation of a biomass burner and the logistics involved 

in collecting and transporting the biomass will rarely be more advantageous than the use of 

natural gas. However, future legislation providing incentives for reduction of greenhouse gas 

emissions and carbon footprints may make these investments more attractive. 

Other technologies that reduce natural gas consumption are closer to commercialization and will 

continue to receive attention from the existing ethanol plants. For example, the cold cook process 

(raw starch hydrolysis) could reduce natural gas use by as much as 10-15%. 

Yeast strains that are able to withstand higher solids concentrations are required for “high gravity 

fermentation”, which can increase the concentration of ethanol to up to 25%, reducing energy 

use in the distillation process. 

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CORN ETHANOL INDUSTRY PROCESS DATA FINAL REPORT 

The biggest operating cost for dry grinds is the cost of corn (excluded from this analysis), 

followed by natural gas. Currently, natural gas futures trade on the NYMEX between $7.75 and 

$9.00 per mmBTU through 2010. We expect labor and electricity cost increase at the rate of 

inflationl, and enzyme costs to drop to 5¢ per gallon. We expect capital cost to return to around 

$1.50 per gallon in 2007 dollars, due to a drop in demand. 

10 
CORN ETHANOL INDUSTRY PROCESS DATA FINAL REPORT 

Table 5 – Technology Overview 

Feedstock Input - 56 lbs of Corn @ 13% Moisture Technology Outputs (

Starch Oil Protein Fiber EtOH DDGS CO2 

Current Corn Composition - In Percent 68% 5% 7% 7% Current Corn Composition - In Pounds 38.1 2.8 3.9 3.9 Current Standard 18.47 19.06 18.47 Fractionation 17.71 9.95 17.71 

New Corn Composition - In Percent 74% 3% 5% 5% New Corn Composition - In Pounds 41.4 1.7 2.8 2.8 Current Standard with New Corn 20.10 15.80 20.10 Fractionation and New Corn Strains 19.27 10.18 19.27 

Source: BBI Estimates and Analysis
 

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February 2009

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Subcontract Report

3. DATES COVERED (From - To)

9/27/2007 - 1/27/2008

4. TITLE AND SUBTITLE

Corn Ethanol Industry Process Data: 

September 27, 2007 – January 27, 2008

5a. CONTRACT NUMBER

DE-AC36-08-GO28308

5b. GRANT NUMBER

5c. PROGRAM ELEMENT NUMBER

6. AUTHOR(S)

BBI International -- Project Development Division

5d. PROJECT NUMBER

NREL/SR-6A1-45152

5e. TASK NUMBER

BZ071003

5f. WORK UNIT NUMBER

7. PERFORMING ORGANIZATION NAME(S) AND ADDRESS(ES)

BBI International -- Project Development Division

300 Union Blvd., Suite 325

Denver, CO 80228

8. PERFORMING ORGANIZATION

REPORT NUMBER

AEV-7-7638-01

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National Renewable Energy Laboratory

1617 Cole Blvd.

Golden, CO 80401-3393

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NREL

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NREL/SR-6A1-45152

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13. SUPPLEMENTARY NOTES

NREL Technical Monitor: Debra Sandor

14. ABSTRACT (Maximum 200 Words)

This subcontract report supplies timely data on the historical make-up of the corn ethanol industry and a current 

estimate of where the industry stands. The subcontractor used experience, contacts, and involvement in the dry grind 

corn ethanol industry and established an estimate of industry averages for new state-of-the-art mills. The 

subcontractor has also reported on the expected future trends of the corn ethanol dry grind industry. Capital costs for 

corn dry grinds have increased significantly with the recent building boom for new capacity but are expected to fall in 

the coming years due to an anticipated drop in demand. Once the plants currently under construction are completed, 

ethanol production capacity from corn will approach 15 billion gallons, which is widely regarded as the maximum 

feasible. Technological advances for the future will most likely see the adoption of fractionation technology by more 

plants, which will allow the production of higher value co-products than DDGS.

15. SUBJECT TERMS

corn; ethanol; mills; dry grind; capital cost; 

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