NREL report shows E85 gives gas stations a competitive edge
July 18, 2008
A study released by the U.S. Department of Energy's (DOE) National Renewable Energy Laboratory (NREL) can help gas station owners and Clean Cities stakeholders determine whether adding E85 to their product mix can increase profitability.
Competition in the fueling station business continues to intensify, particularly as grocery stores and discount clubs offer gas at lower prices. NREL’s analysis shows that selling E85, a blend of 85 percent ethanol and 15 percent gasoline that can be used in flexible fuel vehicles (FFVs) could set a station apart from its competitors by being environmentally friendly. More importantly, selling E85 also could attract repeat business from local vehicle fleets and area FFV owners.
Several factors influence the profitability of E85. They are discussed in NREL’s new report “E85 Retail Business Case: When and Why to Sell E85.” The complete business case report and a four page summary fact sheet are available at www.eere.energy.gov/afdc/fuels/ethanol_business.html.
According to the report, converting mid-grade gasoline tanks to dispense E85 is the easiest way to meet investment goals, but the amount of fuel sold is the most important factor in making E85 profitable. A good benchmark is about 74,000 gallons a year, the business case says.
The report also provides guidance to help station owners assess the profit margin they might expect to earn by selling E85. It provides a checklist they can use to determine whether E85 will be a profitable investment. The E85 business case report was produced as a tool for Clean Cities stakeholders under DOE’s Office of Energy Efficiency and Renewable Energy Vehicle Technologies Program. Clean Cities (www.eere.energy.gov/cleancities) is a voluntary program composed of 90 volunteer coalitions, which develop public/private partnerships to promote alternative fuels, advanced vehicles, and other petroleum-reduction measures and technologies.
NREL is DOE’s primary national laboratory for renewable energy and energy efficiency research and development. NREL is operated for DOE by Midwest Research Institute and Battelle.