On Tap: Retailers Preparing for Year-Round E15 Have Options for Pumps, Financing and Marketing.

by Matt Thompson (Ethanol Producer Magazine) ...(W)ith the U.S. Environmental Protection Agency expected to extend the Reid vapor pressure (RVP) waiver to E15, hopefully before next summer’s driving season. Retailers will have to decide not only if they will offer the blend, but how they’ll dispense it.

For those who have already added the blend to their product mix, the most widely chosen option has been blender pumps that combine E85 with E10 to produce blends like E15. But Mike O’Brien, vice president of market development for Growth Energy, says there are other choices. “As of late, Kwik Trip, Casey’s and Cumberland Farms, for example, will be selling a preblended E15, where they put E15 in an existing tank and dispense it through existing dispensers. So, we’re starting to see that part of the market as well.”

“We’re seeing more and more fuel suppliers who are selling a preblended E15.”

That isn’t to say Casey’s is unhappy with the blender pumps all of its E15 sites currently use. Doddridge says the blenders have been effective. “Maybe E15 was hot today, but we do want that flexibility,” he says, adding that the pumps can blend up to E30, should more mid-level blends take off within the industry.

Equipped for success
Danny Seals, product marketing manager for retail dispensers at Gilbarco Veeder-Root, a fuel dispenser supplier, says the company offers a number of pump options for E15. He also says the demand for blenders has been steady in recent years.

Scott Negley, director of products for Wayne Fueling Systems, says other issues are top of mind for many retailers. “The focus for retailers right now is probably more around making sure they get ready for the upcoming payment security—EMV chip and PIN mandates—that will be taking effect, and making sure that they comply.”

While payment compliance is the focus now, Negley says it presents an opportunity for retailers to expand their offerings. “I’ve told my friends in the ethanol segment, ‘This is an opportunity if you’re a retailer. Whether it’s in your short- or long-term plans to upgrade to a higher ethanol classification from a fuel offering standpoint, now’s the time to do that because you can cover both elements in one changeover. You can get compliant on payment while making sure you meet your future fuel needs.’”

Seals says the equipment’s Underwriter Laboratories listing is important in retailers’ pump decisions. “The three levels of ethanol UL has developed standards to test to are E10, E25 and up to E85,” he says.

And retailers who want to offer E15 next summer driving season shouldn’t delay making those decisions. “From Gilbarco’s perspective, the dispensers capable of delivering ethanol content greater than 10 percent are within our standard lead time, so retailers should keep that in mind,” Seals says. “I think site designs and approvals should be considered soon due to the permitting process for a site.”

Ron Lamberty, executive vice president of the American Coalition for Ethanol, says misinformation swirls around what it costs retailers to add E15 to their stores. “It’s not costly to do E15. It does cost a little bit more if you want to do flex fuel, but it’s an opportunity and the guys who see it first are going to do well.” He adds that, for some retailers, the cost of adding E15 is little more than changing decals.

Seals says retailers say the cost is high, but the return is, too. “For our customers, the cost of adding the equipment to offer greater than 10 percent ethanol is pretty well-known. The retailers doing it have been able to capture the value of the ethanol offerings and see a reasonable payback.”

“Once consumers try E15, they come back and buy more E15 and because of that, the amount of usage of E15 is growing exponentially.” The number of consumer E15 transactions has topped 1 million, he adds.

In Michigan, ethanol producer Carbon Green Bioenergy LLC partners with retailers on branding and marketing ethanol. Carbon Green has its own ethanol brand—Yellow Hose—which offers E85 directly to retailers, but it also uses the Unleaded88 branding, developed through Prime the Pump, for E15. Carbon Green has its own on-site fueling station that offers several blends, including E15. When the fueling station was initially installed, Carbon Green told Ethanol Producer Magazine the intent was to increase interest among retailers in installing blender pumps.

Carbon Green’s efforts have continued to generate some interest in higher ethanol blends, but Gabe Corey, commodities and risk manager for Carbon Green, says most of the retailers it works with are backed by petroleum companies. “The obstacle again has been with the branded gasoline stations,” he says. “We’ve seen more willingness to offer E85 than to put in blender pumps to offer different level blends, just because of the branding requirements.”

While the branded retailers may not be progressive E15 adopters, Doddridge says change within the industry often comes from the smaller retailers. READ MORE