The assessment of corn-derived ethanol was the most extensive of the reports (60% of the total printed pages in the final collection of papers) and formed a notional blueprint for a facility sited in Illinois with a projected working life of 20 years and operating costs of approximately 950/gallon of hydrous ethanol (table 5.1). The final factory gate selling price was computed to be $1.05/gallon (1978 prices) in the base case of the 50-million-gallon/year capacity including the results of a 15% dis­counted cash flow/interest rate of return analysis; the selling price was a little lower (980/gallon) with twice the annual capacity but considerably higher ($1.55/gallon) at only 10 million gallons/year. The quoted comparative price for refinery gasoline was 400/gallon; after allowing for the lower energy content of ethanol (70% of that of gasoline — chapter 1, section 1.3), the “real” cost of corn-derived ethanol would have been $1.50/gallon for the 50-million-gallon facility, that is, 3.75-fold higher than gasoline at that time.

Various options were explored in the study to define the sensitivity of the required selling price for ethanol:

1. The DOE required the analyses to define a selling price that would cover not only the annual operating expenses but also yield a return on equity, the base case being a 15% discounted cash flow/interest rate of return; increas­ing this factor to 20% resulted in a higher selling price ($1.16/gallon for the base-case scenario).

2. Lengthening the depreciation schedule from 10 to 20 years increased the selling price by 20/gallon.

3. Increasing the working capital to 20% of the total production cost increased the selling price by 30/gallon.

4. A higher investment tax credit (50%) would reduce the selling price by 20/gallon.

5. Financing only 80% of the plant investment could reduce the selling price by 100/gallon.

6. For every 10% rise in the price of corn, the selling price would increase by 80/gallon (after allowing for a triggered rise in the selling price of the solid animal feed coproduct).

7. For every 10% rise in the price of the animal feed coproduct, the selling price would decrease by 40/gallon.

8. Replacing local coal by corn stover as the fuel for steam generation would increase the selling price by 40/gallon — although a lower total investment (by approximately $1 million) would have been an advantage resulting from the removal of the need for flue gas desulfurization.

All of these changes are comparatively minor, and other quantified changes to the over­all process were likely to have been equally small: ammonium sulfate (a coproduct aris­ing from flue gas desulfurization) was only generated in small amounts, approximately 3 tons/day, and no allowance was made for capturing and selling the CO2 generated in the fermentation step. No denaturant was included in the final cost breakdown.

Alternative feedstocks were also explored. Milo (grain sorghum) offered a slight reduction in the selling price of ethanol (down to $1.02/gallon) but was considered a

small-acreage crop at that time. Both wheat and sweet sorghum were likely to increase the final factory gate selling price to $1.31/gallon and $1.40/gallon, respectively. Although wheat and milo grain could be processed in essentially the same equipment used for corn, sweet sorghum required a higher investment in plant facilities.