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By Mehgan Belanger
ALEXANDRIA, Va. -- The first of three NACS webinars to educate on the issues affecting the industry was held yesterday, and centered on the National Renewable Energy Laboratory (NREL) and its efforts to support retailers in bringing E85 to their areas.
Caley Johnson from the NREL's transportation technology and systems division was on hand to discuss the organization and its efforts, including the Clean Cities Program, which promotes alternative fuels at the local level through 85 coalitions in 45 states.
Clean Cities offers a number of resources for retailers, including coordinators, who are central people that can bring together stakeholders -- such as car dealerships, fleets and gas retailers -- that are looking to bring E85 to an area, Johnson said. The partnerships can "take a lot of risk out of offering E85," he noted.
"They can help secure funding. There's a lot of funding out there for a gas retailer who wants to sell E85," he said, adding that the coordinators can be a good source because they know how to navigate the issue and make it as easy as possible to secure funding.
Another resource for retailers is the Department of Energy (DOE) hotline. Between 9 a.m. and 6 p.m. EST, anyone can call the hotline -- which uses resources such as NREL, the DOE or other outside sources -- to ask questions about alternative fuels.
In addition, the Alternative Fuels & Advanced Vehicles Data Center (AFDC) Web site offers a multitude of information for retailers looking to get into E85 or other alternative fuels, including a searchable listing of incentives and laws on the state and federal level.
"There are a lot of incentives, such as tax breaks, low interest loans and grants, that are offered to alternative fuel users and retailers. It's good to find out what kind of incentives you can cash in on, or what laws could be inhibiting you from offering E85," he said.
Another feature on the Web site is an alternative fuel station locator. By entering an address, consumers and retailers can find locations where alternative fuels are already being sold, and get directions and details on the station, including if it is public or private.
"It's good to find where the other stations are that offer E85 -- as competitors, if they are close, and colleagues, if they are far," Johnson said, noting that a close proximity of colleagues that offer E85 is a good way to get consumers comfortable with buying the fuel.
Another project that NREL discussed was its E85 Retail Business Case: When and Why to Sell E85. The project discusses the difficult market that gas retailers are operating in, including reduced gas margins, increased competitiveness and the need for differentiation.
The project found that E85 can augment existing tactics to improve competitiveness. "Retailers have been innovative and been competitive," he said. "So you've come up with strategies that are working, and E85 can augment that. E85 can bring people in for higher margin goods."
E85 also can attract a loyal niche market, such as a local corporation that wants to look green, so it employs an E85 fleet, or a state municipal or federal fleet. "If you can get these fleets going to you, it's quite a gold mine," he said.
Johnson also explained that E85 can be added to a station relatively inexpensively by using an existing midgrade gasoline tank as storage. Then, by using a blender pump for midgrade gas, the location can offer the same three grades in addition to E85.
He also offered a checklist for E85 profitability at a station:
-- Having robust competition equals a need to differentiate;
-- The ability to price E85 well below the price of gas, with the key being low wholesale costs;
-- A large potential throughput of E85;
-- Having an existing tank that can be converted to E85, and replacing the pumps with blenders for midgrade fuels;
-- Getting a low maintenance and operational cost from purchasing equipment from a quality vendor with a warranty; and
-- Having a state or local cost-share for installing E85, such as a fleet.
Other findings Johnson presented based on a 2005 study in Minnesota -- where a quarter of the nation's E85 pumps are located -- were:
-- Stations in urban areas had more E85 sales;
-- The more affluent and higher-educated the population, the more E85 purchased;
-- Consumers with a longer commute distance were more likely to buy E85;
-- Each additional flex fuel vehicle in a zip code led to an additional 4-gallon per month sales increase for stations; and
-- The largest indicator of success for E85 retailers was a road sign on a nearby highway or road that touted E85 availability.