Corn Plus garners $12 million tax credit for its fluidized bed

By Holly Jessen | January 27, 2011

The blenders credit wasn’t the only tax credit benefiting ethanol producers that was extended through 2011. Thanks to the Alternative Fuel Mixture Tax Credit, Corn Plus LLLP in Winnebago, Minn., will get a check for about $1 million a month, for a total of $12 million by the end of the year. 

Corn Plus is eligible due to its first-of-its kind fluidized bed, which was installed in 2004. It burns a combination of syrup and diesel to generate enough steam to cut its natural gas use in half, said Mark Drake, who has served as general manager of the plant since August. 

Other industries that have taken advantage of the tax credit include the seafood and rendering industries. So far, Corn Plus is the only ethanol plant benefiting from the tax credit, but that could change should the credit get extended and other ethanol plants started burning a product produced at the plant, such as distillers grains, as a fuel. 

The company will distribute a portion of the money to its 700 shareholders and reinvest the rest into the facility. Corn Plus, which was built in 1993, has a capacity of 49 MMgy but is currently only producing 42 MMgy. “We have an older plant, it needs some updating,” Drake said, adding that upcoming projects on the list include items to increase plant efficiency. 

Corn Plus received the tax credit in 2008 and 2009 but it was suspended in 2010. The tax package extended in Congress just before the end of 2010 restored it retroactively for 2010 and through the end of 2011, Drake said. It’s unknown if the tax credit will be extended for 2012. 

The fluidized bed isn’t the only alternative energy source at Corn Plus. In 2007 the company installed two wind turbines that produce about 30 percent of the plant’s electrical needs. A big part of the potential payback for both projects comes in terms of reducing the plant’s carbon footprint and being environmentally friendly.

When asked if the alternative energy project had turned out to be a good decision for Corn Plus, Drake said the economics have changed a lot over the years. When the company decided to install the fluidized bed natural gas was $8 to $9 per dekatherm compared to a price of about $4.50 a dekatherm today. Because the plant is burning its syrup Corn Plus produces less distillers grains than other plants, a missed revenue opportunity. The fact that the government provides support is helpful. “Without the alternative fuel mixture tax credit, it would be tough,” he says. “With all the economics we have today, including the tax credit, the fluidized bed was a good decision.”