here is a relatively informative post about ethanol I found on another forum:
Ethanol can make slightly more power than gasoline even though it has a lower BTU/lb.
Ethanol 12,000 btu/lb
Gasoline 19,000 btu/lb
Ethanol Stoich ~9:1 In Lamba this equals 1
Gasoline Stoich ~14.7:1 In Lamba this equals 1
Say best power is at .89 lambda which is around 13.0:1 A/F ration in gasoline terms and 8:1 A/F in ethanol terms.
So even though ethanol has a lower btu per pound, we are using more of it per pound of air.
13(AF Ratio) / 8(AF ratio) = 1.625 ratio of ethanol to gasoline at the same lambda
12,000(ethanol BTU) X 1.625 = 19500 BTUs
( (19500 X 100) / 19000) - 100 = 2.63% potential power gain
If you do the math on methanol with it's 6.4:1 stoichiometric and ~9500-9800 btu/lb you get a gain or around 14-17%, which is a good reason to use methanol over ethanol on a race only car.
Ethanol and methanol also have a high latent heat of vaporation, in the 400s btu/lb compared to gasoline in the low 100s. So they both take a lot of heat to convert from liquid to vapor and inturn cool your intake charge temps and combustion chamber temps down a lot. I don't know how much this would help a naturally aspirated car, should help pick up a few HP. But on a boosted car it makes a world of difference, you can run 40-50psi of boost without an intercooler and a small radiator on a methanol car. The same car on a good race gas like VP C16 would have to run an intercooler and be limited to boost in the 30s.
When doing an E85 conversion though, you have to make sure your fuel tank, lines, fuel rails, injectors and regulator can handle the ethanol. And you need a pump, lines and injectors big enough to handle the extra flow requirements. Ethanol isn't anywhere near as corrosive as methanol, but it is still corrosive to a lot of things like aluminum and normal rubber fuel lines. You don't want it eating away part of your fuel tank or an aluminum fuel rail and clogging a fuel injector.
I would like to convert a DSM to E85 someday so that I could run 30psi daily on $1.75/gallon fuel.