National Strategies LLC, PJM Interconnection, Ernst & Young LLC, and their partners, including Drive Oregon and the County of Los Angeles, commit to demonstrate an economic proposition that will allow school districts to transition to battery-electric school buses without increasing the cost of pupil transportation. Achieving this outcome will entail deployment of existing, though recently developed, technology in the new context of pupil transportation. In the formative phase of the project, the commitment partners will recruit two school districts and/or pupil transportation contractors ('operations partners') to serve as hosts and co-sponsors of individual demonstrations and will engage with relevant utility, technology, and manufacturing, stakeholders. The partners will also secure the monetary and in-kind resources needed to design, produce, and deploy the project. The commitment partners will recruit and integrate stakeholders from four distinct realms: school bus manufacturing, electricity supply, pupil transportation operations, and financial services.
On the vehicle side, the initial phase involves the procurement of four vehicle-to-grid (V2G)- and vehicle-to-building (V2B)-capable electric school buses per district (for a total of eight school buses). The commitment partners will engage with companies that have the capability of producing battery-electric buses. It is anticipated that this will entail the issuance of a Request for Information to the heavy-vehicle industry followed by a Request for Proposal to the companies who seem most capable and interested. One factor the sponsors will consider is the eventual need for a process to ramp up market demand and production scale for V2G/B school buses.
On the utility side, the project will install charging technology and 'smart grid' electronics necessary for electricity flow back and forth between the school buses and the electrical grid. Drawing on partners' expertise, and building on current advances in projects underway through the University of Delaware and the Department of Defense, the project will demonstrate and troubleshoot delivery of 'ancillary grid services' from electric school buses including assessment of potential revenue and contracting options. ['Ancillary grid services' involve the supply of electricity to maintain the physical characteristics of delivered electricity within established tolerances. The most important ancillary service is frequency regulation, whereby relatively small amounts of electricity are added to the grid for short periods (seconds to minutes) on extremely short notice (seconds) with the intention of maintaining the oscillation frequency of alternating current at 60 cycles per second.] The project will also explore, separately or in conjunction with ancillary services, the opportunity for these buses to provide security services; as power for microgrids or mobile generators in the case of grid power failure or other disaster response.
On the financing side, the project partners will draw on the financial and operational data generated from the initial deployment above to make the case to financial institutions and school/ municipal finance departments to develop one or more bus financing models (e.g., power purchase agreements (PPAs), revenue bonding, energy service contracts) to enable larger fleet purchases of electric school buses.
From project start, the partners will engage a set of school districts, fleet owners, energy companies, financial, manufacturing, technology, municipal, and NGO partners who have an interest in significant fleet purchases and broader technology deployment. Assuming critical milestones are met, the partners, and likely others identified in the course of implementation, will work to finalize financing and facilitate the manufacturing and energy services contracting necessary to deploy subsequent tranches of buses. Industry sources have indicated that a predictable annual volume of 500-1,000 buses per year will be necessary to bring the cost per bus down to a commercially viable level. This number should be understood in the context of the total number of school buses sold annually; 25,000-48,000 units throughout the last decade. The result is that commercial viability may be achievable with a market share that is under 5 percent. This circumstance creates a natural target for a potential second phase of the project. (Initial objective: demonstrate the technology. Second-phase objective: ramp up demand past the threshold of commercial viability.)
NGO, school, and municipal partners will also work throughout the project to raise awareness, and build buy-in and support from appropriate community, economic development, and policy stakeholders.
National Strategies, LLC's (NSI) role in the project will be to bring its knowledge base of V2G/V2B markets, technology and regulatory issues to the team. This includes its unique research findings and demonstration project development around V2G/V2B school buses, including its forward looking business model program. NSI also has substantial working relationships with all public and private sector entities participating in various V2G and V2B programs. NSI will also dedicate staff time to project management of any demonstration project.
Ernst & Young LLC's (E&Y) commits to bring its subject matter expertise to develop tax equity, new market tax credit and other applicable innovative financing structures to this program. E&Y also pledges facilities and infrastructure to convene and host meetings and to use the firm's brand-value, credentials and/or collateral as required to support this initiative.
PJM Interconnection commits to bring PJM subject matter expertise and the human resources necessary to support the integration of an aggregated fleet of electric school buses into the wholesale electricity markets as a market participant. Where possible, PJM pledges to lend its credibility as the largest grid operator in North America and the largest wholesale electricity market in the world to promote the project in its 13 state plus D.C. footprint, and beyond.
The project team embodies numerous capabilities relevant to the approach described above. One or more team members have expertise in public-sector fleet management, vehicle electrification, wholesale electricity markets, financial engineering, and project management.
The major steps of the action plan include the following:
1) Securing of funds that can defray the cost of formal project management. The target date to secure funds is 7/31/13. This will mark the formal start of the three-year project period.
2) Recruitment of regionally co-located electrical utilities and/or regional transmission organizations and school districts to serve as the physical hosts of the project. Deliverables will consist of appropriate Memoranda of Understanding. The target completion date is 09/30/2013.
3) Development, issuance, and management of a Request for Information (RFI) and Request for Proposal (RFP) to the bus industry, with a view toward arranging one or more contracts for vehicle supply between one or more suppliers and one or more school districts. Note that the question of safety certification will be addressed. Deliverables will consist of the RFP and the eventual contracts. The target date to issue the RFI is 10/31/2013. The target date to sign one or more supply contracts is 09/30/14. The target date for delivery of demonstration buses is 06/31/15.
4) Organization of financing for the capital elements of the project, i.e., buses, charging infrastructure, and V2G technology. It is anticipated that participating school districts will be able to contribute from their capital budgets at a level consistent with conventional diesel bus technology. Funding for the electric bus premium and the project's other capital elements will need to come from a combination of grant funding and project financing based on downstream fuel cost savings and ancillary services revenue streams. The target completion date is 08/31/2014.
5) Development of protocols to demonstrate performance on four dimensions: (a.) Operation of electric school buses, addressing economics and considerations such as range. (b) Integration of the buses with the electrical grid via V2G technology, showing technical feasibility and revenue-generating capacity (c) Integration of the buses with the building/campus electrical systems, showing technical feasibility. (d) Financial viability of the school bus V2G concept, given projected bus prices; actual fuel and maintenance savings; and ancillary services revenues. The target completion date for formal documentation of the protocols to be applied on each of the four dimensions listed above is 03/31/15.
6) Cooperation with the co-sponsoring school districts on the execution of the demonstration. Target dates for the start and finish of the formal demonstration are 09/01/15 and 06/31/16 respectively.
7) Documentation and dissemination of the results that accrue on each performance dimension. The project partners intend to actively disseminate the results with the hope that electric school buses will gain an initial foothold in the school bus market and a steadily growing market share in subsequent years. The target date for dissemination of results and formal end of the project is 07/31/16.
There were 473,000 yellow school buses in operation in the United States during the 2010-11 school year. Approximately 85 percent of these buses run on diesel fuel. The buses were operated in fleets that ranged in size from 24 or less to more than 300. New York City has the country's largest fleet with more than 8,000 vehicles. Sixty nine percent of school districts purchased at least one new bus in calendar 2012. Between 2005 and 2012, national bus replacement sales rates have been as low as 25,000 units a year to as high as 48,000 units, with the annual rate of replacement varying from 5 to 10 percent. This implies that the average life of a school bus at retirement is 15 years. At this rate, 'clean diesel' vehicles, mandated by the Environmental Protection Agency starting with the 2010 model year, will not fully displace dirtier vehicles until the middle of the next decade.
The public health benefits of displacing diesel fuel school buses with cleaner alternatives are very clear. Numerous studies have shown that the concentrations of diesel-related air pollutants can be significantly higher on-board school buses than concentrations in ambient air, on other vehicles, and along school walking routes. The exposure studies found that conventional diesel school buses pollute themselves, with emissions from tailpipes and engine compartments contributing significantly to on-board concentrations of air pollutant[s].' Numerous medical studies cite the negative health impacts of exposure to diesel exhaust. It is a known carcinogen; it causes irritation to the eyes, noses, throat and lungs and lightheadedness; and can exacerbate asthma. Despite the known health effects, diesel-powered school buses remain the norm because underfunded school districts and cities are often without the resources to replace/refit these school bus fleets.
At the same time, the private and public sectors in the U.S. have invested in innovative, alternative drive and clean fuel vehicle technologies that offer the combined opportunities of greatly reducing America's reliance on foreign fuels, minimizing the health and environmental impacts associated with vehicle emissions from traditional fuels, and creating jobs and economic strength for the U.S.
The concept for this project originated at CGI America 2012 at the Clean Fuels and Transportation Working Group. Members of the working group, including Ernst &Young LLP, Drive Oregon, and the County of Los Angeles, were introduced to National Strategies LLC, and PJM Interconnection. The project partners and other interested parties have held monthly calls and two in-person meetings to define and advance the project.