February 7, 2020

Like pioneering fleet managers around the world, executives at California’s transit authorities and school districts are exploring alternatives to internal-combustion engines. The benefits to bus riders and their communities are undeniable. Electric buses are much quieter than their diesel predecessors, cheaper to maintain, and they don’t leave behind the black clouds that are standard on many of today’s public transit routes.

The benefits to the environment are even more dramatic. The California Air Resources Board (CARB) estimates that if all the state’s municipal bus fleets were 100 percent electric, greenhouse gas emissions in California would fall by 19 million metric tons between 2020 and 2050—the equivalent of taking 4 million cars off the road. The good news is that a rapid transition to electrification is under way in the public-transit market.

Trends in the Move to EVs

The shift to alternative transportation first took hold in smaller vehicles. Even as overall car sales in California fell by more than 5 percent in the first three quarters of 2019, sales for electric vehicles (EVs) and plug-in hybrids actually grew by 7.9 percent. Companies like Tesla have built mass-market appeal by extending the range of EVs to hundreds of miles, reducing charge times with fast DC charging, and lowering prices. Now, Ford has released an all-electric SUV; the movement of America’s original car company into this market further validates the long-term viability of EVs.

Commercial and public-transit fleets are rapidly catching up with the consumer market. In 2019, the transit bus sector passed the passenger vehicle sector in terms of proportion of new vehicles sold that are zero-emissions. Buses are making the transition quickly for a couple of reasons. One is that personal taste is less of a factor in fleet decision-making. Another reason is that the ongoing cost savings and environmental benefits of electrification are strong motivators for corporations and government agencies. Amazon recently proved this point by placing an order for 100,000 electric delivery vehicles.

In addition, government agencies are increasingly requiring public entities to transition vehicles to alternative power sources. A key example: In December 2018, the CARB adopted a rule mandating that all new buses bought by mass transit agencies in California must be fully electric starting in 2029. The goal of the rule is to transition the state’s municipal fleets to 100 percent EV buses by 2040.

Electric-Powered Transit, by the Numbers

Challenges Along the Way

A number of factors are leading some municipal and K-12 district leaders to wait until they can follow others into electrification. One up-front deterrent is the current cost. The non-profit American Public Power Association estimates that a single electric-powered mass transit bus costs $750,000, vs. $500,000 for the diesel model, and an electric school bus costs $230,000, vs. $120,000 for diesel. Many locales and air-quality management districts are offsetting the discrepancy in purchase price by offering incentives to early movers into EV fleets.

Decision-makers can expect the purchase price for EV buses to continue to decline. However, the cost of ongoing operations presents a unique opportunity for adept planners. The same American Public Power Association study projects an annual cost savings of up to $50,000 per year on fuel and averted maintenance, which means the higher initial outlay for an EV bus could generate a return on investment (ROI) in about five years.

Bus route design and supportive infrastructure can have a significant impact on time to ROI. A transit district might invest in EV buses that recharge in minutes but have a range of about 80 miles. Alternatively (or in addition), it might invest in extended-range buses that can go 300 miles between charges but take a few hours to replenish the batteries. In the fast-charge scenario, bus routes might need to include on-route charging stations to optimize scheduling without requiring repeated returns to the depot throughout the day.

Another critical factor in planning the move to EVs is the timing of charging activities. Although California’s utilities are not currently placing demand charges on commercial EV operators’ charging stations, demand charges may come back into effect in a matter of years, to recoup costs. If they do, charging an entire fleet of electric buses could lead to significant surges in electricity costs.

Even without the demand charges, rates vary dramatically by time of day. A kilowatt-hour that costs 12 cents at night may cost 50 cents between 4 p.m. and 9 p.m. An optimized charging strategy is critical to achieving the cost savings that the transition to electric buses has to offer.

Taking Control of Energy Consumption

One more source of complexity in the EV support infrastructure is the use of renewable energy. Utilizing solar, wind, or hydrogen power—combined with battery energy storage—typically makes sense for both the environment and the bottom line. The CARB’s Low Carbon Fuel Standard (LCFS) provides a credit to organizations and agencies based on the carbon intensity rating of their fuel practices. Sourcing the power for an EV fleet charging station from solar panels can result in a 10-cent credit per kilowatt hour. Distributed energy resources that both power the fleet’s charging needs and sell excess energy back onto the grid can make a lot of financial sense.

While the evolving market is making renewable energy increasingly affordable, adding energy storage makes these power sources even more cost-effective. Transit authorities and school districts that decide to rely on the traditional electric grid and on-site renewable generation like solar will find that an energy storage solution reduces costs by controlling when and where energy is sourced without impacting transit operations. California state incentives for energy storage are still available and cover a significant portion of project costs. (More on this solution in our next blog.)

The transition to EV buses will give transit authorities and district logistics managers more control over the energy they are using. As they build out their EV infrastructure, decisions about which technologies will power their fleet will have a big impact on the ability to generate ROI and reduce carbon dioxide emissions down the road.

What’s Next

The move to electrification needs to be on the radar of every mass transit and school district fleet manager in California. The transition to electric buses is not a question of “if,” but of “when.” Less than a year after the CARB released its new EV expectations for municipal buses, the Los Angeles Department of Transportation (LADOT) established the official goal of having an all-electric municipal transit fleet even earlier—by 2030. The city took its first large step in that direction by ordering 130 EV buses. On a smaller scale, Duarte, a small city located in the foothills above L.A., replaced all three of its buses to become the first city in southern California to run an all-electric bus fleet. On the education transportation front, the California Energy Commission (CEC) is awarding nearly $70 million in grants to districts across the state to replace more than 200 diesel school buses with EV alternatives.

The move to EV buses presents a fantastic opportunity. Incentives are attractive right now, and with the right infrastructure, EV fleets can generate substantial cost savings over diesel vehicles for the organizations and agencies running them. To turn the challenge of electrification into an opportunity, school districts and transit authorities must develop an effective and efficient charging infrastructure. That requires selection of energy generation and energy storage technologies that minimize energy costs and carbon content.

To achieve these benefits, a school district or transit authority needs to work alongside utilities and community choice aggregation energy suppliers. It also needs to understand all its options for grants, warranties, and financing. The right partner is critical in successfully navigating all the myriad options for electrification and optimization of transit EV operations.