Accelerating Electrification of Transportation · Utility On-Bill Investment at the Grid Edge...
Transcript of Accelerating Electrification of Transportation · Utility On-Bill Investment at the Grid Edge...
Accelerating Electrification of Transportation: Utility On-Bill Investment at the Grid Edge
Holmes Hummel, PhD - Founder and Principal [email protected]
100% EV transit bus in Louisville, KY
In the U.S., transit has the most compelling
business case for electrification
Speed, scale – and avoiding stranded assets
Innovation Diffusion Curves (Rogers)
Sources: IEA, Global EV Outlook, 2017; BNEF, Electric Buses in Cities, 2018; McKinsey, Focused Acceleration, 2018.
EV
Transition
is Here
Lifecycle costs of Battery Electric Buses are competitive
• Example case of Lake City (a fictional name for a real city)
$-
$200.000
$400.000
$600.000
$800.000
$1.000.000
$1.200.000
$1.400.000
Diesel CNG Battery electric bus
Fuel costs
Maintenance costs
Other capital costs (incl.
infrastructure)
Midlife costs
Bus purchase cost
Cost Category
Total cost of ownership for a bus purchased in 2019 (discounted)
$-
$200.000
$400.000
$600.000
$800.000
$1.000.000
$1.200.000
$1.400.000
Diesel CNG Battery electric
bus
Midlife costs
Bus purchase cost
Upfront cost for clean bus is 50% or more, a steep barrier
5
Total cost of ownership for a bus purchased in 2019 (discounted)
Most
agencies
seek grants
$0
$100.000
$200.000
$300.000
$400.000
2020 2021 2022 2023
Ne
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(2
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9)
Incremental Upfront Cost of EV Bus & Charger
Public funds Private capital
The incremental upfront cost declines, but also persists
Covering the full amount with grants is not scalable or sustainable.
Instrument Sustainable Scalable
Customer
Balance Sheet
Treatment
Taxpayer funding
Polluter funding (carbon price)
Ratepayer funding (rebates)
Debt financing (bonds) Balance sheet
liability
Lease financing Balance sheet
liability
Utility tariffed on-bill investment
Highly
sought
grants
Funding and financing options for EV buses
Financing
How does utility on-bill investment
via PAYS for Clean Transport work?
Utility tariffed on-bill investments “behind the meter”
have already unleashed capital for efficiency upgrades
Inclusive financing reduces
first cost barriers for all
What would happen if we applied the same approach to
electrification in transportation, starting with transit buses?
on-board batteries and
on-site charging stations
Battery
Example: Eversource in New Hampshire
80% of
Estimated
Fuel Cost
Savings
Fair
ROI
Capital
Provider Utility Transit
Agency
Terms of
Service
Agreement
Utility Transit
Agency
Capital
Provider
… and recover its costs (for battery and charger)
via a flat charge on the bill that is less than estimated savings
A utility can invest in site-specific, cost-effective upgrades…
Attributes Battery Lease
Agreements PAYS®
• Participant needs no upfront capital for cost-effective battery and
charging station
• Participant must accept a liability on their balance sheet
• Participant accepts an opt-in utility tariff (NOT a debt or a long-term
lease) tied to its metered location
• Estimated savings must exceed cost recovery charges
• Cost recovery is through a fixed charge on the utility bill
• Participant accepts tariff with disconnection for non-payment
• Payments end if battery fails and is not repaired or replaced
Comparison between PAYS® and Battery Lease Agreements
How does PAYS for Clean Transport
affect the need for grant funding to
accelerate electrification?
$0
$100.000
$200.000
$300.000
$400.000
2020 2021 2022 2023
Ne
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Incremental Upfront Cost of EV Bus & Charger
Public funds Private capital
The transit agency depends on nearly the same level of
grant funds the next year to buy more EV Buses
$0
$100.000
$200.000
$300.000
$400.000
2020 2021 2022 2023
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Incremental Upfront Cost of EV Bus & Charger
Public funds Private capital
Utility on-bill investment for the on-board battery and
charging station vastly reduces the grant funding needed
3.4:1 3.9:1 4.4:1 5.2:1
$5 M for EV transit buses is enough to pay for the
incremental upfront cost of 15 electric buses…
…or, with PAYS for Clean Transport, $5 M would
cover the incremental cost of 50 electric buses
Why might a utility be motivated to
offer PAYS for Clean Transport for
EV transit buses?
Invested capital for upfront cost of on-board battery
and charging station is fully recovered CAPITAL: CASH FLOWS FOR INVESTMENT AND COST RECOVERY
• Under a tariffed on-bill investment program, Lake City Utility would provide NPV $13.17 million over four
years to support procurement of 56 BEBs over that time span to replace diesel buses.
• Using the utility’s prior discount rate of 6.75% as the program cost of capital, there would be no net financing cost, as the NPV of cost recovery payments would also equal $13.17 million.
Note: All NPV figures are discounted to 2019 and presented in 2019 dollars
$12.84M $13,2 M
-$13,2 M
$0,0 M
$20.000.000
$10.000.000
$0
$10.000.000
$20.000.000
Utility Investment Cost Recovery Net Financing Benefits
Lifetime Discounted Cash Flows for Investment 2020-2023 BEB Procurement
Revenues from new sales to fuel the EV buses exceeds
Cost of Supply by more than 1/3 ENERGY: CASH FLOWS FOR SUPPLY AND NEW SALES
• Over the lifetime of the 56 buses planned for procurement through 2023 by Lake City Transit, procurement
of BEBs would increase utility revenues of NPV $4.17 million from increased sales.
• Lake City Utility would incur NPV $2.40 million in additional costs to serve new load to charge the batteries
on-board these vehicles.
• Lake City Utility would gain NPV $1.78 million in net energy revenue from procurement of 56 BEBs.
Note: All NPV figures are discounted to 2019 and presented in 2019 dollars
Cost of Supply
$2.34M
$4,2 M
-$2,4 M
$1,8 M
$4.000.000
$2.000.000
$0
$2.000.000
$4.000.000
$6.000.000
Increased Revenues Increased Supply Costs Net Energy Benefits
Lifetime Discounted Cash Flows for New Electricity Sales
Utility cost-benefit ratio exceeds 1.1
NET IMPACT
• Combined, a tariffed on-bill
investment program would provide
NPV $17.34 million in lifetime benefits
and $15.57 in lifetime costs, yielding a
benefit-cost ratio of 1.11 and net
ratepayer benefits of $1.78 million.
• This analysis does not account for
potential program administration
costs, which would be a reduction to
ratepayer benefits, and must be less
than NPV $1.78 million to retain
ratepayer benefits.
Note: All NPV figures are discounted to 2019 and presented in 2019 dollars
Investment
$12.84M
Cost of Supply
$2.34M $17,3 M
-$15,6 M
$1,8 M
$20.000.000
$15.000.000
$10.000.000
$5.000.000
$0
$5.000.000
$10.000.000
$15.000.000
$20.000.000
Lifetime Benefits Lifetime Costs Net Benefits
Lifetime Discounted Total Cash Flows 2020-2023 BEB Procurement
Partners Validators
The Lab endorsed PAYS for Clean Transport in 2018
Pay As You Save® and PAYS® are registered trademarks in the U.S. held by Energy Efficiency Institute, Inc.
The Lab endorsed PAYS for Clean Transport in 2018
Pay As You Save® and PAYS® are registered trademarks in the U.S. held by Energy Efficiency Institute, Inc.
Thank you
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