Alternative Fuels

Making the Business Case for Alternative Fuels

Nicole Schlosser
Posted on May 22, 2015
Yuma (Ariz.) Educational Transportation Consortium, which operates 23 propane autogas buses, cut infrastructure costs by buying fuel at a bulk rate.

Yuma (Ariz.) Educational Transportation Consortium, which operates 23 propane autogas buses, cut infrastructure costs by buying fuel at a bulk rate.

Using alternative fuels such as propane autogas and compressed natural gas (CNG) can cut carbon emissions, creating cleaner air and health benefits for students, bus drivers and the community. However, with the cost of diesel now somewhat lower, and gasoline still significantly cheaper as of press time, is there still a business case to be made for making the switch? Considering factors such as cost savings on fuel and maintenance, increased uptime, and an equivalent performance level, end users and experts agree the answer is yes.

Although school transportation has mainly run on diesel for a number of decades, the interest in alternative-fuel vehicles and the options are without a doubt growing. In 2013, according to Blue Bird, approximately 10% of all Type C buses purchased were Blue Bird propane autogas school buses. Propane Education & Research Council (PERC) is seeing a faster adoption of the fuel in the industry: Sales of over 7,000 vehicles have been logged in 44 states, from private contractors and school districts, mainly in the last two to three years.

Thomas Built Buses is producing buses that run on CNG and propane autogas; its new Saf-T-Liner C2 CNG will go into production in 2016, says Jed Routh, product planning manager at Thomas Built Buses. IC Bus’ new CE Series propane autogas school bus became ready for order in February, and Collins Bus is offering NEXBUS Type A propane and CNG school buses.

Electric buses are also becoming options, with Trans Tech’s SSTe all-electric school bus in demonstration in California and Lion Bus’ eLion all-electric Type C school bus to be released this fall.

There are two hurdles to purchasing alternative-fuel vehicles, end users say: the purchase price for them tends to be higher than for diesel-fuel buses, and CNG infrastructure can be considered expensive. However, districts can recoup those expenses by saving money on fuel and maintenance and securing grants to help pay for the buses and sometimes the fueling systems as well.

Savings on fuel, maintenance costs
One common practice for school districts and private contractors to get back some of that higher initial expenditure on alternative-fuel vehicles is to secure the annual fuel pricing through the bid process. As with gasoline and diesel, propane autogas suppliers can assist with competitive annual fleet pricing or even longer-term contracts to lock in lower prices, says Michael Taylor, director of autogas business development for the Propane Education & Research Council (PERC).

Propane autogas costs about 30% less than gasoline and up to 50% less than diesel nationwide, and its price holds steady as crude oil prices fluctuate, he adds. “Historically propane has followed that trend,” Taylor explains. “We don’t see that changing.”

The average time frame for a school district’s transportation department to start seeing savings kick in depends overall on three factors, regardless of fuel used: the miles driven, driver operating habits and maintenance practices, according to Taylor.

“Given that those factors are consistent, we’re seeing savings in one or two years, depending on the number of buses,” he explains.

As with propane autogas, CNG offers a cost advantage even with diesel at a lower price, since CNG pricing is one dollar per gallon cheaper than diesel, says Peter Grace, senior vice president of sales for Clean Energy Fuels. Additionally, gasoline prices are creeping back up, whereas CNG remains stable, he adds.

The fuel cost savings when using CNG is paid back in eight or nine years, and since the typical life of school buses is 13 to 15 years, fleet owners benefit from the lower fuel prices for the rest of the life of the bus, says Matt Godlewski, president of NGVAmerica.
 
Most important, however, is the total cost of ownership, Taylor says. Multiple factors need to be considered, such as maintenance, fuel, repairs, time spent in repair shops, uptime versus downtime, and productivity versus efficiency from the time of purchase to when the vehicle will be retired.

James Wigo, superintendent of schools at Rose Tree Media School District in Media, Pennsylvania, says that of the 23 CNG buses put in service by the district from December 2014 through the end of January, 15 were new Thomas Built CNG buses, and eight were older International diesel buses that were converted to run on CNG.

Grace Eves, director of management services for the district, says the CNG cost for 22 of the buses in January 2015 was $6,606. The diesel cost would have been $16,639, bringing a savings of $10,033.

Meanwhile, the district’s twenty-third CNG bus was delivered at the end of January and is expected to provide more savings. Next year’s savings should increase by $50,000 with the addition of 12 new CNG buses that are scheduled to be delivered this summer, Eves adds.

The district received $360,000 in grants for the initial 23 buses that it converted and purchased, and 100% of the grant money went toward the purchase of the buses.

Crittenden County and the Kentucky Department of Education’s pilot program for one Blue Bird Propane Vision bus in the 2013-14 school year  exceeded initial cost savings expectations, and has grown to include eight of the buses, says Wayne Winters, Crittenden County transportation official and vice president of the Kentucky Association for Pupil Transportation.

With this year’s propane autogas prices, it’s costing Crittenden County about 23 cents a mile to fuel the alternative-fuel buses and 56 cents a mile to fuel the diesel buses, for a savings of about 50%, he adds.

Alternative-fuel vehicle customers are also getting a return on investment with reduced maintenance costs.

Winters says his shop still changes the oil of the propane autogas buses at 6,000 miles, just like with the diesel buses. However, he has found that propane autogas buses require significantly less oil and cheaper filters.

“[It costs] around $130 to $170 to change the oil in a diesel bus and about $38 to change the oil in a propane bus,” he explains. “That’s a considerable savings [for us]; we run 16,000 miles on some of our routes, so we change the oil three or four times a year.”

Rose Tree Media School District recently saved over $10,000 on fuel with its CNG buses. Shown here left to right: James Wigo, superintendent of schools; Grace Eves, director of management services; and school board President John Hanna.
Rose Tree Media School District recently saved over $10,000 on fuel with its CNG buses. Shown here left to right: James Wigo, superintendent of schools; Grace Eves, director of management services; and school board President John Hanna.
Less maintenance needed
CNG and propane autogas don’t require aftertreatment, such as particulate filters or additives, that a diesel bus needs to burn off the soot coming out of the tailpipe, which can add several thousand dollars to a bus maintenance shop’s costs over the year.

“[CNG] can meet emissions standards with a catalytic converter without adding a filtration system or fuel to clean it up,” Grace explains. “There’s less maintenance, cost and downtime, which translates into lower labor costs, because you’re not performing as much maintenance and replacing as many parts.”

Using propane autogas reduces preventive maintenance costs by about 30% to 40% just in fluids and filters alone when compared with diesel, Taylor adds.

Additionally, starting up the vehicles in cold temperatures is much quicker than with diesel-powered vehicles.  

Winters says he did not have to plug the propane autogas buses into a block heater overnight as he did with the diesel buses last winter.

“That cost us anywhere from $800 to $1,200 per month over about a five-month period,” he explains. “We spent an entire day [trying to get] our two diesel buses started. The propane autogas buses started instantly, at zero [degrees Fahrenheit] and 20 below zero wind chill.”

Ron Halley, vice president of fleet and facilities for Student Transportation of America (STA), which deployed 435 Blue Bird propane vision buses for Omaha (Neb.) Public Schools and Millard Public Schools in 2013, shared a similar experience. He says his shop manager in Omaha easily started up 134 propane autogas buses with no assistance when it was 24 degrees below zero last winter.

Electric buses are also becoming options, with Trans Tech’s SSTe all-electric school bus in demonstration in California.
Electric buses are also becoming options, with Trans Tech’s SSTe all-electric school bus in demonstration in California.

Related Topics: alternative fuels, CNG, cutting costs, propane

Nicole Schlosser Managing Editor
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