Alternative Fuels

Golden Opportunities to Go for Green: Taking Advantage of Alt-Fuel School Bus Funding

Nicole Schlosser
Posted on May 31, 2017

With the Volkswagen (VW) settlement funds on the horizon, as well as Diesel Emissions Reduction Act (DERA) funds and local grant opportunities dovetailing with increasing progress, availability, and demonstrated efficiency of alternative-fuel school buses such as electric, propane, and compressed natural gas (CNG), now is the time to strike when it comes to seeking grants.

VW update
The VW settlement is providing $2.9 billion for a mitigation trust fund to support the replacement or repowering of school buses and other diesel vehicles. The main goal of the funds is to financially support the most cost-effective actions to reduce nitrogen oxide (NOx), to counteract its release from the VW diesel vehicles that had “defeat devices” installed on them.

Wilmington Trust was selected as the federal trustee, and all states except California will receive a minimum of $7.5 million. California will receive over $381 million as the result of the state’s integral role in the case, and the demand for charging infrastructure there, according to the Environmental Protection Agency (EPA) website. Additionally, $2 billion will be available through the zero-emission vehicle (ZEV) fund for electric and fuel cell vehicles. Allocations per state are based on the number of 2- and 3-liter diesel VW vehicles that were registered in each state.

State beneficiaries will file mitigation plans, and Wilmington Trust will give final approval toward the end of the year.

Since VW funds are going to every state, there’s ample opportunity at the state level for school transportation providers who have been thinking about adding alternative-fuel buses to their fleets to get the boost that they need in their budget to get the vehicles on the road, says Kay Kelly, Clean Cities project leader for the Transportation and Hydrogen Systems Center at the National Renewable Energy Laboratory (NREL).

States are determining how to maximize the funds to offset NOx to meet VW’s objective, and can do that in different ways, says John Gonzales, senior engineer for advanced vehicle deployment at NREL. Each state will put in their own request and may utilize their funds differently. Generally, incentives are dependent on state programs, which vary, Gonzales says.

Grantees can get up to 100% of the vehicle cost through the VW settlement, but some states will not utilize the money that way, because they want to make sure the operator still has some investment in the program. However, that is one of the big hurdles for fleets.

“It’s that incremental cost that is the barrier for fleets to [use alternative fuels],” Gonzales adds. For a vehicle that costs more than what they are used to buying, school bus fleet managers have to justify that higher cost, which isn’t easy.

Jim Reynolds, president and CEO of Adomani, says recent ride-and-drive demonstrations of eLion electric school buses in Phoenix, Arizona; Las Vegas, Nevada; and Utah have been well-received. Shown here is the demonstration in Phoenix.
Jim Reynolds, president and CEO of Adomani, says recent ride-and-drive demonstrations of eLion electric school buses in Phoenix, Arizona; Las Vegas, Nevada; and Utah have been well-received. Shown here is the demonstration in Phoenix.

Other funding opportunities
The EPA expects to give out between 20 and 80 grants totaling at least $11 million in DERA funds for clean diesel projects in a recently announced grant opportunity. Alternative fuels also meet the criteria for these funds. (See news story for more information on DERA funds.)

The California Air Resources Board’s Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP) offers up to $110,000 of differential money for a qualifying vehicle, such as the eLion electric bus, among others. Disadvantaged communities can get additional money for the first three units. At press time, the South Coast Air Quality Management District proposed to approve awards for 33 electric Type C or Type D school buses and the charging infrastructure to 16 public school districts and two charter schools for up to $8,844,000, according to GreenPower Motor Co.

The New York State Energy Research and Development Authority (NYSERDA) offers a $90,000 voucher incentive program to help offset the incremental cost between the conventional chassis and electric buses, such as  Trans Tech’s eSeries, says John Phraner, president of Trans Tech. “Operators can apply for the electric school bus vouchers under NYSERDA’s NYT-VIP program.”  

Additionally, all federal and state incentives can be found at the Alternative Fuels Data Center website: afdc.energy.gov/laws.

Alternative-fuel updates
Along with the announcements of these funding opportunities, alternative-fuel school bus options are expanding.

For electric buses, Trans Tech’s all-electric eSeries and Lion Bus’ eLion school buses earned spots on New York’s school bus contract. Lion plans to add a new electric bus manufacturing facility in California. GreenPower Motor Company Inc.’s Synapse 72 all-electric Type D school bus, with a 150-mile range, has been approved by the California Air Resources Board for the previously mentioned HVIP voucher. In a Massachusetts pilot, three school districts are each running one eLion electric school bus.

Jim Reynolds, president and CEO of Adomani, says recent ride-and-drive demonstrations of eLion electric buses, which the company powers, in Phoenix, Arizona; Las Vegas, Nevada; and Utah, have been well-received.

Additionally, more than 12,000 propane school buses were operating in the U.S. as of the beginning of 2017, and propane buses now make up more than 45% of all non-diesel school buses used for pupil transportation, according to the Propane Education & Research Council (PERC). Hillsborough County (Fla.) Public Schools installed a new propane fueling station at the end of 2016 and ordered 40 more propane school buses to add to the 50 in its fleet.

Meanwhile, the landscape for CNG has changed significantly over the last 18 months, due to more natural gas engine options becoming available for Type C buses, says Matt Godlewski, president of NGVAmerica. New engines and technologies came into the marketplace, particularly for Type C buses, in the last year. Thomas Built, IC Bus, and Blue Bird now have alternative-fuel Type C and D school bus options, and several manufacturers have developed engines for these buses.

In Missouri in 2016, Blue Springs School District bought 36 CNG buses, and North Kansas City Schools replaced most of its diesel fleet with 124 new Thomas Built CNG school buses. Los Angeles Unified School District purchased 71 CNG buses.

In 2016, Blue Springs (Mo.) School District bought 36 CNG buses. Shown here are some of the Collins Type A buses. Matt Godlewski of NGVAmerica points out that over the last 18 months, more CNG engine options have become available for Type C buses.
In 2016, Blue Springs (Mo.) School District bought 36 CNG buses. Shown here are some of the Collins Type A buses. Matt Godlewski of NGVAmerica points out that over the last 18 months, more CNG engine options have become available for Type C buses.

Tips for seeking funding
With more alternative-fuel options now available and funding at the ready, industry experts share some tips on obtaining grants:

1. Conduct a fleet inventory
Godlewski advises managers to develop a detailed inventory of their fleet, identifying buses that should be replaced. This is especially important when seeking VW settlement funding, since that program focuses on replacing, rather than adding, buses. Then, talk to local fuel providers and utilities that might be interested in helping with the fueling infrastructure that will need to be installed.

“Begin addressing some of these issues [to be] ready to take advantage of these funding opportunities when they open up later this year,” Godlewski says.

2. Consult bus manufacturers
Checking in with bus manufacturers and dealers on grants and for help with the funding process can be invaluable.

“We spent a lot of time, effort, and money tracking all the different funding opportunities,” says Todd Mouw, vice president of sales and marketing at Roush CleanTech. “We also sometimes help our school district partners pay for their [application] process to get that funding. [We] tell you what’s available and how to apply for it.”

In particular, Roush CleanTech has developed the Michigan Clean School Bus Program to help the state — which is eligible to receive over $60 million from the VW settlement — replace 5% of its diesel buses with propane buses by investing about $32 million from its share of the settlement. The program offers a 50% rebate for the total cost of a new propane school bus, Mouw says.

Roush CleanTech has submitted plans for similar programs to all states. It is requesting a 30% cost match, which will help accelerate adoption of propane school buses while stretching states’ money further, allowing them to replace more school buses.

3. Connect with Clean Cities
Clean Cities coordinators can help direct grant seekers to funding opportunities and bundle projects with others in the community who are trying to achieve similar goals, Kelly says.

Eighty-two percent of the U.S. population is represented by Clean Cities coalitions. (A list of locations can be found at cleancities.energy.gov.) In regions where there isn’t a coalition or apprentice group nearby, industry associations for the various alternative fuels can be helpful, Kelly adds.

Michael Taylor, director of business development for PERC, also recommends contacting the local Clean Cities coalition. “We have had huge success in a number of states, such as Alabama, Ohio, and Indiana.”

4. Collaborate to tell the story
Schools have a good story to tell for using alternative fuels, Clean Cities’ Kelly notes.

“Their applications will stand out just because of the population they serve. There’s a really good story to tell about using alternative fuels: They can improve the air that children breathe, and can sometimes save school districts money when you look at total cost of ownership over the lifetime of the vehicle.”

When applying for a grant, focus on what value proposition the grantor is looking for and then tell the story of how you can supply those needs, says Dennis Whitaker, vice president of product development for Blue Bird.

“Whoever tells the most compelling and logical story on how they are going to do that in a cost-effective way is going to get the grant, in most cases.”

When applying for a grant to create an electric bus, Blue Bird worked with its partners to communicate the vision for the drivetrain, batteries, and battery management systems.

“They talked about what they could do with the equipment, and together we wrote the story of how we were going to satisfy the requirements,” Whitaker says. 

Grant Success Stories

Twenty-nine new electric school buses are being provided in part by a state grant to serve students in the Sacramento area. Shown here is an eLion electric bus.
Twenty-nine new electric school buses are being provided in part by a state grant to serve students in the Sacramento area. Shown here is an eLion electric bus.

A school bus manufacturer and school district both saw success with grants recently.

Blue Bird was awarded a $4.4 million grant in 2016 from the U.S. Department of Energy to develop an electric school bus. One of the main purposes of the grant is to show that with greater volume and over time, the cost of an electric school bus can come down toward $200,000, from a current cost of more than $325,000, says Dennis Whitaker, vice president of product development for Blue Bird.

Another objective of the grant is to demonstrate improvement in efficiencies as measured by kilowatt hours per mile. Blue Bird’s target is to get from 1.4 kilowatt hours per mile toward 1.2 kilowatt hours per mile.

In 2019, Blue Bird will deliver eight electric buses to Rialto Unified School District in California and will monitor them, providing a warranty and service for the buses.

The timing of receiving the grant and making the buses available two to three years from now is perfect, Whitaker says, because the decreasing cost of batteries over the next couple years will be significant.

Meanwhile, Elk Grove (Calif.) Unified School District will soon receive eight eLion and two Trans Tech Motiv Power Systems electric buses as a result of a state grant, says Jill Gayaldo, the director of transportation for the district.

The Sacramento Metropolitan Air Quality Management District approached Elk Grove about participating in a grant application, because the state set aside a large amount of money from cap-and-trade funds, Gayaldo explains. Elk Grove worked on the grant with the Sacramento Air District and two neighboring school districts: Sacramento City Unified School District and Twin Rivers Unified School District.

“They felt it would be more powerful if we applied as a joint group for the funding,” Gayaldo says.
Sacramento City will receive three electric buses, and Twin Rivers received 16.

The grant gave preference to disadvantaged areas. Elk Grove’s transportation department used a map that showed where the district would run the electric bus routes in those areas. The routes were also planned based on the distance that the buses could cover.

The grant covers a major portion of the electric buses, infrastructure, and some of the cost to operate for the first year. Gayaldo’s district will receive a little over $3 million in funding, and the district has committed $686,000.

“These buses are very expensive, but when you have the grant pay for the bus and the infrastructure, that made it where we have to give this a try,” Gayaldo says.

Related Topics: alternative fuels, CNG, electric bus, propane

Nicole Schlosser Managing Editor
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