Guidebook for Deploying Zero-Emission Transit Buses (2021)

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54 3.1 Overview Up-front capital costs are one of the biggest obstacles facing the current ZEB market. For your first ZEB deployment, you should anticipate capital costs related to: • Vehicle costs, • Fueling equipment costs, • Fueling infrastructure installation costs, • Electric utility upgrades, and • Maintenance facility modifications. Current market pricing may necessitate pursuit of additional funding opportunities to augment available transit agency funds for a valid ZEB business case. The following funding opportunities can help offset the cost of ZEB procurement, including: • FTA’s Low or No Emission Vehicle Program, • FTA’s Bus and Bus Facilities Program, • Volkswagen Environmental Mitigation Trust, • State programs offering competitive grants or incentives , • Electric utility EV fleet programs, and • Electric utility infrastructure make-ready programs. The ZEB market is maturing, creating risks that investments in capital today can become obsolete in the future. A thorough analysis of market technologies and expansion plans can help ensure continued usefulness of infrastructure investments. You should review and compare current technologies, market costs, and funding opportunities prior to each ZEB deployment on a total cost of ownership basis. As the market matures, bus and infrastructure costs may decline and technology advancements may improve the business case for future deployments without additional funding sources. PHASE 3 CAPITAL COSTS AND FUNDING OPPORTUNITIES Best practices for evaluating capital costs and funding opportunities include: • Estimating current costs of your selected vehicle and fueling technology through thorough research and modeling. • Assessing short- and long-term fueling infrastructure needs and available capital to make the smartest investments for your ZEB plans, while meeting current service needs . • Identifying available local, state, and federal funding opportunities to support the procurement of ZEB technology.

Capital Costs and Funding Opportunities 55 3.2 Key Stakeholder Considerations Project Managers • Complete bus and infrastructure cost analyses before each deployment. OEMs or transit agencies that have deployed the technology may be able to provide cost estimates for equipment or lessons learned. However, an analysis specific to your deployment should be conducted. • Factor all future plans for ZEB deployments into your cost analysis to ensure infrastructure investments made today have long-term usefulness. Balance this analysis with an understanding that technology advancements may alter your plan in the future. • Research funding opportunities to support your ZEB deployments. Funding availability can significantly offset capital costs. Coordinate with procurement on funding requirements and deadlines. Operations, Maintenance, and Facilities • Review maintenance requirements for your ZEB technology to understand required facility upgrades/equipment and training needs. • Review power requirements for BEB charging to understand facility upgrade needs. Procurement • Engineering design services may be needed to fully understand the needed facility modifications and cost of fuel equipment installation. If expertise is not available in-house, a third-party could provide a cost estimate. • Funding opportunities will often require grant applications or rebate filings. Review applicable terms, deadlines, and filing requirements to ensure compliance. External Stakeholders • Bus and fueling infrastructure OEMs should be consulted on current technology options and costs prior to any ZEB deployment. • Electric utilities should be consulted early in the planning process to discuss funding opportunities or potential partnerships for sharing in capital costs of infrastructure or energy storage systems. • Third-party consultants can be useful in identifying funding opportunities or helping build business cases for deployment.

56 Guidebook for Deploying Zero-Emission Transit Buses 3.3 Capital Costs Capital costs for a ZEB deployment may include, but are not limited to: • Vehicle costs, • Fueling equipment costs, • Fueling infrastructure installation costs, • Utility upgrades, and • Maintenance facility modifications. ZEB costs will be transit agency-specific and based on the different configurable options of the buses, the size of the deployment, required facility upgrades, and fueling approach. While large, full-scale deployment planning is in the early stages in the U.S., current market conditions suggest the comparative capital cost and effort required for BEB versus FCEB deployments can be illustrated by Figure 3-1. With a smaller fleet size, FCEB deployments tend to be more costly than BEB deployments, mainly due to higher hydrogen fueling station costs and required maintenance facility upgrades. These costs tend to dominate the overall costs per bus for small deployments. However, hydrogen fueling infrastructure scales more easily than BEB infrastructure , so with larger fleets, the costs associated with incremental BEB charging infrastructure and associated facility and electrical infrastructure modifications required for depot charging become more significant. Any future plans for expansion should be analyzed to ensure the value of your current deployment is not negatively impacted by your expansi on plans. Figure 3-1. Illustrative example of comparative capital costs and effort required for BEB and FCEB deployment size.

Capital Costs and Funding Opportunities 57 Table 3-1 and Table 3-2 contain high-level cost estimates for various components of FCEB and BEB deployments, respectively. Because the magnitude of costs vary with deployment size, estimated costs for a five bus deployment, and estimated costs for a 50 bus deployment are shown. These estimates are based on recent deployments and should be used for planning purposes only. Costs can vary widely based on the configurable components of buses, as well as local factors that will influence costs of infrastructure design and construction. For example, AC Transit required $1.5M in facility upgrades when deploying FCEBs. Upgrades would have been more costly if AC Transit did not require buses to depressure fueling systems prior to maintenance (Sokolsky, 2016). SunLine Transit constructed a new FCEB maintenance facility that allows hydrogen to escape through large gaps, therefore avoiding the need for major retrofits (Sokolsky, 2016). Figure 3-2 shows the relative estimated costs of components of a five FCEB deployment without on-site hydrogen production equipment, and a five BEB deployment with plug-in depot chargers. Figure 3-3 shows the relative estimated capital costs of a 50 FCEB and 50 BEB deployment of the same configuration. The ZEB market is maturing; current market costs should be researched before each ZEB deployment as pricing and options will change. Table 3-1. Cost estimates for fuel cell bus deployment components. Component High-Level Cost Estimate for a Five Bus Deployment High-Level Cost Estimate for a 50 Bus Deployment 40 ft FCEB Base cost shown with no options $1.01M per bus [California Department of General Services (CA DGS), 2019a] $994K per bus (CA DGS, 2019a) Hydrogen fueling station equipment and installation ~$5M ~$5M Maintenance facility upgrades Costs may vary significantly based on technologies currently deployed (e.g., CNG). ~$1M per facility ~$1M per facility TOTAL ESTIMATED DEPLOYMENT COSTS ~$11.1M ~$55.8M

58 Guidebook for Deploying Zero-Emission Transit Buses Table 3-2. Cost estimates for battery electric bus deployment components. Component High-Level Cost Estimate for a Five Bus Deployment High-Level Cost Estimate for a 50 Bus Deployment 40 ft Battery Electric Bus Base cost shown with no options ~$740K (CA DGS, 2019a) ~$730K (CA DGS, 2019a) Plug-in depot charger capital costs ~$75K - $125K (CARB, 2016a) ~$75K - $125K (CARB, 2016a) Plug-in depot charger design, build, and electrical upgrades ~$50K - $75K per charger ~$150K - $180K per bus TOTAL ESTIMATED DEPLOYMENT COSTS ~$4.3M ~$48.5M

Capital Costs and Funding Opportunities 59 Figure 3-2. Estimated relative costs of a five FCEB deployment with hydrogen delivery and a five BEB deployment with plug-in depot charging.

60 Guidebook for Deploying Zero-Emission Transit Buses Figure 3-3. Estimated relative costs of a fifty FCEB deployment with hydrogen delivery and a fifty BEB deployment with plug-in depot charging.

Capital Costs and Funding Opportunities 61 The FCEB costs shown in Figure 3-2 and Figure 3-3 reflect a scenario where hydrogen is delivered. Estimated costs for on-site production of hydrogen are shown in Table 3-3. Table 3-3. Estimated costs of on-site hydrogen production capabilities. System High-Level Cost Estimate Electrolysis system $4.4K/kg/day for 1,000 kg capacity to $10.6K/kg/day for 100 kg capacity (Melaina and Penev, 2013). Costs of raw materials are variable; at 100% electrolyzer efficiency, 2.4 gallons of water are required to produce 1 kg of hydrogen. Natural gas reformation system $4K/kg/day for 1,000 kg capacity to $11.2K/kg/day for 100 kg capacity (Melaina and Penev, 2013). One transit agency installed a reformation station for five buses for $750K (Sokolsky, 2016). The following tools can help your transit agency analyze the costs associated with FCEB fueling: • The National Renewable Energy Laboratory (NREL) offers a Hydrogen Financial Analysis Scenario Tool (H2FAST) that provides a quick and convenient financial analysis for hydrogen fueling stations. • Argonne National Laboratory has a Heavy-Duty Refueling Station Analysis Model (HDRSAM) that allows a user to compare the cost of alternative hydrogen refueling options, identify cost drivers of current hydrogen refueling technologies for various station configurations, and identify demand profiles of heavy-duty fuel cell electric vehicles. The BEB costs shown in Figure 3-2 and Figure 3-3 reflect a depot charging scenario with plug-in chargers. Estimated costs for overhead conductive chargers, inductive chargers, and installation costs for an on-route charging configuration are shown in Table 3-4.

62 Guidebook for Deploying Zero-Emission Transit Buses Table 3-4. Estimated costs of overhead or inductive chargers in an on-route charging configuration. Item Estimated Cost Overhead charger capital costs and installation ~$350K - $500K Inductive charger capital costs and installation ~$200K - $500K On-route charger design, build, and electrical upgrades Some economies of scale will be seen if multiple chargers are installed at the same on-route location. ~$400K - $600K per charger Battery, fuel cell, and bus technology are continuously evolving; therefore , costs are expected to decline in the future as the market matures and moves toward economies of scale. Your transit agency should perform a thorough analysis of deployment options and costs before any ZEB deployment. This will likely include: • Research on current ZEB bus pricing and fueling infrastructure costs, either through discussions with OEMs, other transit agencies who have recently deployed the technology, or a request for quote (RFQ) process. • Consultation with your electric utility to understand power needs and required utility upgrades for your short- and long-term ZEB deployment plans. • Consultation with engineering design experts to understand costs related to fueling equipment installation and any needed facility modifications. 3.4 ZEB Deployment Support While the federal government has supported ZEB deployments through competitive grants for years, state and local governments have begun increasing support as well, as a way to mitigate the impacts of climate change through reducing emissions and prioritizing the public health needs of their communities. Financial support may be in the form of planning initiatives that consider opportunities for zero - emission vehicle deployments, policies that encourage or require zero-emission vehicle deployment, or programs offering financial support to help offset the higher incremental costs associated with these vehicles. Funding may be available through competitive grant solicitations or programs that provide vouchers or other types of incentives.

Capital Costs and Funding Opportunities 63 Electric utility companies are also increasing their support for ZEB deployments. According to the Utility Filings Dashboard, 16 utilities in 14 states have been approved to invest more than $590 million in electrification programs, some focused on buses and trucks (Smith, 2019a). Utilities are using these programs to create opportunities for shared infrastructure and offer incentive programs (Smith, 2019a). Some utilities are starting to create rate structures that promote electrifications, offer rebates for charging equipment, provide make-ready power distribution, or provide design and build support for fueling installations to incentivize transportation electrification. The public health and environmental benefits of ZEBs are increasing the availability of public funding programs for ZEB deployment. Prior to your ZEB deployment, research all opportunities for federal, state, and local funding as well as programs offered by your electric utility. The number and types of funding programs being offered associated with the ZEB industry are constantly changing. The sections below describe different types of funding sources that are or have been available, as of early 2020. States, regions, and local jurisdictions are beginning to undertake planning initiatives to address: • The role zero-emission vehicles play in achieving emission reduction goals, • How a state or region might accelerate the adoption of electric vehicles, • The feasibility of fleet electrification, and • The impact of electric vehicles on the grid. For example, the Massachusetts Department of Transportation (MassDOT) is conducting zero- emission vehicle feasibility studies. MassDOT is working with state agencies and commissions to evaluate opportunities to electrify the state’s vehicle fleets, including vehicles used by the regional transit authorities. (Senate Bill 2505, 2017) The California Department of Transportation (Caltrans) is working with state agencies such as public transit operators, to update the California Transportation Plan. The plan addresses how the state will achieve emissions reduction goals, taking into consideration the use of alternative fuels and new vehicle technology. (California Government Code 65070-65073) 3.4.2.1 Federal Funding Two competitive grant programs available through the Federal Transit Administration (FTA) offer funding that can help transit agencies deploy ZEBs. The Low or No (Low-No) Emission 3.4.1 Planning Initiatives 3.4.2 Financial Support

64 Guidebook for Deploying Zero-Emission Transit Buses Vehicle Program is included in the Fixing America’s Surface Transportation (FAST) Act. FTA issues a Notice of Funding Opportunity on an annual basis for this competitive program that provides funding for the acquisition of low- and no-emission buses and supporting infrastructure. FTA’s Bus and Bus Facilities Program is another competitive funding opportunity for transit agencies. Funding is available for capital projects to replace, rehabilitate, and purchase buses and to construct bus-related facilities. Unlike the Low-No program, the Bus and Bus Facilities Program is not exclusively focused on advanced vehicle technologies; however, awards in recent years have increasingly included projects supporting the deployment of ZEBs. 3.4.2.2 State Funding State or local programs may also offer funding to help support the purchase of ZEBs. The programs may offer vouchers, incentives, or funding awarded through competitive grants. One of the most well-known voucher programs is California’s Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP) offered by the California Air Resources Board (CARB). HVIP is a point of sale incentive program that offers vouchers to reduce the cost of eligible vehicles. Voucher amounts for the purchase of a new battery electric bus range from $90,000 to $175,000 and $300,000 for a fuel cell electric bus. Other states have offered similar programs in the past, including New York and Maryland. Replacement of transit vehicles is an eligible mitigation activity under the consent decree that governs the Volkswagen (VW) Environmental Mitigation Trust that made funding available to all 50 states, Puerto Rico, and the District of Columbia. States are beginning to open funding opportunities with some including a specific focus on transit vehicles. For example, the Driving a Cleaner Illinois Program made funds available for the replacement of diesel buses. Virginia is funding a Clean Transportation Voucher Program that offers grants to transit agencies to help offset the incremental costs associated with all-electric buses and also helps fund the purchase of infrastructure. As the VW funding includes scrappage requirements, transit agencies are advised to contact their regional FTA office to determine the useful life and federal interest in the vehicle proposed for replacement. Funding may be available through Air Quality Management Districts in California. For example, the Carl Moyer Memorial Air Quality Standards Attainment Program helps deploy newer and cleaner vehicles and is offered through a partnership between CARB and local air districts. These funds cannot be used for projects required by law or in certain periods prior to regulation compliance. 3.4.2.3 Utilities Electric utilities across the country are offering electricity rate or infrastructure incentives to support the deployment of light-, medium-, and heavy-duty vehicles. The incentives will vary by market and utility type (i.e., investor-owned utility, municipal utility, rural electric cooperative).

Capital Costs and Funding Opportunities 65 discussions. The type of utility will dictate the required procedures for any new rate structures or pilot programs. Infrastructure Incentive Examples Pacific Gas and Electric (PG&E) has created the EV Fleet program to assist fleets with the installation of charging infrastructure. According to the EV Fleet program website, the program “offers dedicated electrical infrastructure design and construction services, significant cost offsets for electrical infrastructure work, and additional EV charger rebates for eligible equipment” (PG&E, n.d.). Transit and commuter bus fleet customers are eligible for the program. Other utilities own and operate BEB chargers, and some are considering purchasing BEB batteries at the end of the bus’s service life to use as energy storage. Rate Incentive Examples Many utilities offer residential or commercial EV rates. Some utilities are conducting pilot programs that give fleet operators time to familiarize themselves with the technology and optimize operations. For example: • PG&E is proposing an EV rate where operators pay for kW of charging capacity, not the actual peak demand used. • Southern California Edison is waiving demand charges for 5 years. • Minnesota Power’s pilot program that would cap demand charges at 30% of the total electricity bill. 3.5 Additional Resources • Federal funding examples o Low or No Emission Vehicle Program, Federal Transit Administration o Bus and Bus Facilities Program, Federal Transit Administration • State funding examples o Carl Moyer Memorial Air Quality Standards Attainment Program, California Air Resources Board o Driving a Cleaner Illinois Program, Illinois Environmental Protection Agency o Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP), California Air Resources Board • Electric Utility examples o EV Fleet Program, Pacific Gas and Electric • Cost Estimations o Hydrogen Financial Analysis Scenario Tool (H2FAST), National Renewable Energy Laboratory, U.S. Department of Energy o HDRSAM, Argonne National Laboratory, U.S. Department of Energy Discuss available incentives or pilot programs with your utility and engage in any new rate filing

66 Guidebook for Deploying Zero-Emission Transit Buses o Total Cost of Ownership to Advance Clean Transit, California Air Resources Board o Advanced Clean Transit Program – Literature Review on Transit Bus Maintenance Cost, California Air Resources Board