By Wayne Snead of Texas Gas Service
If you’re a fleet manager considering switching to compressed natural gas (CNG), you may be asking yourself the following:
- Do I have the right type of fleet?
- What type of fueling station is required?
- How much will the project cost?
- What is the payback period?
- Where will I get the money?
A recent study by The Center for Climate and Energy Solutions (C2ES), funded by the U.S. Department of Energy, may provide some answers (calculations based on 2014 fuel prices):
1. Whether your fleet is a good candidate depends on a number of factors including vehicle type, size of fleet, annual mileage per vehicle, travel patterns and vehicle life. C2ES found that tractor-trailers (weighing under 80,000 pounds since larger 15-litre engines aren’t available) offer the most opportunity because they consume a large amount of fuel (high annual mileage of more than 60,000 miles), have a low fuel economy per vehicle (5.8 miles per gallon), an annual turnover of 353,000 vehicles and an average lifespan of seven years. Larger fleets with short turnover times (due to shorter vehicle lifespans) may be better candidates. School buses also have potential.
2. There are several types of fueling stations and the best one for your fleet will depend on your required fueling time. If you need to use the vehicle right after filling, you need a fast-fill station. If your vehicles remain parked overnight between uses, a time-fill station is best. Keep in mind, the fuel dispensing hose is not compatible between the two types of stations.
3. Natural gas vehicles cost more to purchase: an additional $3,750 premium for a taxi to $90,000 for a Class 8 tractor-trailer fueled with liquefied natural gas. Adding new fueling infrastructure—which costs between $500,000 and $1,000,000 per station based on one fuel pump—increases upfront costs significantly. For tractor-trailers and school buses, infrastructure can add between $400,000 and $22 million to the project cost, depending on the size of the fleet and the vehicle miles traveled.
This additional cost may extend the payback period beyond the expected life of the equipment. Large fleets with high mileage may work the best. School bus fleets must have a very high annual mileage (20,000 or more per vehicle) and more than 50 vehicles in order to achieve a net cost savings when new infrastructure is required.
4. The price difference between diesel, gasoline and CNG (gallon equivalent) is the largest single factor affecting payback. Although the price difference has narrowed significantly in recent months, the U.S. Energy Information Administration maintains that gasoline and diesel prices will rebound and remain higher than natural gas prices for the next several decades.
CNG prices are also less volatile compared to those of diesel and gasoline, remaining within three cents of the average price over three years compared to 23 and 45 cents, respectively. Vehicles with long life expectancies have more time to accumulate fuel cost savings, which can result in a net cost savings over the life of the project.
The National Renewable Energy Laboratory’s Vehicle and Infrastructure Cash-Flow Evaluation tool calculates how net savings depend on fleet type, fuel price, equipment costs and operation and maintenance costs.
5. According to the DOE Alternative Fuel Data Center, 38 states and the District of Columbia offer grants, loans, rebate programs or tax incentives for natural gas conversions. If there are other natural gas fleets in your area, you can leverage existing fueling infrastructure or share new infrastructure, which will significantly reduce fueling station costs.
If financial incentives aren’t offered in your area, you may want to contract with an energy service company, which provides technical and financial assistance. In general, the cost savings must be great enough to cover the energy service company’s costs and provide the necessary benefit for the fleet owner. The higher the cost savings, the more services will be available.
Lower Emissions
CNG vehicles also have a positive impact on the environment. For instance, tractor-trailers can reduce their carbon dioxide emissions by nearly 365,000 pounds over the vehicle lifetime, assuming an annual mileage of 66,000. Argonne National Laboratory’s GREET tool provides life cycle analysis of greenhouse gas emissions of natural gas fuels and vehicle technologies.