How Transit Leaders are Thinking Outside the Box and Taking Control of Energy

By Marcus Gilmore , Clean Mobility Strategy, ENGIE North America Inc.

I recently had the opportunity to attend a public transit event in Atlanta sponsored by the Center for Transportation and the Environment (CTE). A colleague and I hosted small-group discussions with transit leaders from across the U.S. and Canada.

85% of Transit Agencies are Considering Onsite Solar Generation

We started each session by asking participants several specific questions about their organizations’ transition to zero-emission vehicles. We learned that a staggering 85% of the 31 transit agencies represented are considering integrating onsite solar generation, battery energy storage, and/or a resilient microgrid as a part of their charging infrastructure project.

Why is this important?

This shows that transit leaders are thinking holistically and strategically about their transition. Rather than just installing grid-connected chargers and hoping for the best, they are thinking about how to assume a new level of control over their energy. They know that electric buses will be less expensive to operate overall than their current diesel fleet, but they see an opportunity to further stabilize costs and improve both sustainability and reliability.

Transit systems have always had one large operational cost that is unpredictable—diesel fuel. They may have no choice but to ride the roller coaster of global petroleum prices. When communities make the move to electric buses, the path of least resistance is to exchange that risk for a similar risk—fluctuations in retail energy rates from the local utility.

But thinking outside the box can help mitigate that risk in ways that are not possible with diesel. By integrating onsite solar photovoltaic (PV) generation, transit systems can reduce their dependence on expensive grid power by generating a portion of their energy needs. If they add battery storage, that electricity can be used when higher, peak-hour utility rates are in effect. Adding a microgrid with backup generation capabilities can help agencies weather power outages by operating independently of the utility grid. All these enhancements help transit agencies assume more control over their energy use—and their budgets.

3 Models for Financing and Ownership

I’m happy to see so many transit agencies thinking strategically about these things, but the financial aspect of this transition poses a significant challenge. Public sector capital projects often involve complex funding processes, such as bond elections or special budget requests—both of which can be subject to the whims of politics. In addition to grants and incentives coming out of the Inflation Reduction Act (IRA), there are three distinct models for financing and operating charging infrastructure for electric buses. Each offers unique benefits and considerations, and understanding them can help transit leaders navigate the financial landscape of this transition.

They are:

• Agency owned, agency financed. This is the traditional model where an agency identifies its own capital funds and contracts with an energy services company to build infrastructure on its behalf. The agency owns the resulting systems and maintains them in-house or with a service contract.
• Agency owned, third-party financed. This option enables an agency to leverage third-party financing so that the capital costs are paid off with operating funds over time. The agency owns the completed infrastructure, and operates and maintains it in-house or with a service contract.
• Third-party owned and financed. Sometimes called Charging as a Service (CaaS), this model involves a long-term agreement with an energy services company that finances, designs, and builds the charging stations and related energy projects. This third party owns, maintains, and operates the completed infrastructure on the agency’s behalf, bound by strict service-level agreements (SLAs). The agency transfers operational risk and pays a predictable, contracted rate for energy consumed.

When we spoke with our small groups at CTE, it was encouraging that several attendees were already aware of the implications of each of these models. More than one-third were considering a CaaS approach before we even explained the concept. These leaders are on the cutting edge, responsibly overcoming capital constraints to accelerate the transition to zero emission vehicles.

The Need to Move Quickly

We also asked what agencies’ goals are for the timing of fleet electrification. Three-quarters of the agencies represented in our sessions have specified a transition timeline. While full electrification is 10 to 15 years away for virtually everyone, many agencies have intermediate goals that are looming sooner—and some leaders are feeling a little overwhelmed by the whole thing.

Speed is indeed of the essence for many agencies—both to comply with organizational or government mandates and to qualify for currently available grants and incentives. But the cost savings on the other end of the process are potentially game-changing, given the lower operating costs of electric buses, the energy cost savings from onsite generation and storage, grant funding availability, and financing mechanisms like CaaS. If you have questions or would like to explore these options, the ENGIE team is here to help.