Electric School Bus Fleets Test the US Vehicle-to-Grid Proposition

There are good reasons for electric school buses to be the
breakout vehicle-to-grid (V2G) technology in the United States. At
least, that’s how Duncan McIntyre, CEO of Highland Electric
Transportation, sees it.�

McIntyre, who founded renewable energy procurement and analysis
marketplace Alternex in 2011 and sold it to Edison International in
2015, started Highland Electric two years ago to build a
“business entirely around the school bus electrification
market.†

The idea is to replace the up-front and ongoing costs of EV
buses and charging infrastructure with a fixed annual fee, equal to
or less than a school district’s current budget for owning,
fueling and maintaining their existing diesel-fueled fleets.
Highland finances the arrangement and recoups the investment by
finding ways to earn money from the new fleet’s battery capacity
when they’re not on the road. 

A major part of that equation relies on tapping their energy
storage capacity for soaking up low-cost overnight or midday power
— and more importantly, discharging it during grid-stressed
evening peaks. That’s the big difference between V2G
technologies
, which actively tap EV batteries, and the far more
common “V1G†approach of simply throttling or halting EV
charging to reduce grid impacts. 

Out of all the EVs out there, “we think electric school buses
are the killer V2G app,†McIntyre said in an interview last week.
Not only do the nearly 500,000 school buses in North America spend
most of their time parked, “they’re idle in the middle of the
day, they’re idle in the evening, and they’re idle all
summer,†a schedule that fits almost perfectly with emerging grid
needs. 

Why V2G has been slow to take off 

Vehicle-to-grid isn’t a novel technology in the U.S. One of
the most widespread V2G technology platforms today was initially
developed at the University of Delaware back
in 2007
. San Diego-based Nuvve has built that foundational
technology into a platform orchestrating EV grid services in
Europe, Japan and the U.S., including a commercial V2G operation in
Denmark that’s been running for
four years

Europe is home to multiple
V2G projects
 actively bidding into energy markets. But in the
U.S., V2G opportunities have been limited by a number of
factors, said Jacqueline Piero, Nuvve’s vice president of
policy. Adding bidirectional power flow adds complications
that state interconnection regulations and U.S. grid operator
market structures aren’t designed to handle. 

But these bottlenecks have started to open. California recently
revised its interconnection
rules to include V2G
 systems, laying the groundwork for broader
adoption, she said. Mid-Atlantic grid operator PJM has followed up
its University of Delaware V2G pilots with tests with BMW and
General Motors, and is participating
in a pilot
 launched by Virginia utility Dominion Energy. 

In March, Highland Electric Transportation landed
its first deal
 with the city of Beverly, Mass. to supply Thomas
Built Bus’s electric buses powered by Proterra’s
electric drivetrains
 and charged with Proterra’s 60-kilowatt
charging stations. Highland is working with utility National Grid
to tap its lucrative energy storage pay-for-performance incentives,
and is also exploring opportunities from grid operator ISO New
England’s emergency response program, McIntyre said.

Nuvve, which announced plans this week to go public via a
special purpose acquisition vehicle
(SPAC) reverse merger
, has recently started
bidding stationary battery capacity
at the University of
California at San Diego’s microgrid into California state grid
operator CAISO markets, as a precursor to tapping the microgrid’s
growing EV fleet. But not all EVs are well-suited to taking part in
V2G to money-making opportunities, Piero noted. First and foremost,
EVs have “a primary use that can’t be compromised†—
serving the transportation needs of their owners. 

Most U.S. EV charging systems today offer incentives for EVs to
charge with cheap and plentiful off-peak energy, and avoid charging
when grid demand is at its peak. That will be critical to manage
the grid impacts
 of an EV fleet that’s set to grow to tens of
millions of vehicles in the coming decade. 

But EVs may not have much excess battery capacity, and can face
significant customer and automaker resistance to adding stress to a
battery whose long-time health is critical to maintaining vehicle
range and value.

School buses, by contrast, can carry batteries with excess
capacity to provide the grid. Proterra’s 220-kilowatt batteries
for Thomas Built school buses are warrantied for 4,000 cycles over
eight years, which means that “more than half of their use case
could be for use as a grid asset,†CTO Duncan Grace said.   

Most EVs also charge at unpredictable times and locations,
making it hard to align their capabilities with traditional energy
market and utility program constructs. EV fleets, by contrast,
offer scale that multiplies their value, and a single owner that
can commit them to being available when they’re most valuable to
the grid. 

Utilities, public-private partnerships targeting the electric
school bus opportunity

School buses fill a unique niche in the world of fleet vehicles,
Piero noted. First of all, they’re an almost completely North
American phenomenon, as most other countries rely on public transit
or other transportation methods for students. 

Second, they’re owned by school districts or city and county
agencies open to a variety of public-private partnerships. Nuvve
has been participating in California Energy Commission-funded
school bus V2G pilot projects in the Southern California school
districts of Torrance
and Rialto,
partnering with bus
maker Blue Bird

An electric school bus still costs about $120,000 more than its
diesel equivalent upfront, but will save its owner about $170,000
to $240,000 in lifetime fuel and maintenance costs, according
to a
2018 report
 from the U.S. Public Interest Research Group
(PIRG). Multiple avenues are emerging to bridge the resulting gap
between up-front costs and long-term payback. 

The California Energy Commission’s School Bus Replacement
Program has dedicated $94
million
 to help cover conversion costs for eligible districts
or agencies. States including Vermont, Minnesota, Arizona and
Michigan have set aside EV bus funds from their shares of
Volkswagen’s $2
billion ‘Dieselgate’
 settlement. Proterra has a $200
million credit facility
 with Japan’s Mitsui to finance leases
of its electric bus batteries. 

Utilities are also funding electric school buses to meet state
or internal transportation electrification and decarbonization
goals, and to expand into a new class of capital investment. The
biggest to date is in Virginia, where utility Dominion Energy has
won regulator approval to deploy 50
electric buses

Of course, allowing utilities to use ratepayer funds to engage
in EV markets can create anti-competitive concerns. Dominion has
yet to win Virginia lawmakers’ backing for a plan to expand its
program to 1,000 electric school buses by 2025, with competing
bills
 proposing state block grants or other funding mechanisms
to open the market to non-utility competitors. 

But most states have allowed utilities to invest
in infrastructure
 to enable EV charging while keeping the
charging itself open to multiple parties, a model that could be
applied to utility V2G investments. VW settlement-funded, five-year
electric bus pilot program in Michigan with
Proterra and utility DTE Energy
will include tests of their V2G
capabilities to provide building backup power during
emergencies. 

Utility
Arizona Public Service
is also exploring the potential to
partly finance electric school bus fleets for school districts in
exchange for gaining access to their batteries for grid services
during off hours. 

Judson Tillinghast, APS product development and strategy leader,
noted in a recent interview that the day-to-day availability of
electric school buses for V2G match well with the state’s
solar-driven supply-demand imbalances. â€œThere are some
correlations here that really make sense in terms of a
partnership.†

(Image courtesy of Arizona Public Service and Advanced Energy
Economy)

As a company centered on financing school bus V2G values,
Highland is opposed to allowing utilities to own the vehicles
themselves, McIntyre said. But “we might argue that the utilities
could own the batteries, and treat them as distributed energy
resources to support the grid.†

Highland is actively developing about two dozen more deployments
similar to its deal with Beverly, he said, though he wouldn’t
disclose where they were. Nor did he provide specifics on the
“really big balance sheet companies†that are providing the
capital behind its contracts, though he did say the deregulated
business of a Fortune 500 electric utility was among them.  

* * * 

Learn more about the expanding role for distributed and
aggregated batteries to serve grid needs at Wood
Mackenzie’s Energy
Storage Summit 2020
 this week. The three-day event, now in its
sixth year, will bring together utilities, system integrators,
financiers, regulators, battery and software innovators, and other
key storage players for two days of data-intensive presentations,
analyst-led panel sessions with industry leaders, and extensive,
high-level networking. 

Source: FS – GreenTech Media
Electric School Bus Fleets Test the US Vehicle-to-Grid
Proposition