The U.S. Electric Bus Transition: An Analysis of Funding and Financing Mechanisms by Dexter Liu | MEM/MBA ‘19 Advisor: Professor John Buley April 26th, 2019 Masters project submitted in partial fulfillment of the requirements for the Master of Environmental Management degree in the Nicholas School of the Environment of Duke University Contents Executive Summary ............................................................................................................................................................ 4 Acknowledgements ............................................................................................................................................................. 5 Section #1: The Electric Transit Bus Industry .............................................................................................................. 7 Introduction & Market Trends .................................................................................................................................... 7 Research Purpose & Methodology ............................................................................................................................ 10 Section #2: Current Ecosystem & Procurement Process .......................................................................................... 12 Electric Bus Manufacturers ......................................................................................................................................... 12 Transit Agencies ........................................................................................................................................................... 13 Federal & State Agencies............................................................................................................................................. 14 Infrastructure Technology & Electric Utilities ........................................................................................................ 14 Financiers ....................................................................................................................................................................... 15 Consultants .................................................................................................................................................................... 15 Procurement Process ................................................................................................................................................... 15 Section #3: Current Funding Mechanisms ................................................................................................................... 17 Federal Grant Money ................................................................................................................................................... 17 FTA: Low or No-Emission Grant Program (5339(c)) ...................................................................................... 17 FTA: Bus and Bus Facilities Grant Program (5339) .......................................................................................... 18 FTA: Urbanized Area Formula Grants (5307, 5340) ......................................................................................... 18 FTA: Formula Grants for Rural Areas (5311) .................................................................................................... 18 FTA: Capital Investments Grants (5309)............................................................................................................. 19 FHWA: Congestion Mitigation and Air Quality Improvement Program ...................................................... 19 State Grant Money ....................................................................................................................................................... 19 California: Hybrid and Zero Emission Truck and Bus Voucher Project ....................................................... 19 Voucher amounts are designed to help offset the incremental cost of a zero-emission bus versus natural gas buses. The voucher process is designed to be frictionless with HVIP approved manufacturers or dealers submitting voucher requests on behalf of fleets. HVIP vouchers can be used in conjunction with other grant funding. ................................................................................................................................................. 20 California: Low-Carbon Transit Operations Program ....................................................................................... 20 California: Transit & Intercity Rail Capital Program ......................................................................................... 20 Other States .............................................................................................................................................................. 20 Volkswagen Emissions Settlement Funds ................................................................................................................ 21 Municipal Transportation Taxes & Bond Offerings .............................................................................................. 23 Section #4: New Financing Mechanisms...................................................................................................................... 24 Bus & Battery Leasing ................................................................................................................................................. 24 Case Study: Proterra and Park City Transit ......................................................................................................... 24 Case Study: Generate Capital and BYD ............................................................................................................... 25 Utility Investment & Ownership ............................................................................................................................... 27 Case Study: Portland General Electric and Tri-County Metropolitan Transportation District of Oregon .................................................................................................................................................................................... 27 Energy/Transportation-as-a-Service ......................................................................................................................... 29 Section #5: Selected Case Studies .................................................................................................................................. 31 California | City of Porterville | Richard Tree ....................................................................................................... 31 South Carolina | City of Greenville/Greenlink | Nicole McAden ..................................................................... 32 Texas | Dallas Area Rapid Transit | Beverly Adler ............................................................................................... 33 Washington | Everett Transit | Melinda Adams .................................................................................................... 34 California | Antelope Valley Transit Authority....................................................................................................... 36 Section #6: Analysis, Market Forecast, and Takeaways ............................................................................................. 38 Key Drivers and Barriers of Adoption ..................................................................................................................... 38 2 Takeaways ...................................................................................................................................................................... 38 1. Manufacturing Ramp-Up ................................................................................................................................... 38 2. Aggregated Purchase Model .............................................................................................................................. 39 3. Larger Deal Sizes ................................................................................................................................................. 40 4. Technology Improvements ................................................................................................................................ 40 5. Policy Development ............................................................................................................................................ 41 Future Areas of Exploration ....................................................................................................................................... 42 Appendix ............................................................................................................................................................................ 43 Appendix A: Interview Questions ............................................................................................................................. 43 Transit Agency Interview Questions .................................................................................................................... 43 Manufacturer Interview Questions ....................................................................................................................... 43 Appendix B: State-by-State Zero-Emission Bus Deployment and Orders........................................................