By 2030, every one of the 15,000 diesel school buses in Dominion Energy’s service area will be all-electric, and Dominion Energy will mobilize the capital to pay for the upfront cost premium of all those zero emission buses. That’s the bold vision announced by Dominion’s CEO alongside the Governor of Virginia during the 2019 Back to School season.
Dominion Energy announced plans to work with schools to deploy 50 electric school buses in Virginia by next year, ramping up to 1,000 by 2025. The utility aims to replace the remaining 14,000 school buses between 2025 and 2030.
Mothers Out Front, a grassroots group committed to a “swift, complete, and just transition away from fossil fuels,” has campaigned for electric school buses in Fairfax County, which has one of the largest school bus fleets in the country. They called for school district authorities to eliminate toxic diesel fumes from school buses. These fumes include carcinogens and other particulates that cause asthma and other breathing issues in our children. Within 10 days, Dominion answered their demands.
This first phase of the transition — the first 50 buses — has a price tag of approximately $13 million. At a time when many school districts struggle to find sufficient funds for teachers and supplies, Dominion’s ability to pay for the difference in upfront cost between a diesel bus and a zero emission electric bus (plus the necessary charging infrastructure) makes a game-changing difference. But how Dominion mobilizes the money for these buses could ultimately limit how much this solution can scale, both to buses beyond the initial 50 and elsewhere in the United States.
On the same day of their announcement on electric school buses, Dominion Energy also claimed excess profits in 2018 of $277.3 million, much more than allowed by Virginia utility regulators. Under a law passed in 2018, Dominion can divert excess earnings into new capital investments that modernize the state’s electric grid and boost renewables, instead of refunding the money to ratepayers or reducing electricity rates. The total incremental upfront cost of 1,000 electric school buses purchased over the next five years is approximately $260 million.
While it’s good news that Dominion has chosen to commit excess profits from ratepayers into zero emission buses for student transportation, the choice also highlights a not-to-be-missed opportunity to harness the funds to achieve much greater benefits for the ratepayers of Virginia. Rather than pitting ratepayers against school districts, utilities can achieve a positive, equitable impact with cost-effective investments that benefit both ratepayers and students.
Clean Energy Works has performed financial analyses for utilities and transit agencies looking for solutions to the upfront cost barrier of EV buses. Based on our completed transit analyses and preliminary results for electric school buses, it is clear that a utility can accelerate deployment of zero emission school buses by making site-specific, cost-effective tariffed investments in bus batteries and charging stations with cost recovery and a pathway to ownership for the school bus fleet operator. This approach would accelerate the electrification of the remaining 14,000 school buses in Virginia with vastly lower burden on ratepayers and would also speed up the pace at which other utilities could follow suit, meeting growing demands from parents, students, teachers, and drivers to eliminate fossil fuel pollution.
While transit buses are on the road most of the time, school buses are typically parked most of the time. As a result, batteries aboard school buses can be dispatched to cut the energy costs of the school or even of the utility itself. This interaction between the vehicle and the grid can increase utilization of the grid, providing additional value to ratepayers and to the utility. For instance, Fermata Energy, a Virginia-based company, makes vehicle-to-grid technology capable of realizing the value of vehicle batteries when the vehicles are parked at their charger. The value streams from those additional services make the value proposition of all-electric vehicles even more compelling, multiplying the number of electric school buses that could be deployed with $270 million.
Clean Energy Works looks forward to exploring further the potential for utilities to accelerate deployment of zero emission school buses with investments that have a lower burden on ratepayers for greater benefit to all.