With support from Convergence Blended Finance, Clean Energy Works conducted a feasibility study and found promising results for the implementation of electric technologies in transit and the innovation of PAYS for Clean Transport in Lima, Peru. In this newly released report, Clean Energy Works presents the financial analysis that led to the findings, lessons learned from the study, and potential paths forward to continue promoting electric buses and new financial instruments in Lima and the rest of Latin America.
This report shows the potential to use PAYS for leveraging concessional capital as the market matures and prices fall. The analysis relied on existing available data and results are sensitive to assumptions about electric bus purchase cost and maintenance costs. Clean Energy Works found that during this study new data emerged from Santiago indicating much lower maintenance costs for electric buses after one year of operation compared with data provided for this initial analysis. Should this trend continue, it will have a significant impact on the total cost of ownership for electric buses and their business models in the region.
In addition to the positive results, there are, however, barriers specific to the Lima context which could prevent PAYS for Clean Transport from being successfully implemented. The study also confirmed technological, institutional, and regulatory barriers in addition to the high up-front cost, not unique to Lima, which need to be cleared for utilities to play a pivotal role in electrification of transport.
With this analysis and experience Clean Energy works found that the key next steps to the adoption of PAYS for Clean Transport or any novel electric bus financing mechanism include engagement with electric utilities, financial institutions, and local and regional allies in order to support existing ongoing reforms, test proposed models, and find solutions to remaining barriers.