AMPLY releases white paper on the potential cost-savings of electric fuel
A new white paper authored by AMPLY Power breaks down electricity rate structures given fleet vehicle requirements by comparing the cost to “fuel” different vehicle fleets in the top 25 U.S. metropolitan areas.
According to the paper, in more than 84% of these top areas (based on population in the U.S.), it is cheaper to refuel electric trucks, buses, and passenger vehicles with electricity than fossil fuels. However, the complexity of electricity rate structures, coupled with confusing or conflicting metrics, is a fundamental impediment to a global transition to electric vehicle (EV) fleets. Unlike gasoline or diesel fuel prices (all-too-well-understood in the U.S. as a fixed number of dollars per volumetric gallon), electricity prices can vary significantly on a volumetric (measured in kWh) basis.
In fact, according to the white paper, there are three basic components that get factored into an energy bill:
- Energy charges: In $/kWh, these are how many electrons were consumed. Much like gasoline, this charge is purely volumetric (e.g., to fill a 100 kWh battery you would need 100 kWh); however, as compared to gasoline, the volumetric price per kWh in most cities will vary depending on the time of day or day of week that the battery is charged (“time of use” energy pricing). In some cities, “on-peak” energy charges (e.g., charging in the middle of the afternoon) can be nearly six times as costly as “off peak” energy charges (e.g., charging in the middle of the night).
- Demand charges: Demand charges (in $/kW) refer to the instantaneous rate at which the vehicle is charged, and for the majority of the top 25 metros, are typically calculated using the single highest 15- or 30-minute “spike” registered in a month. Much like energy charges, demand charges in these areas typically also have on- and off-peak rates, thus, designing a fueling strategy to limit demand both overall and during on-peak periods is critical.
- Fixed charges: Fixed charges (in $/month) refer to the regulator-approved fixed components of any electricity bill. For the most part, these charges are not impacted by charging strategies and should be amortized across all consumption over the course of the month.
This report attempts to distill and simplify the interaction of complex electricity rate structures with fleet vehicle requirement by providing a comparative assessment of how electricity rate structures in the top 25 U.S. metropolitan areas impact the cost to “fuel” different vehicle fleets. Thus, the company has developed the Dollar per Gallon-equivalent (DPGe) metric. The DPGe is described as a "direct, apples-to-apples comparison" that allows the company to assess the electric dollar per gallon-equivalent of gasoline (or diesel) for specific cities, incorporating regional-specific electricity rate structures, fleet-specific charging strategies, and vehicle class efficiencies into a single metric that can be used to assess, plan, and budget for a fleet transition.
The results of the DPGe calculation across the top 25 U.S. metros yielded the following findings:
- Light-duty fleets: With the updated assessment, AMPLY found that well-managed light-duty EV fleets can see a lower fuel cost than their ICE fleet counterparts in 23 of the top 25 U.S. metros. In those 23 cities, it is 47% cheaper than gasoline to fuel light-duty vehicles with electricity.
- Medium-duty fleets: The DPGe study indicates that with a fueling management strategy, fueling light-duty vehicles with electricity is cheaper than fueling using gasoline in 21 of the top 25 metros. Removing the four cities that did not experience cost-savings, electric fuel is, on average across these cities, 41% cheaper than gasoline for medium-duty vehicles.
- City bus fleets: In 24 of the top 25 cities, the company found that switching from diesel to electricity generates cost savings. On average larger savings can be seen than last year with electric fueling being 64% cheaper than diesel in those 24 metros.
- Heavy-duty fleets: Fueling heavy-duty vehicle fleets with electricity in 22 of the top 25 metros provides significant costs savings with a managed charging strategy. On average, it is 47% cheaper than diesel to fuel heavy-duty fleets in these 22 metros.
The company states that DPGe demonstrates that the value of transitioning fleets to electric, but that value must be understood in locational-and operational-specific terms. It added that in some cities, such as New York, it would be illogical and quite costly to transition a light-duty fleet to electric without a targeted management strategy.
Other metros with lower electricity rates, such as Seattle, face a simpler quandary: Whether or not the fleet is managed or otherwise, there is real value to be had in fleet electrification. In every metro, a fleet management strategy can generate even greater savings and yield increased value to organizations that decide to transition.
Where in the highest-variable metros a managed charging strategy can reduce fuel costs by as much as 85%, the company says fleet operators must truly understand the dynamics of both their city’s electricity structure and their fleet requirements. Detailed studies, analyses, route planning, and assessments must be completed to realize these savings—but this hard work and thorough diligence will generate very meaningful value to stakeholders, and will flip the discussion of a fleet transition from “a costly sustainability action” to “a must-have cost reduction measure.”
For more information, visit amplypower.com.