The Business Case for Natural Gas Vehicles in Utility Fleets
As utility fleets continue to search for cleaner-burning vehicles that operate more efficiently and use lower-cost fuel, the business case for natural gas vehicles (NGVs) is becoming clearer thanks to advancements in vehicle technologies and evolving infrastructure.
And yet, the recent decrease in oil prices – which is being driven, in particular, by a slowing global economy and increased supplies of shale gas in the U.S. – has left some people wondering about the future of NGVs. Do they still offer an economically viable solution for utility fleets? How will the decrease in oil prices impact initiatives to switch to clean-energy vehicles?
“Despite the current low cost of oil, natural gas still enjoys substantial cost savings compared to gasoline and diesel,” said Matthew Godlewski, president of NGVAmerica (www.ngvamerica.org), an organization dedicated to the development of a sustainable market for vehicles powered by natural gas or biomethane. “Utility fleets that have already begun to make the switch to natural gas and have seen its economic and other benefits firsthand are continuing to stay the course.”
Godlewski added that the United States’ abundant domestic reserves of natural gas help to create long-term price stability that allows fleet operators to avoid the price volatility of traditional petroleum fuels.
While the current lower cost of gasoline and diesel has the potential to negatively impact NGV adoption, making the switch to natural gas is about more than just economics.
According to Ron Gulmi, managing director of Emerald Alternative Energy Solutions (www.eaesi.com) and a former fleet manager at Long Island Lighting Co. and KeySpan Energy Delivery, utilities should integrate NGVs into their fleets for many reasons, including setting the right example for customers, complying with energy mandates and meeting their own sustainability goals.
“You don’t drink Coke in a Pepsi factory,” Gulmi said. “Utilities need to walk the talk. If they want customers to convert, they should do it themselves.”
Natural Gas Benefits
In addition to cost savings, natural gas delivers a host of other benefits, both for users and the environment. For starters, it burns cleaner than gasoline and diesel, and it produces fewer emissions. It’s no wonder, then, that the topic of natural gas often comes up as companies – spurred on by government tax incentives – look for ways to build cleaner-running fleets.
“Utilities should consider using NGVs regardless of oil prices because they should be buying what they are selling, CNG is still cheaper than gas or diesel in most areas of the country, and natural gas burns cleaner and is better for the environment,” said Chad Schlaepfer, business development associate for ampCNG (www.ampcng.com), which owns and operates CNG stations across the country.
Another benefit of natural gas is that it is less volatile compared to other fuel sources. And whereas the costs of gasoline and diesel ebb and flow, that’s not usually the case with alternative fuels.
Natural gas also offers safety advantages such as lighter-than-air properties and a high ignition temperature, meaning it is less likely to catch fire if exposed to a heat source. Additionally, it doesn’t leak into groundwater and is a colorless, odorless, nontoxic substance.
“While performance and economics will always be the leading factors in converting fleets, many utilities have larger sustainability goals, and the significant environmental benefits offered by NGVs are instrumental in achieving those objectives,” Godlewski said. “The abundant long-term domestic supply of American natural gas is also an advantage that utilities often consider.”
The main factor driving the switch from diesel to natural gas is fuel-cost savings, which can be dollars per gallon. This savings is demonstrated mostly in vehicles with high-fuel consumption, or trucks that run 80,000 miles or more per year.
Ideal Natural Gas Candidates
According to Gulmi, ideal candidates for natural gas are higher-use, higher-mileage vehicles or vehicles that have a PTO engaged with the engine idling while burning fuel to operate it.
Godlewski agreed. “Natural gas vehicle projects for high fuel-use applications will always enjoy the greatest economic returns,” he said. “The low cost of natural gas compared to gasoline and diesel means greater savings are realized through greater fuel use.”
Refuse, public transportation, Class 8 and heavy-duty vehicles also often benefit from the use of natural gas. But as advancements are made in NGV technology, fleet managers should see NGVs as a more feasible financial solution even for lower-mileage fleet vehicles.
Given the increased fuel-cost savings, environmental advantages and available tax credits, it’s no wonder natural gas continues to interest utility fleet managers as a viable alternative to gas and diesel. And with the safety advantages it offers, the use of this fuel source to power utility fleet vehicles will likely only continue to grow in the future.
About the Author: Cheryl Knight has written for the fleet industry for more than 20 years. Her work has appeared in Automotive Fleet, Fleet Financials, Government Fleet and a number of other niche-market publications.