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Business case for compressed natural gas in municipal fleets

Compressed natural gas (CNG) vehicle projects can be highly profitable, or they can lose money, depending on numerous aspects of the fleet and station. To assist fleets and businesses in evaluating the profitability of potential CNG projects, the National Renewable Energy Laboratory (NREL) built the CNG Vehicle and Infrastructure Cash-Flow Evaluation (VICE) model. The VICE model demonstrates the relationship between project profitability and fleet operating parameters.

This report describes how NREL used the VICE model to establish guidance for fleets making decisions about using CNG. The first section establishes a base-case scenario for three fleets that commonly use CNG—transit buses, school buses, and refuse trucks. This base-case tries to represent the average or most-common parameters affecting the CNG project’s profitability for average fleets of each type.

The second section uses the model to show how specific project parameters (such as station cost or price of fuel) change profitability from the base-case. The section then prioritizes these parameters to help fleet operators understand the most important factors affecting the business case of the project. Through a question-and-answer format, this section presents common CNG-related questions answered by NREL using the VICE model. The business case targets municipal governments, which operate fleets suited well for CNG vehicles because they drive circular routes that enable refueling at the same station.

These fleets are transit buses, school buses, and refuse trucks. Municipal governments are also targeted
because their primary goal is to improve their residents’ quality of life. This goal allows the government to utilize all the advantages of CNG, including long-term cost-effectiveness, more-consistent operational costs, increased energy security, reduced greenhouse gas emissions, reduced local air pollution, and reduced noise pollution. A forthcoming report will focus on private fleets that are suited well for CNG, such as taxi cabs and delivery trucks.

Download the report: Business case for compressed natural gas in municipal fleets