USERS GUIDE: E-Truck Task Force (E-TTF) Business Case Calculator

Transcription

1 USERS GUIDE: E-Truck Task Force (E-TTF) Business Case Calculator Purpose: CALSTART s intent in developing and providing this E-TTF Business Case Calculator is to provide fleets with a simple, useful planning tool that can help them make informed decisions about how best to use and succeed with e-trucks. Especially at this early stage in the market where knowledge of e-trucks is scarce, fleets can benefit from a tool to help them organize their approach to procuring, placing and using these vehicles. Like its partner tool, the E-TTF Infrastructure Planning Guide, CALSTART and its industry and fleet partners working in the E-Truck Task Force felt these tools helped fill information gaps in the early market. Much of the data comes directly from early fleet and vehicle experience. What it is / What it is not: This calculator IS a great tool to visually show if the e-truck can be a success for you, and how the key variables in implementing e-trucks dramatically affect your payback. Those key variables are: Purchase price (and ways to offset it, like incentives); How many miles you can drive every day (or how much energy you use payback comes from off-setting petroleum); and Infrastructure (careful advanced planning can control this cost). Run different mileage or energy use numbers and you will see what we mean. However, this is NOT intended to give you an absolute calculation of your internal business case. That will depend on variables only you will know, including other reasons for buying e-trucks (zero emissions operations, noise reduction, sustainability, renewable energy). So use it as a planning guide to head in the right direction, but you may still want to run your own business case. It is also not perfect and we are regularly updating it consider it a work in progress for which we request your feedback. How to Use: The User s Guide is laid out quite simply it provides an explanation of all the fields in the calculator, guiding you on which ones you can enter data into, and where to find guidance information for fields where you are not yet sure of your own data. At each stage, we also share with you the assumptions built into the calculator s function. About HTUF: HTUF is a national, multi-year, user-driven program to speed the commercialization of hybrid, electric and advanced technologies for the medium- and heavy-duty industries. HTUF is operated by CALSTART in partnership with and under contract to the US Army TARDEC National Automotive Center.

2 Vehicle life The vehicle life represents the number of years the vehicle will be kept in service. The default value is 10 years but the calculator can accept up to 30 years if needed. Vehicle class From a scroll-down menu, the user can choose between 2 classes of medium and heavy-duty trucks: Class 4 and Class 5-6. In addition, 2 operating modes are available: driving and work site. The driving mode represents delivery or city driving operation in which the truck is predominantly driving. The work site mode represents operation in which the truck uses energy to operate a boom or to provide external power (for utility or telecom operation for example). In the calculations, we used the following numbers for fuel efficiency and electric efficiency: 1 Fuel Efficiency Electric efficiency Class 4 Driving 9 MPG 0.70 kwh/mi Class 5-6 Driving 8 MPG 1.00 kwh/mi Class 4 Work Site 7 MPG 0.85 kwh/mi Class 5-6 Work Site 6 MPG 1.20 kwh/mi Vehicle daily range / Vehicle fuel usage If the driving mode is selected, the user will have to choose a vehicle daily range, representing the number of miles the vehicle is driven each day it is in service. If the work site mode is selected, the user will have to choose a vehicle daily fuel usage, representing the number of gallons of diesel that the conventional diesel truck consumes daily. Please note that we assumed trucks are operated 5 days per week and 50 weeks per year. Vehicle capital cost The vehicle capital cost is the total cost of the conventional diesel vehicle, including cab/chassis or strip chassis, and with your body configuration. Please note that the vehicle capital cost needs to be entered as a negative number: for a truck that costs $65,000, enter Conventional Diesel Price guidelines 2 Class 4 Driving $65,000 Class 5-6 Driving $85,000 Class 4 Work Site $90,000 Class 5-6 Work Site $130,000 1 These numbers were derived from discussions with CALSTART staff. 2 These price guidelines are ballpark estimates and were derived from discussions with CALSTART staff.

3 Maintenance cost The maintenance cost is the amount of money that is spent on maintenance and repair for each mile that the conventional truck is operated. 3 Diesel fuel price Diesel fuel prices are from the U.S. Energy Information Administration (EIA) weekly gasoline and diesel fuel update. 4 The default value is the weekly California No. 2 diesel retail sales by all sellers. We recommend you visit the Energy Information Agency web site for the latest fuel prices. For your information, the table below presents an example of diesel fuel prices from the EIA: U.S. On-Highway Diesel Fuel Prices ($/gallon) As of 04/16/12 U.S East Coast New England Central Atlantic Lower Atlantic Midwest Gulf Coast Rocky Mountain West Coast West Coast less California California Source: U.S. Energy Information Administration (EIA) Fuel escalation rate We included a fuel escalation rate to account for the probability that the cost of diesel in the future will be higher than it is today. The fuel escalation rate is a percentage number representing the average percentage that diesel prices will increase every year. 5 3 Conventional diesel maintenance cost default value was derived from D. Hurst and C. Wheelock, Hybrid, Plug-in Hybrid, and Battery Electric Medium and Heavy Trucks: Market Analysis and Forecasts, Pike Research, 3Q The fuel escalation rate default value is derived from A. Rushing, J Kneifel and B. Lippiatt, Energy Price Indices and Discount Factors for Life-Cycle Cost Analysis -2011, U.S. Department of Commerce, September 2011.

4 Maximum charging power The maximum charging power represents the power (in kw) at which the electric vehicle will be charged. For Level 1 charging, the maximum charging power is 3.3 kw. At this charging power, a 50 kwh battery would be charged in 15 hours. For Level 2 charging, the charging power ranges from 3.3 kw to 19.2 kw. At 6.6 kw, a 50 kwh battery would be charged in 8 hours. At 19.2 kw, a 50 kwh battery would be charged in 3 hours. The on-board charger is usually the limiting factor on your power. However, charging power is a product of two things: the force (Voltage) and the current (amps). So, if you have a 240 Volt connection at 50 Amps of current, your charging power could be 12kW (240 x 50). If you know your charging power, you can enter it. This is important to know when accounting for the power needs of your facility, especially if you have multiple vehicles. Maintenance cost The maintenance cost is the amount of money that is spent on maintenance and repair for each mile that the electric truck is operated. 6 Electricity cost From a scroll-down menu, the user can choose between 7 different electricity prices, ranging from $0.08/kWh and $0.20/kWh. For your information, the table below presents the average commercial retail electricity prices from the EIA: Average Commercial Retail Price of Electricity to Ultimate Customers ( /kwh) November 2011 U.S Massachusetts New York Ohio 9.44 Missouri 7.36 Florida Kentucky 8.55 Texas 8.77 Colorado 9.44 California Hawaii Source: U.S. Energy Information Administration (EIA) It is important to talk with your facility managers to understand what rates are paid for electricity at different times of day. This can vary widely, and can impact your payback. There may be Time of Use (TOU) rates your facility pays, however, that can provide extremely low cost electricity. 6 Electric vehicle maintenance cost default value was derived from D. Hurst and C. Wheelock, Hybrid, Plug-in Hybrid, and Battery Electric Medium and Heavy Trucks: Market Analysis and Forecasts, Pike Research, 3Q 2011.

5 Demand charges Demand charges have been a surprise to some users, and in some few cases have been quite substantial. The rate structures that apply to commercial and industrial customers usually include a monthly demand charge based on the highest amount of power drawn by the facility. In the simplest case, the demand charge is based on the peak demand in a given month, usually averaged over a 15- minute period, no matter what time of day it occurs. 7 The user has the possibility to include in the calculation the demand charges from the electric vehicles. When they are included, we assume a worst-case scenario where the power demand from the electric vehicles is added to the maximum power demand of the fleet facility. For example, in case A below, electric vehicle charging occurs at night when the facility s power demand is low. Although, charging increases the facility power demand at night, it does not increase the maximum power demand for the day, and thus does not increase the demand charges. On the other hand, in case B below, the facility sees its maximum power demand at night. Charging electric vehicles at this time increases the maximum power demand for the day, and thus increases the demand charges as well. From a scroll-down menu, the user can choose between 5 different demand charges prices, ranging from $5/kW and $25/kW. You do not need to build demand charges into your business case if you do some smart planning in advance of deployment to know how much energy the facility uses where you will be recharging your vehicles, and can avoid going over your peak demand. Electricity escalation rate We included an electricity escalation rate to account for the probability that the cost of electricity in the future will be higher than it is today. The electricity escalation rate is a percentage number representing the average percentage that electricity prices will increase every year. 8 7 From G. Masters, Renewable and Efficient Electric Power Systems, ISBN , John Wiley & Sons, Inc., The electricity escalation rate default value is derived from A. Rushing, J Kneifel and B. Lippiatt, Energy Price Indices and Discount Factors for Life-Cycle Cost Analysis -2011, U.S. Department of Commerce, September 2011.

6 Electric vehicle capital cost The electric vehicle capital cost is the total cost of the electric vehicle. Please note that the vehicle capital cost needs to be entered as a negative number: for a truck that costs $140,000, enter Electric Truck Price guidelines 9 Class 4 Driving $140,000 Class 5-6 Driving $155,000 Class 4 Work Site $170,000 Class 5-6 Work Site $200,000 Infrastructure installation costs The infrastructure installation costs are calculated as the sum of the cost for smart meters as well as electric vehicle supply equipment (EVSE) and are calculated for 1 vehicle. Please note that the smart meters and EVSE costs need to be entered as negative numbers. 10 Electrical service upgrade costs The electrical service upgrade costs are calculated as the sum of the electrical panel upgrade, installation of new conduits and trenching if necessary. These costs are calculated by increments of power: for each 33 kw power increments over 33 kw (representing 5 electric trucks at 6.6 kw maximum charge), we add 1 electrical service upgrade cost. Please note that the electrical panel upgrade, installation of new conduits and trenching costs need to be entered as negative numbers. 11 Load management software costs The load management software is calculated for the fleet, i.e., 1 software package per fleet. Contingency costs We included optional contingency costs to represent the current uncertainties of electric truck availability and reliability, and the need to have conventional replacement vehicles. Contingency costs apply over 10 vehicles. You can make your own judgment about what, if anything, to include here. 9 These price guidelines are ballpark estimates and were derived from discussions with CALSTART staff. 10 For more information, please see W. Pitkanen and B. Van Amburg, Best Fleet Uses, Key Challenges and the Early Business Case for E-Trucks: Findings and Recommendations of the E-Truck Task Force, E-TTF Infrastructure Planning Guide for E-Truck Fleets, p.28, CALSTART, For more information, please see W. Pitkanen and B. Van Amburg, Best Fleet Uses, Key Challenges and the Early Business Case for E-Trucks: Findings and Recommendations of the E-Truck Task Force, Detailed Infrastructure Planning Guide for E-Truck Fleets, p.29-30, CALSTART, 2012.

7 Cost of capital The discount rate is an interest rate used to adjust a future cash flow to its present value: its value to the organization today. As the starting point for the discount rate, most organizations use their cost of capital, the rate of return that must be earned in order to pay interest on debt (loans and/or bonds) used to finance investments and, where applicable, to attract equity (stock) investors. 12 As a rule of thumb, the user can define the cost of capital for a for-profit commercial entity at 7% and for a government agency or municipal utility at 4%. 13 State EV incentive (HVIP) Several states have incentive programs for hybrid and electric vehicles. For instance, the California Hybrid Truck and Bus Voucher Incentive Project (HVIP) is a unique and streamlined program to help speed the early market introduction of clean, low-carbon hybrid and electric trucks and buses in California. Source: Hybrid Truck and Bus Voucher Incentive Project website (accessed on ). The state EV incentive is for 1 vehicle and represents an incentive for e-truck purchase at the state level. Federal EV incentive The federal EV incentive is for 1 vehicle and represents an incentive for e-truck purchase at the federal level. As of today there are no such incentives, but you may use this space for any other projected funding you might receive. EV infrastructure incentive The EV infrastructure incentive is a 1 time incentive, regardless of the fleet size. 12 From Energy Star Building Upgrade Manual, US EPA, Office of Air and Radiation, 2008 Edition, Chapter 3: Investment Analysis, accessed on For more information, Aswath Damodaran, Professor of Finance at the Stern School of Business at New York University has compiled data for 5,891 firms in various sectors. Data can be accessed at (accessed on ).

8 Battery cost From a scroll-down menu, the user can choose between 3 installed battery pack price points in $ per kwh. These price points have been identified by the E-Truck Task Force as follows: : $500 - $600 /kwh (we chose the more conservative $600 /kwh) : $450 /kwh : $300 /kwh Battery size Although the battery size is a user s input, the calculator will check the value entered by the user and compare it to the minimum required battery size to cover the vehicle daily range for a driving vehicle or the vehicle daily fuel usage for a work site vehicle. If the value entered by the user is lower than the minimum required battery size determined by the calculator, then the calculator will overwrite the user s input. For instance, choosing a vehicle daily range of 80 miles/day and a 20 kwh battery size is not physically possible with the typical electrical efficiency of electric trucks. Thus the calculator will overwrite the user s value and replace it with the minimum required battery size needed to cover 80 miles per day, which is 67.2 kwh. Please note that the calculator includes a 20% battery reserve to the minimum required battery size. For instance, a class 4 driving truck with an electrical efficiency of 0.7 kwh/mile needs a minimum of 56 kwh to cover 80 miles. Adding a 20% reserve (equivalent to 11.2 kwh) leads to the minimum required battery size of 67.2 kwh. NOTE: Please make sure to reevaluate the battery size every time you calculate a new business case. The calculator will keep the latest value (provided the calculator doesn t overwrite it) and consider it as a user s input. Total battery costs The total battery costs are given as information to the user. It is calculated as the battery size times the battery cost. End of life costs End of life costs can be set to a positive value to represent battery resale value or a negative value to represent recycling costs. Fleet size By default, the calculator is set to analyze the business case of 1 electric truck, however, the user can analyze a fleet of several e-trucks. 14 For more information, please see W. Pitkanen and B. Van Amburg, Best Fleet Uses, Key Challenges and the Early Business Case for E-Trucks: Findings and Recommendations of the E-Truck Task Force, p. 20, CALSTART, 2012.

9 E-truck incremental cost The e-truck incremental cost represents the price difference between an electric truck and its conventional diesel equivalent. It includes the increment in vehicle capital cost, the infrastructure installation costs and the electrical service upgrade costs (this last item is divided by the number of vehicles in the fleet). Simple payback period without incentives The simple payback period (SPP) gives the number of years an energy efficiency improvement or production system will take to pay for its initial capital cost based on its energy and economic savings. It holds true for short time periods and/or low discount rates because it ignores the time-value of money and for minor operation and maintenance costs because it usually ignores them as well. Despite these limitations, SPP is one of the most intuitive and useful measures of cost-effectiveness. 15 The simple payback period without incentives is the number of years it takes to recoup the incremental investment if no incentives (state, federal and infrastructure) were available. We strongly encourage fleets to take a life cycle cost view of e-trucks to factor in all their operational benefits, rather than just a simple payback. Net Present Value (see below) provides one way of doing this. Simple payback period with incentives The simple payback period with incentives is the number of years it takes to recoup the incremental investment with considering incentives (state, federal and infrastructure). Net present value Net present value (NPV) is a measure of the investment s financial worth to the organization, taking into account the preference for receiving cash flows sooner rather than later. An investment is financially worthwhile if its NPV is greater than zero, because the present value of future cash flows is greater than the outlay. In the rare case of an opportunity with a zero NPV, the organization should theoretically be indifferent between making or not making the investment. A positive NPV is the net gain to the organization from making the investment assuming that the discount rate properly adjusts for the timing of the cash flows. Besides helping to decide whether an investment is worthwhile, the NPV can be used to choose among alternative investments. If an organization has two or more investment opportunities but can only pick one, the financially sound decision is to pick the one with the greatest NPV From J. Randolph and G. Masters, Energy for sustainability: technology, planning, policy, ISBN , Washington, Island Press, From Energy Star Building Upgrade Manual, US EPA, Office of Air and Radiation, 2008 Edition, Chapter 3: Investment Analysis, accessed on

10 Additional notes on battery life Based on our understanding of battery life and the findings of the E-TTF, we identified 3 driving profiles and 3 corresponding battery life findings (assuming once a day charging at Level 2): - 70 miles/day fixed route suburban delivery: 8 years - 80% daily battery discharge work site vehicle (e.g. utility truck): 8-10 years - 20 miles/day urban driving: 10 years However, in the calculator, we decided to slightly modify this approach. To reflect the fact that fleets would most likely not replace the vehicle batteries after 8-10 years on a vehicle that is kept years, we assumed that the electric vehicle battery will last 10 years in most duty cycle scenarios. However, if the vehicle is driven more than 80 miles per day, we assumed that electric vehicle battery would need to be replaced within the life of a typical vehicle. In the table below is the current calibration from which electric vehicle battery life calculations are derived: 17 Average battery life 20 years Vehicle Daily Mileage 40 miles 40 < Vehicle Daily Mileage 60 miles 15 years 60 < Vehicle Daily Mileage 70 miles 12 years 70 < Vehicle Daily Mileage 80 miles 10 years 80 < Vehicle Daily Mileage 90 miles 8 years 90 < Vehicle Daily Mileage 100 miles 7 years Vehicle Daily Mileage > 100 miles 6 years 17 For more information on battery life, please see W. Pitkanen and B. Van Amburg, Best Fleet Uses, Key Challenges and the Early Business Case for E-Trucks: Findings and Recommendations of the E-Truck Task Force, CALSTART, 2012.