Expanding the use of Natural Gas Vehicles Bill Zobel, VP Market Development & Strategy for National Governor s Association, Washington DC August 27, 2015
SOLID EXPERIENCED GROWING
EXPERIENCE AND CAPABILITIES CNG CNG CNG CNG Comprehensive CNG Fueling Solutions Proprietary High-speed Fueling CNG Design, Build and O&M Expertise and Services Capital Financing and Grant Acquisition
FACILITATING CNG IN EVERY SECTOR Class-8 Trucking Transit School Districts Refuse and Municipal Government
OVERVIEW The Challenge: How to increase the use of NGVs; and, Stimulate a fully functioning NGV marketplace Policymakers can make a difference Focus on policy that develops a sustainable commercial market
COMPETITIVE, FUNCTIONING, SUSTAINABLE MARKET Applied to the transportation market: Ample buyers and sellers o Fleets/drivers (buyers) and fuel retailers (sellers) Transparent and competitive pricing Access to competitively priced (vehicle) products Conveniently located refueling centers
CNG MARKET PARTICIPANTS Buyers Ample buyers under the right commercial conditions Buyers commercial decision points: Fuel price and volatility Truck price Customer preferences Refueling convenience Competitors position Payback analysis <50% of the (1 st buyers) useful life of the truck Sellers Several qualified competitors building CNG refueling centers Sellers commercial decision points: Real Estate cost / location Utility tariffs Fuel price and volatility Permitting Competition Return On Investment (ROI) Internal hurdle rate
TRANSPARENT FUEL PRICING Gas markets are very transparent Financial instruments are similar to petroleum Transportable Can be stored for when needed Done - Check off this box!
COMPETITIVE (VEHICLE) PRODUCTS Products are available in all vehicle classes HD, MD, LD New products are in development More engines - larger and smaller LoNOx engines Dual Fuel applications Onboard fuel storage Done - Check off this box!
CONVENIENT REFUELING CENTERS Convenience for the buyer is a primary concern Brokered vs. Dedicated Freight Hours of Service regulations, Labor cost Sellers options for refueling stations Public vs. Private access Co-locate vs. Greenfield Supporting policy may include Incentives for public access stations Favorable utility tariffs
SUPPORTING POLICY INITIATIVES Policy with a commercial focus will lead to success Buyers Reduce payback period Vehicle incentives Retain residual value Tax treatment Flexible in-state mileage requirements Sustained policy Sellers Return On Investment Station Incentives Tax treatment Utility incentives Sustained policy Ease of use Audit and recalibrate Ease of use Audit and recalibrate
STATE PROGRAM EXAMPLES AND SUGGESTIONS Small changes in policy can make a big difference State Action Results Florida California Illinois Indiana Maryland $6 MM/year for 5 years, $25K/truck, but limited to 10 trucks per year $23 MM Zero Emission Drayage demonstration project $7 MM program, $20 K/vehicles; public fleets only $15 K HD vehicle tax credit, limited to 10 trucks per year, in state use reqs. $20 K/truck, limit 5 trucks, Port Drayage program Limited sellers, program undersubscribed by 50% No viable commercial applications Commercial market focus? Limited sellers, program undersubscribed Results TBD
THANK YOU Bill Zobel VP Market Development & Strategy 760-590-3420 wazobel@trilliumcng.com www.trilliumcng.com
CNG FUELING SOLUTIONS Fast-fill Public
CNG FUELING SOLUTIONS Fast-fill Public
CNG FUELING SOLUTIONS Fast-fill Public
CNG FUELING SOLUTIONS Fast-fill Public
CNG FUELING SOLUTIONS Private Heavy Duty
CNG FUELING SOLUTIONS Private Heavy Duty
CNG FUELING SOLUTIONS Private Heavy Duty
CNG FUELING SOLUTIONS Time-fill
CNG FUELING SOLUTIONS Time-fill
CNG FUELING SOLUTIONS Temporary, Mother Daughter
CNG VS. LNG THE SUPPLY CHAIN ADVANTAGE CNG has no ties to a manufacturing facility or on-road logistics Diversity of gas suppliers ensures competition on commodity pricing and products Gas Production & Transportation CNG Retail Distribution Petroleum Fuels Oil Production & Transportation Refining On-road Transportation Retail Distribution LNG Gas Production & Transportation LNG Liquefaction Plant On-road Transportation Retail Distribution
AS NGVS GROW NATURAL GAS PRICES WILL STAY LOW American Clean Skies Foundation analyzed the impact on CNG pump prices based on various market growth scenarios: Conclusions: Under the most aggressive transportation growth case, gas demand increased about 2% Resulting impact on CNG pump price is about $0.03/DGE NGV market expected to grow at an compound annual growth rate (CAGR) of 14.6 percent (1) (1) EIA Annual Energy Outlook, 2013 (2) American Clean Skies Foundation Driving on Natural Gas April, 2013