BUSINESS CASE FOR COMPRESSED NATURAL GAS IN MUNICIPAL FLEETS - Natural Gas-powered Cars and Trucks: Options and Issues - page 64

Garage Cost
The facility upgrade costs associated with upgrading a fleet from diesel to
CNG are considered zero. This is in agreement with the fact that the
incremental cost of making a new garage and maintenance facility compatible
with CNG is minimal (Marathon 2006). Therefore, the model implicitly
assumes the fleet already has well-ventilated facilities or that they are building
new facilities that would be the same cost regardless of fuel type. However,
garage upgrade costs will be modeled in part two of this analysis to explore
their effects on the economics of a CNG project.
Project Life and Salvage Value
The project life, or investment period, is the same duration as the vehicle's
useful life. As discussed above, this is 15 years for transit and school buses, 12
years for refuse trucks, and 14 years for any fleet that combines refuse trucks
with buses.
The station is assumed to be used throughout the entire project period
(vehicle life) and then salvaged at the end of that period. The salvage value of
the station is assumed to be 20% regardless of how many years (12, 14, or 15)
it has been in service. This number is static throughout time because the value
is more a function of demand for components than it is the age of the
components. The 20% value was chosen after interviewing two CNG station
technicians that have overseen dozens of projects. The difference between
diesel and CNG salvage values of all three vehicle types is considered zero
(Linder 2009 and Lemmons 2009). This means that at the end of the vehicle's
life, a CNG vehicle is worth no more than a diesel vehicle.
CNG P ROJECT Q&A
The base case represents an average or common CNG project. Every
project deviates from this base case, which is why fleet operators question the
specific parameters of their projects. The questions and answers in this section
are organized to first give fleet managers their bearings and show how
profitable the base-case project is. The following questions go on to address
changes in fuel expenditures, changes in operating costs, and changes in
upfront costs.