BUSINESS CASE FOR COMPRESSED NATURAL GAS IN MUNICIPAL FLEETS - Natural Gas-powered Cars and Trucks: Options and Issues - page 85

transit. Our current diesel price of $2.56 is on a transitional point of the
payback curve for transit and refuse fleets. If diesel prices stay where they are
or rise, project economics look resilient, and if they fall, the economics look
marginal.
Per-vehicle VMT is almost as strong an indicator of profitability as the
number of vehicles for school fleets. However, VMT is not a relevant factor in
transit or refuse fleets unless their VMT is reduced to 1/3 of the average fleet's
VMT.
Project success is very sensitive to vehicle maintenance costs. Doubling
these costs increases the payback period of the least-sensitive fleet from 1.7
years to 3.3 years. Doubling them can also make a school project not pay off
no matter how large the fleet is.
An increase in vehicle incremental cost has a large effect on project
profitability. A reduction in incremental cost has a much smaller impact on
profitability because most of the amount up to the base case was subsidized by
the government, and very little of the amount over the base case is subsidized.
Tax issues have a strong influence on profitability. There are synergies
with the vehicle and fuel tax credits, so together, they reduce the payback
period of a project more than the sum of both of their impacts. Taking either
one of the tax credits away makes school projects not pay off. If a fleet has to
pay taxes on diesel but not CNG, their payback period is reduced by 22%.
The cost of the station has a significant influence on the profitability of
marginal projects. In general, a 50% increase in station cost results in a 30%
increase in payback years. This could be make-or-break for many school fleets
and smaller (<50 vehicle) transit and refuse fleets.
Factors that don't have much effect on project profitability over the range
tested are:

• Efficiency difference between CNG and diesel engines (-25% to

+10%)

• Change in vehicle/project life (10 years to 20 years)

• Electricity prices (50% and 150% baseline)

• Maintenance costs for CNG station (50% and 150% baseline)

• Garage upgrade (for minimal-upgrade scenario)

• Number of new attendants/hostlers (-2 to +4 personnel).

These conclusions were derived from testing parameter changes on what
NREL deemed a common or average fleet. Synergies between these
parameters were not tested and could have surprising effects. To account for