Energy Service Companies for Public Fleets

Local Market
Electric Vehicle Batteries

Challenge: Converting public fleets to electric vehicles involves an up-front cost that can cause budgeting headaches. While most states have mechanisms available for financing energy savings in buildings, those tools are generally not available for retooling vehicles.

Solution: States could use energy savings performance contracting (ESPC) to help finance electric vehicle purchases. By partnering with a third-party energy service company (ESCO), a state can use an ESPC to pay for today’s vehicle upgrades with tomorrow’s energy savings. ESCOs can develop, finance, and install energy efficiency projects in buildings. ESCOs traditionally serve governments, hospitals, universities, and schools, saving these end-users a total of $50 billion in avoided energy costs as of 2014. And unlike public entities, ESCOs can benefit from the federal $7,500 tax credit on alternative fuel vehicles.

Examples: While the Rose Tree Media School District, near Philadelphia, Pennsylvania, was working the ESCO Johnson Controls to establish energy efficiency building performance contracts, the company identified another opportunity for savings: converting the district’s bus fleet to use compressed natural gas. Johnson Controls managed the conversion of diesel buses to natural gas, converted maintenance infrastructure and operations, built fueling stations, and provided staff training and transition assistance. The Rose Tree School District, which operates seventy-four school buses, will save $6.5 million in fuel and $1 million overall on the project.

In 2013, Colorado amended its utility cost-savings measures law—which previously applied only to buildings—to include fleet vehicles. Vehicle fleet maintenance and fuel cost savings can now be included in public contracts, as long as the overall cost savings are equal to or higher than the contract amount. Expanding the definition of eligible cost-savings measures to include fleet vehicles allows municipalities, hospitals, schools, and universities to upgrade their fleets while also saving money. This increases demand for EVs and in-state charging stations, creating good-paying installation jobs and adding revenue to the local economy.