On Tuesday, September 12th, 2023, Grayson Thermal Systems sponsored and attended the Clean Buses UK Conference in London. The event brought together decision-makers from local authorities, operators, vehicle OEMs, and suppliers, energy providers, charging solution suppliers, and funding agencies.
Over the day, we had the opportunity to hear from senior leaders who are at the forefront of deploying zero-emission bus (ZEB) fleets. As a leader in heating and cooling solutions for ZEBs, it also allowed us to highlight how we work with customers to support their next-generation bus fleets.
See below for a summary of some of the critical areas of discussion:
New funding models could disrupt the bus sector
Regardless of whether it is the transport authority or the operator, transitioning an entire fleet of buses from diesel to zero-emission alternatives is an expensive undertaking. Not only is there the cost of the vehicles themselves (according to one operator, a double deck hydrogen fuel cell bus costs £600k and a battery electric bus costs £450k, compared to approximately £280k for a Euro 6 diesel bus), but there are also significant infrastructure and retraining costs to consider.
Power struggle: Interestingly, a leading operator highlighted the difficulty involved in accessing the power needed to run a battery-electric fleet. Bus operators with relatively low numbers of ZEBs are being required to buy more power for their depots than they currently require to ensure that they can meet future demand (as their ZEB fleets grow). This leaves operators having to decide whether it is best to invest in more power for their depot, knowing that some of that power and cost will be going to waste in the short term.
While public sector funding such as ZEBRA and SCOTZEB goes some way to soften the financial blow, there is still a significant funding shortfall that operators are required to cover to transition their fleets. This comes at a time when gaining access to capital is more challenging due to a rise in interest rates making borrowing more expensive.
This is leading to a new funding model making inroads in the bus sector: Vehicle leasing. Louis Swindell from Rock Road (a private equity firm operating in the transport sector) introduced the audience to their leasing proposition. Rock Road buys the ZEBs and then leases them back to operators for use at their depots. The model means operators and authorities are not left with expensive, depreciating values on their balance sheets, enabling them to invest in other areas, such as depot infrastructure, maintenance, and retraining.
All eyes are on Manchester as the franchising model enters the spotlight
With Transport for Greater Manchester’s franchising bus model set to start this September (representing a significant shake-up of bus operations outside of London), other authorities are watching it with keen interest (including Transport for West Midlands).
Bus franchising works in a similar way to rail franchising; potential operators bid competitively for the right to operate a bus franchise by requirements set by the franchising authority. Under franchising arrangements, the bus route, services, timetables, frequencies, and any service quality standards, will be determined entirely by the franchising authority.
Interestingly, the move to franchising may fuel demand for a leasing finance model, as it can help reduce the upfront costs for bus operators, which can make them more competitive when bidding for bus franchising contracts. It can also give bus operators more flexibility to lease buses for different periods, depending on the franchise contract that has been won.
Battery Electric vs Hydrogen Fuel Cell – The spirited debate continues
A somewhat contentious topic at the conference was which technology would become dominant in the mission to deliver a clean bus reality: Battery electric or hydrogen.
Transport authorities and operators shared their experiences with hydrogen, with some citing challenges regarding the costs of ‘green hydrogen’ and access to reliable hydrogen deliveries. There were also case studies demonstrating the problem of getting hydrogen facilities certified by the Health and Safety Executive, largely because the technology and infrastructure are so new that bodies responsible for certifying them lack the expertise or knowledge required.
Despite the increased costs and infrastructure challenges facing hydrogen, however, the technology did have its champions in the room. When questioned whether the government was right to invest in hydrogen technology, Richard Holder, Under Secretary of State for the Department for Transport, noted that hydrogen was still an important option for rural locations where access to grid power is a challenge, including construction sites, mining operations, and rural communities.
It was also pointed out that hydrogen fuelling stations can become a shared resource for buses, HGVs, and other applications, helping to reduce costs and increase uptake of the technology.
Importantly, it was highlighted that the comparison between battery electric and hydrogen fuel cells is not a like-for-like comparison at the moment, with battery electric being much further along its technology adoption curve than hydrogen. While use cases of hydrogen still involve very small numbers (single and double digits), the economies of scale needed to bring the costs down to parity with diesel or battery electric won’t happen.
A long road to zero-emission bus transportation lies ahead
The challenges raised by operators and authorities emphasise that there is still much to be done to reach the ambitious targets set out to transition to complete zero-emission fleets.
Of the 31,400 buses in England, 24,700 were still diesel as of last year, according to data shared by KPMG. Alongside the need to replace these tens of thousands of vehicles with clean alternatives is also the need for an infrastructure revolution. Thousands of more charging facilities, expensive substations, and substantially more power from the grid for depots and vehicles are also needed in the next 15 years.
These challenges are giving way to new ways of thinking about how buses should be designed, built, operated and financed. With our decades of experience providing energy-efficient, high-performance HVAC and driveline cooling systems for buses, Grayson Thermal Systems stands ready to support the transition to emission-free bus transportation with our heating and cooling solutions.
To highlight the important role thermal management plays in the clean bus journey, we also unveiled our new ‘Heating and Cooling the Clean Bus Journey’ at the conference. At the event, each delegate received a copy of our simple guide, explaining the various steps involved in achieving zero-emission bus transportation and how our thermal management is integral to helping make it a reality.