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Schools scramble to prepare for $1B in federal money for electric buses

From small rural districts to statewide fleets, schools are figuring out how to put to use the biggest electric school bus investment in U.S. history.
By Jeff St. John

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Electric school bus at press event in South Carolina
Students and administrators at Orangeburg County School District in South Carolina celebrate their $6.2 million federal award to buy 16 electric school buses. (South Carolina Department of Education)

Last month, nearly 400 school districts across the country were awarded a combined total of almost $1 billion in federal funding to buy about 2,500 electric school buses. It’s the country’s single largest investment so far in cleaning up a fleet of some 500,000 diesel-fueled school buses nationwide.

But getting rebates of up to $375,000 per electric bus and associated charging equipment into the hands of school districts is just the first of many steps it takes to put the money to use. For Mike Bullman, director of transportation for South Carolina’s state Department of Education, the planning has been going on for months already.

The department’s $58 million award — the third-largest of any state from the Environmental Protection Agency’s initial round of rebates authorized by last year’s infrastructure law — will cover the costs of 148 electric buses and associated charging equipment, or about 4 percent of the buses in the state-operated school bus fleet.

That’s a huge jump from the eight electric buses the department was awarded through the 2020 federal Covid relief bill, Bullman said in an interview last week. Work has already begun to prepare the department’s bus depots to handle the new additions — We start construction, doing the trenching and that groundwork for the chargers, within the next couple of weeks.”

Getting ready for 148 electric buses across 16 school districts will take a lot more work, though, starting with getting utilities on board, he said. One of the first things I did when we received the final award was put together a spreadsheet with addresses” of all the state’s bus depots, with number of buses, satellite views, all those things, and sent that out to the utility providers to do some assessments,” he said.

That will give us some preliminary idea of where they’re ready to start rollout today, or to say, We’re not ready for that site; let’s look at some alternative locations,’” he said. Utility grid constraints are likely to be a problem at some sites, given how much power an electric bus-charging depot requires.

Training for drivers and maintenance crews will follow, as will designing routes and schedules that best suit the battery capacity and driving range of electric buses, he said. The department will also be working with utilities on rate and tariff structures for charging all those buses, to make sure it can capture the core financial benefit of much cheaper electricity to supplant some of the roughly 50,000 gallons of diesel fuel per day the department’s buses consume.

We want to emphasize that the primary goal here is helping the environment,” Bullman said. Kids are riding on cleaner buses.” Beyond fighting climate change, that will reduce exposure of children and communities to harmful diesel exhaust.

But there are a lot of added benefits” to consider as well, he said — particularly as the department looks to take on the next round of diesel-to-electric bus conversions without the advantage of federal grants. This is not only a short-term plan of getting the buses deployed,” he said. We want to make sure we do the best we can to plan for the future.”

Getting government grants to bolster the economic case

Last month’s Clean School Bus Awards — the first of a total of $5 billion to be distributed over the next five years — add up to nearly double the $525 million in public funding of all kinds awarded for electric school buses to date, according to advisory group Atlas Public Policy. Most of the nearly 400 school districts that won EPA funding are getting fewer than 10 electric school buses apiece, but about 50 school districts will get the maximum of 25 buses apiece.

Much of the funding is going to districts in states such as California and New York that have been putting money toward electric school buses for years. But with all 50 states and multiple U.S. territories getting at least one award, the latest round will also bring money to 21 states that haven’t yet made state funding available for electric school buses, said Spencer Burget, a policy analyst at Atlas. 

A map of EPA clean school bus awards made in the Lower 48 states
A map of EPA Clean School Bus Program awards made in the Lower 48 states. (EPA)

What’s more, 99 percent of EPA’s first round of awards went to prioritized school districts” including those with high levels of poverty or in rural and tribal areas, he said. That proves that it’s not just wealthy school districts in progressive states” that are interested in cleaner student transportation.

But these prioritized districts, transportation agencies and other entities in states without preexisting funding are also far less familiar with the ins and outs of operating an electric bus fleet. That’s why EPA has set up technical assistance programs with other federal agencies to help deploy the buses and charging systems.

Electric buses still cost about three times as much as a typical diesel-fueled bus. Falling battery costs and growing economies of scale for electric school bus manufacturers including Thomas Built, Blue Bird and Lion Electric are projected to bring down these upfront costs over the next decade. And the lower fueling and maintenance costs of electric vehicles are expected to bring the lifetime cost of owning and operating electric school buses within striking distance of their diesel counterparts within the next several years.

But those aren’t the only costs at play for school districts, said Michelle Levinson, manager of eMobility Financial Solutions with the World Resources Institute’s Electric School Bus Initiative. During a webinar last month, Levinson laid out all the new tasks facing districts that switch from fossil-fueled to electric buses, including managing charger costs and operations and the utility billing structures.

World Resources Institute electric school bus roles and responsibilities graphic
Electric school buses bring new management tasks for the school districts using them. (World Resources Institute)

The key barriers are higher upfront costs, discomfort with an unfamiliar technology and a need to consider new business models,” she said. And, of course, these barriers disproportionately impact underserved communities.” Whether or not those districts can build on their first EPA funding to expand their electric bus fleets may well depend on how smoothly or not their first deployments go.

The World Resources Institute has been collecting and sharing information on school districts’ experiences with electric school buses for years now. At last month’s webinar, Gilbert Blue Feather Rosas, director of sustainability and adaptation for Modesto City Schools in California’s Central Valley, described how his district has prepared to replace nearly half its 62-bus fleet with 30 state-grant-funded electric buses set to arrive next year.

Rosas previously worked for Stockton Unified School District, another Central California district that procured 11 electric school buses through a variety of state and regional grants. Both districts are also getting more electric buses through the EPA program.

Stockton went from winning its first grants to installing chargers and plugging in its first buses in the span of 11 months, Rosas noted. That’s a relatively quick turnaround for projects that typically require about two years of design and engineering, coordination with utilities and aligning grants from multiple agencies.

Now Modesto is hoping to get its electric buses up and running only seven months after winning the grants for them in April, he said — a timeline that takes some tight planning. The school district installed solar parking structures in its bus depot over the summer, and will install two high-voltage direct-current chargers and 30 lower-voltage Level 2 chargers by early next year, he said.

It’s also installing 12 more stubs,” or electrical wiring points ready to attach to new chargers. That will provide enough capacity to charge not just the 30 electric buses expected to arrive in early 2023, but the entire bus fleet that it hopes to convert to electric in the coming years. Planning for that eventuality now means the district avoids the cost of multiple phases of construction.

I think it’s important for school districts to realize that you need to prepare for the future,” he said.

Modesto City Schools’ bus parking lot with newly built solar parking structures
Modesto City Schools’ bus parking lot with newly built solar parking structures. Chargers for electric school buses will be installed over the coming months. (Modesto City Schools)

Multiple business models to solve schools’ electric bus growing pains

Both Modesto and Stockton school districts will own their own electric buses, but they’ve outsourced other aspects of their operations, Rosas said. Both districts contracted construction and engineering to global electrical equipment and services provider Schneider Electric and hired German EV charging management provider The Mobility House to maintain and manage the charging equipment in what’s known as a managed charging” model.

That’s one of the multiple business models available to school districts, Levinson said. Already, about one-third of U.S. school buses are owned and operated by contracted transportation providers rather than being owned or leased and operated by school districts themselves, she pointed out.

With the new risks and opportunities that electrification presents, school districts are weighing a new set of considerations,” she said. Outside partners can bring other assets such as software infrastructure, maintenance and staffing into a deal, and take advantage of financing opportunities.”

World Resources Institute chart of electric school bus business models
School districts have multiple options for how to manage electric school bus fleets on their own or with business partners. (World Resources Institute)

A number of companies are playing these kinds of roles. One is Proterra, which makes the batteries inside the Thomas Built electric school buses being deployed by the South Carolina Department of Education and other school districts.

Proterra’s expansion from its 2004 founding as an electric transit bus maker to a provider of batteries, drivetrains and chargers for different electric vehicle manufacturers highlights the growing complexity of the market, said Jarrett Stoltzfus, the company’s senior director of government relations. Thomas Built and Proterra now offer school districts a number of ways to manage this complexity, from charging solutions and operations and maintenance training to management software, he said.

In some cases, a school district has a lot of technical assistance, staff or external expertise, and we’re there to do chargers and support and technical engagement as they need it,” he said. In other cases, we’ll be asked to come in and do the full turnkey — buy the chargers, engage with your utilities, look at financing.”

Similar transportation-as-a-service structures are being set up by companies such as Highland Electric Fleets, which has financed electric school bus fleets around the country, including the country’s biggest in Montgomery County, Maryland. While government funding has played a critical role in overcoming the upfront cost barrier for electric school buses thus far, Highland’s financing structure is designed to bring the lifetime cost of leasing them within parity of similar leasing structures for diesel buses, said Ben Schutzman, vice president of fleet operations.

One example is Hardin County Schools, a rural Illinois district that has contracted Highland to manage its $4.7 million award for 12 electric buses. Transportation now eats up 12 percent of the district’s overall budget — They’re paying a lot for diesel fuel; they’re paying a lot for maintenance,” he said.

Highland can secure vehicles, chargers and grid equipment that are in short supply today and can be harder for smaller customers to acquire, he noted. It can also manage the lifetime costs of maintaining the buses and equipment for a monthly rate that’s well below what the district now spends to keep its diesel buses running. Through a new contract with three Illinois school associations, the company is exploring how it could expand similar efforts to school districts across the state.

EPA’s first round of funding saw nearly $4 billion in applications, indicating opportunities for financing and service structures to stretch federal money further, Schutzman added. That could help expand opportunities for school districts that want to scale up their electric bus fleets more quickly.

Nuvve, a publicly traded EV-charging provider, has formed a similar fleet-as-a-service offering with Blue Bird that has brought electric school buses to districts in California, Colorado, Illinois and other states. Nuvve was the applicant for 10 school districts that won $24.2 million in EPA grants in Arizona, California and Texas, including $1.2 million to install the bidirectional vehicle-to-grid chargers that allow school bus batteries to earn revenue by injecting their power back into the grid.

Highland has also been earning money from bidirectional charging in Massachusetts and from moderating bus charging to ease grid stress in Maryland. Beyond providing additional revenue for school districts, this kind of grid responsiveness could become an important tool in allowing utilities to serve a growing number of electric school buses without costly and time-consuming grid upgrades.

These grid upgrades may become a significant consideration for school districts as they add more electric buses,” said Ryan Gallentine, director of electrifying transportation at trade group Advanced Energy Economy. If the interconnection queues at utilities are going to be 12 to 18 months, it’s important that schools are thinking ahead for the timing of vehicle delivery and sharing their plans with their utility companies at the start of the process.”

Getting charging installed was an early problem for South Carolina’s Richland County School District One after it won a grant to buy one electric school bus last year. We were the first electric school bus in South Carolina,” said Rick Grisham, the district’s director of student transportation. But because the district hadn’t prepared a charging site, it was forced to share a charger at a local library every other day of the week, he said.

It’s going to be a lot easier for Richland to manage the 16 electric buses that make up its share of the buses awarded to the South Carolina Department of Education since the state is handling the charging, he said. Bullman added that the state department is making plans with the state’s municipal utilities, electrical cooperatives and two primary investor-owned utilities, Duke Energy and Dominion Energy, to do managed charging, metered charging, and to prepare for [vehicle-to-grid] once it becomes really prevalent.”

Some states have authorized utilities to own electric school buses and charging infrastructure, including Duke Energy in North Carolina, Dominion Energy in Virginia and DTE Energy in Michigan. That’s a relatively low-cost model for cash-strapped school districts, said Donnie Owle, service manager of the Cherokee Boys Club, which operates electric school buses for the tribally operated school system of the Eastern Band of Cherokee Indians in North Carolina.

Under that utility program, Duke Energy pays us $215,000 a bus, and they’ll install the infrastructure, the chargers and everything,” Owle said during last month’s webinar. They’ll take care of it for three years, and after that it’s yours.”

How EPA’s grants could catalyze an industry 

Half of EPA’s clean school bus funding is open to buses fueled by fossil gas or propane. But 95 percent of the nearly 400 school districts that got funding in the first round asked for electric buses. If the rest of the $4 billion in EPA’s clean school bus budget follows similar trends, it would be a tenfold increase in public funding for electric school buses, Atlas Public Policy’s Burget noted.

Proterra’s Stoltzfus said this jolt of federal funding could engender an accelerated version of the scale-up that’s happened with public transit bus electrification over the past decade. In that time, electric transit buses have grown from grant-funded pilots to large-scale deployments in more than 130 U.S. communities — even if the percentage of electric transit buses in the U.S. still remains tiny compared to China and Europe.

The lessons being learned here are not new,” he said. And while school buses are generally a local thing,” the EPA funding is putting the federal government in a position to offer a national technical-assistance role and a national standards-setting role” for more school districts to move more quickly in the future.

EPA has made it clear they consider this to be an iterative process,” he said. They think they have an opportunity here to make a significant transition in this sector.” 

The push to electrify school bus fleets can also add up to significant economic development opportunities for regions that haven’t yet invested heavily in electric transportation, Bullman noted. Thomas Built manufactures its Jouley electric buses in North Carolina, and Proterra new battery manufacturing plant in South Carolina is scheduled to come online later this year.

South Carolina could provide a valuable learning environment for other school districts and transportation agencies that are looking to scale up their electric bus fleets, he added. Because it is a state-run operation, we’re going to have this huge repository of data,” he said. We’re going to leverage our routing system, our fleet management database, to track energy use, to track energy back to the grid.”

That kind of data will be important for optimizing the battery health of school buses over their operating life, which typically lasts 12 years. That’s important for maintaining the vehicle’s value over that time, he noted. If those batteries can be repurposed for secondary uses like storing energy for the grid, that future value could be tapped to reduce the up-front financing costs for more school buses to come, he added.

We’ll be able to provide all this data back to the utility and stakeholders involved,” he said. And because of the geographic diversity of the locations for these buses, this may give us one of the better pictures in the country.”

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Jeff St. John is director of news and special projects at Canary Media. He covers innovative grid technologies, rooftop solar and batteries, clean hydrogen, EV charging and more.