1. Energy Services Company Models: Opportunities for Transit
Vermont Energy Investment Corporation

2. Transportation Energy Service Company Models
Energy Services Company Models
ESCOs and Transit
Opportunities and Challenges

3. Our mission:
To reduce the economic and environmental costs of energy use

4. Energy Service Companies (ESCOs)
Traditional Models

5. Energy Services Companies
Use future energy savings to pay cost of investment required to achieve savings
Positive cash flow
Debt service
Before
During
After
Energy costs
Energy costs
Energy costs

6. Energy Services Companies
Primarily used in building sector
Lighting, HVACs, solar
Provide technical assistance with technology
Take on financing, ownership and operation risk in return for shared savings
Provide energy user (buildings) predictability in energy use and savings guarantee

7. Impact of 3rd Party Ownership Models

8. Why Transit?

9. Fundamentals aligned with ESCO model
High mileage vehicles
25,000 to 60,000 miles per year
Low fuel economy
3.26 mpg
Historically variable fuel costs
High community impact

10. Fundamentals aligned with ESCO model
Challenging financial environment
Capital need far outstrips funding
Limited options to raise money
Traditional funding models favor status quo

11. Opportunities

12. Transit Energy Services Companies
Positive cash flow
Debt service
Before
During
After
12 Year energy costs = $350,000
12 year energy costs = $31,000
12 year energy costs = $31,000
Are energy cost savings sufficient to cover higher costs of vehicle
and cost of financing vehicle purchase?

13. Metrics to Guide Investments
Total Cost of Ownership
Risk associated with cost of ownership
Reliance on Government Funding
Total Society Cost of Ownership
De-risking for Long-term Financial Planning

14. Assumptions: Total Cost of Ownership
Diesel
Electric
Vehicle Cost
$450,000
$750,000
Financing Costs -
2.7%
Annual Miles
40,000
Fuel Economy
3.26 mpg
2.10 miles/kWh
Price per Unit
$2.13
$0.12 kWh
Cost escalation
2.0% per year
Annual Fuel Costs
$26,135
$2,286

15. Total Cost of Ownership – 12 year vehicle

16. Total Society Cost of Ownership
Value of avoided carbon emissions
Presentation title to go here

17. Fuel Price Risk Considerations

18. De-risking Long Term Financial Planning

19. Financing Sources Vehicle Manufacturers
State Transportation Infrastructure Banks
Energy Efficiency Programs
ESCOs, ESCO-like entities
Renewable Portfolio Standards

20. Challenges

21. Challenges Mileage Estimates Demand Charges Split Incentive
Operating costs vs. capital costs
Agency Practices, State and Federal Regulations

22. Vermont Advantage Smaller vehicles, smaller gap
30’ electric bus ~ $450,000
35’ electric bus ~ $625,000
Additional Sources of Financing
Rural Utility Service
Vermont Renewable Energy Standard

23. Bethany Whitaker bwhitaker@veic.org
Thank You
Bethany Whitaker

24. Total Society Cost of Ownership
Value of Avoided Damages from Carbon
SC-CO2
SC-CO2 - $56
Net Present Value
Discounted by 2.5% / year
Diesel transit bus
40,000 miles
12,000 gallons of diesel