Article

Exploring the Total Cost of CNG

March 2013, Government Fleet - Cover Story

by Shelley Mika - Also by this author

Pictured are Weld County, Colo., natural gas vehicles in front of its CNG fueling station. Photo courtesy of Weld County.
Pictured are Weld County, Colo., natural gas vehicles in front of its CNG fueling station. Photo courtesy of Weld County.

At a Glance

In addition to vehicle conversions and fueling facility construction, the costs of switching to compressed natural gas (CNG) include:

  • Maintenance facility upgrades
  • Technician training
  • Backup fueling
  • Fueling facility maintenance and repair
  • CNG tank inspection and replacement.

Converting vehicles to run on compressed natural gas (CNG) has some clear and immediate benefits. From the beginning, fleets that rely on CNG can expect lower fuel costs, cleaner running engines, lower maintenance costs, and fewer emissions.

For these benefits, however, fleets pay a price. At first, the costs of CNG conversion seem just as clear as the benefits: purchasing new vehicles, converting old ones, and building fueling stations. But as fleets dig into the planning and implementation of a CNG program, other costs emerge. Five industry professionals share their experiences and shed light on the total costs of converting to CNG — and how to avoid budgetary surprises.

Unexpected Capital Costs

The true costs of CNG can be broken down into two categories: capital expenses and operating expenses. Beyond the purchase or conversion of fleet units and the building of fueling stations, capital expenses include modifications to maintenance facilities, backup fueling stations, and station upgrades.

Modifications to Maintenance Facilities: Fleets that service their own vehicles need to make modifications to maintenance facilities — and before CNG vehicles come on board. Specific code requirements exist for facilities that service natural gas vehicles.

“The National Fire Protection Association (NFPA) outlines some requirements for maintenance upgrades, but local building codes might be even more restrictive in regards to maintenance facilities,” said Steve Riley, automotive director, City of Coral Gables, Fla. “A lot of the building upgrades would be required right away, before you start working on CNG vehicles — or any vehicle that runs on lighter-than-air fuel.”

One of the components of a natural gas fueling station is a dryer (pictured). Replacement of these components should be taken into consideration when calculating the total cost of CNG. Photo courtesy of ET Environmental.
One of the components of a natural gas fueling station is a dryer (pictured). Replacement of these components should be taken into consideration when calculating the total cost of CNG. Photo courtesy of ET Environmental.

In order to safely accommodate lighter-­than-air fuel, maintenance facility upgrades include pressure gauges, leak-detection equipment, and proper ventilation. Without modifications, the CNG fuel system can’t be maintained or repaired inside the maintenance facility.

“Costs for the facility upgrades will vary dramatically, depending on the size of the facility, its age, and its current configuration,” said Richard Drake, P.E., vice president — engineering, ET Environmental, a CNG design and construction services provider.

Modifications to maintenance facilities will also require updates to the ventilation system. CNG exhaust systems are considered “high temperature,” which are more expensive than older, low-temperature systems. For a basic hose drop system, including the fan, ducting, hose, and installation, fleets can expect to pay approximately $5,000 per bay (i.e., one exhaust drop for one vehicle).

A time-fill station is less expensive to operate than a fast-fill station, but it usually can only be used to fuel vehicles outside regular hours of operation. Photo courtesy of ET Environmental.
A time-fill station is less expensive to operate than a fast-fill station, but it usually can only be used to fuel vehicles outside regular hours of operation. Photo courtesy of ET Environmental.

“These high-temperature systems require stainless steel equipment, with special high-temperature resistant parts and hoses. Therefore, the syste

ms are more expensive than older, low-temperature systems,” said Rich Cunningham, national sales manager for Masterduct, a manufacturer of technical hoses for industrial applications. “It is important to have an expert to engineer a proper system for the maintenance facility. This system can be designed for low-cost operation and long-term operation, which improves the return on investment (ROI).”

Backup Fueling: Although many fleets have converted to CNG, fueling stations are yet to be widely accessible. That means fleets must have a strategy in place in the event of a power failure or equipment malfunction.

“CNG is not like liquid fuels that can actually be pumped with a hand-operated crank when the power goes out,” Drake said. “To avoid downtime, it’s important to have a workable contingency plan in place early.”

A nearby public fueling station can be used as a backup. “We can fuel our fleet more efficiently by having our own station, but the public stations offer redundancy for us, should our system be unavailable,” said Elizabeth Relford, Weld County, Colo., transportation planner.

Station Upgrades: An agency may decide to expand its CNG fleet, but if fueling stations aren’t built with future growth in mind, station upgrades will be required to keep up with the fueling requirements of the larger CNG fleet. These likely include the purchase of CNG compressors, a dryer, additional storage spheres, CNG hookup, electrical hookup, engineering fees, dispenser upgrades, and assorted other minimal costs.

“We had outgrown our old station and through American Recovery and Reinvestment Act (ARRA) grant funds, were able to upgrade. We already had the existing site, major electrical work, and dispensers in place,” said Mark Stevens, fleet manager, City of Asheville, N.C. “Since we had an existing station initially installed in 2005, the overall cost to upgrade our station was approximately $350,000. The cost to start from scratch and install a station would have [been] approximately $500,000.”

Compressor Replacement: Unfortunately, CNG compressors don’t last forever, but they should have a predefined lifecycle. As such, it’s important to plan ahead for those costs. “When calculating your true operating expenses, you need to consider the long-term capital equipment replacement costs,” Riley commented. “Prorate those costs via the straight line depreciation method and put that money away for when you need it. The last thing you need is to have a large portion of your vehicles running on CNG while trying to fuel the fleet with an old and unreliable compressor station.”

COMMENTS

  1. 1. Bob Stanton [ September 21, 2013 @ 03:00PM ]

    One factor as yet unmentioned is the residual value of the CNG units. The higher acquisition cost impacts both depreciation and the residual value calculations. If you're in a market where CNG is readily and publicly available the market for used CNG vehicles will be more attractive. Conversely, CNG availab

 

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