3 Takeaways from Southern California Edison’s Fleet Electrification Initiative
Conventional wisdom says that as fuel prices drop, so does market demand for alternative-fuel vehicles – such as those powered by compressed natural gas, propane autogas and plug-in electric systems. That’s because the lower the price of gasoline and diesel, the longer it takes to recoup the premium for alt-fuel technologies through fuel-cost savings.
Yet despite fuel prices in the low two-dollar range per gallon as of press time, a growing number of electric utilities in the U.S. are making substantial investments to green their fleets – specifically in plug-in electric vehicle (EV) systems.
A major driver of this trend has been Edison Electric Institute’s (EEI) Transportation Electrification Initiative, which in late 2014 garnered commitments from more than 70 investor-owned electric utilities to devote at least 5 percent of their annual fleet acquisition budgets to purchase plug-in EVs and equipment.
But for one of the nation’s largest electric utilities, Southern California Edison (SCE), the push for fleet electrification began nearly two decades ago, in 2000. And today, SCE (www.sce.com) operates 644 electrified units, comprising 11 percent of its total fleet. Last year, the utility invested 18.7 percent of its fleet spend in EVs, nearly quadruple the EEI annual target.
UFP recently spoke with Todd Carlson, principal manager for fleet asset management at SCE, to get more details about their fleet electrification initiative and uncover some of the lessons that Carlson and his team have learned in the process. Here are three takeaways that emerged from our conversation.
1. Look for smart opportunities for electrification.
While EVs are not a good fit for all fleet applications right now, there are opportunities for fleet electrification that offer a compelling business case, if you know where to look.
“We seek to electrify everything we possibly can in our fleet,” Carlson said. “Now obviously, we’re not going to electrify our helicopters or some of the real heavy-energy-intensive vehicles. We don’t have plans to electrify our 150-ton cranes. But we do seek to electrify everything we possibly can when it makes good business sense to do so.”
So, where does fleet electrification make good business sense?
Carlson shared one example that may not be on a lot of fleet managers’ radar: corporate security vehicles.
At SCE’s five-building complex in Rosemead, Calif., security guards were using gasoline-powered Ford Transit Connect vehicles to do around-the-clock patrols around the campus.
“We were in a position where there was so much idling and wear and tear on the engine, that the vehicles were constantly down,” Carlson said. “And since this was a very low-mileage, high-idle application, we were having to do more engine replacements and other maintenance to those vehicles. So, we built a business case that showed that it would be more cost-effective to replace the two gas-powered Transit Connects with four battery-electric Toyota RAV4s.”
How could doubling the number of vehicles – with more expensive EVs – be more cost-effective?
“First, since we went from two to four vehicles, we could extend a longer-term lease payment structure,” Carlson explained. “Instead of basically consuming the vehicle over a four-year period, we could expect a life expectancy of seven years because we had double the number of vehicles. And while one vehicle is charging, they’re using the other one.”
But what about the economics of operating the electric RAV4s compared to the gas-powered vehicle? What makes the EV a better investment in this instance?
“When we factor in the lower cost of maintenance [for the EV], the lower cost over the life of the vehicle and the cost of the electricity versus gas, it is actually a lower-cost solution for us to use two electric vehicles in place of one gas-powered vehicle that runs virtually 24/7,” Carlson said.
And Carlson noted there have been driver acceptance and health benefits from the switch to the EVs. “The guards who use EVs absolutely love those vehicles because they don’t have to deal with an engine running all day long that causes constant engine vibration in the vehicle and creates exhaust that they breathe in.”
2. Understand that the business case for ePTO trucks goes beyond financial payback.
SCE operates about 64 medium- and heavy-duty trucks with electric power takeoff (ePTO) systems that power the onboard equipment, such as an aerial platform, without the need to idle the engine. And while SCE has seen direct economic benefits from these trucks in terms of fuel-cost savings, lower maintenance costs and longer asset life, the substantial reduction of exhaust fumes and equipment noise is paying dividends in improved health and safety for the operators, Carlson said.
“The crews love these trucks because they don’t have to deal with fumes and noise – where they’re shouting over the engine noise of the large truck to talk to one another,” Carlson said. “You can talk in a normal voice from the ground to the operator up in the bucket, while he’s up working on the wires. And that’s a big deal with it comes to keeping our crews safe.”
What has SCE seen in terms of payback from fuel-cost savings with ePTO trucks?
Carlson said that the direct financial payback is still “borderline,” but “it’s close enough that we continue to lean into it to say, ‘We’re going to learn more about these trucks and keep doing it.’ Our hope is that this technology continues to move forward and the price keeps coming down, so that we will get a great payback on this type of system.”
3. Eliminate the “hassle factor” of EVs for users.
Carlson said that the biggest challenges SCE has experienced with fleet electrification have to do with take-home vehicles and range anxiety – both examples of the hassle factor.
“If you’re planning to charge the vehicle overnight, you need to have a solution for how that vehicle is going to charge,” Carlson said. “Is the employee expected to plug that vehicle into their own electric outlet at their home? If it’s a hybrid-electric troubleman truck that gets taken home, how will it get charged? If you park it in front of the house and you’re needing to run extension cords out to charge the truck, you’re going to be dealing with potential trip hazards or something else that makes it even more challenging. Charging at home for take-home vehicles can be a bit of a funny question to deal with.”
How has SCE addressed this issue?
“We use our telematics system to identify the trouble truck operators who regularly parked their vehicles at the service centers – where they would be able to safely charge the vehicles – as the target users of new trouble trucks equipped with the plug-in electric systems.”
To tackle the challenge of overcoming range anxiety – the fear of not having enough battery power to make it to a destination – SCE has focused on striking the optimal balance between the driver’s daily job requirements and a vehicle’s range capabilities.
“The solution may be either going with a plug-in hybrid unit that has the range extension of the gasoline engine or identifying a fully electrified product that has a large enough battery capacity to satisfy the 98th percentile of the driver’s daily missions,” Carlson said.
Carlson continued: “You can clearly borrow a vehicle, take from a loaner pool, rent a vehicle or find an alternate vehicle if you need to go on that long trip that the battery electric range doesn’t support. But that adds a hassle factor in logistics to the driver that they otherwise wouldn’t necessarily have in a gas vehicle. So, you need to make sure you limit the hassle factor for the electric vehicles in the vast majority of situations for that driver.”
What advice does Carlson have for fleet managers who are considering expanding their own fleet electrification efforts?
“I would encourage them to lean into it because of the benefits of transportation electrification,” he said. “The driving experience with the quality products on the market is very high. And the users, once they drive electric vehicles, tend to always want to stick with those vehicles moving forward. I think that if fleet managers do the business case realistically and appropriately, then they’ll see that their maintenance costs are typically less with the electrified vehicles and the life of the vehicle is often expected to be increased.”