Less than 1 percent of the school buses in the U.S. cur-


rently are electric. This statistic is more sobering when seen alongside the fact that over 60 percent of low-in- come students rely on the bus to commute to school. Student bus ridership is inextricably linked to household income and vehicle ownership. U.S. elementary and secondary school enrollment broken down is about 40 percent suburban, 30 percent in cities, 20 percent in rural areas, and 10 percent in towns. About 62 percent of electric bus procurement and commitment (by volume) has been within suburban school districts, 25 percent in cities and just about 13 percent in towns and rural areas. The purchase price of electric school buses range from $230,000 to $400,000 and cost between two and four times that of the average $110,000 diesel bus. This is a significant upfront cost, even accounting for reserves for decommissioning the existing fleet and purchasing new replacement buses. The average school district spends about $12,000 to $13,000 per student annually. Capital outlay expenditure is about 10 percent of the average budget per student. Changes in budgets can significant- ly impact how the schools plan for transportation. It is estimated that by eliminating one bus route, schools save an average of $37,000 annually. Alleviating the stressed balance sheet of school


districts at competitive cost of capital can make all the difference and create a more inclusive clean transpor- tation movement. Though the switch to CNG improved air quality and consequently health of millions of Delhi residents, the order and the implementation were not without controversy. The cost burden of this transition was mostly borne by Delhi’s Transit Authority, Delhi Transportation Corporation (DTC), and was financed by governmental loans. Cost of these loans were between 10 and 15 percent, and they were amortized within 13 years. It is estimated that about 50 percent of the operat- ing expense was simply interest. This exemplifies the impact of financing on any tran-


sition that involves higher upfront expenses and lower operating costs. Financing in an emerging economy two decades ago would look drastically different vis-à-vis infrastructure financing in the U.S. today, but even in the current low interest rate environment, state and local governments backing the credit of low-income school districts or providing capital grants can accelerate the adoption and further multiply the value. Schools can in turn divert the savings into much needed supplies, instruction and benefits for teachers. One of the ways to complement the state grants and federal support to finance electric bus purchases is


18 School Transportation News • JANUARY 2022


having third-party financiers come in with their capital. Experienced financiers will be able to bundle financing of electric bus fleets, solar panels to provide low-cost en- ergy during the day to charge the fleets along with price certainty in the long-term, and the requisite charging infrastructure. This will be off-balance sheet financing that can help ease the burden of upfront capital require- ments. Average savings are estimated at $31,000 per year for a 12- to 13-year life. Furthermore, operators able to integrate vehicle-to-grid (V2G) technology will be able to add to the savings as monetization of grid services will further lower the cost to the schools. V2G is still nascent but has tremendous potential as the industry standardiz- es protocols and efficiency scales up. The Biden administration’s infrastructure bill, which


includes $2.5 billion to help schools transition to electric buses, is a step in the right direction. But it is the colossal sustainability and infrastructure-related capital floating in the market right now searching for long-term stable returns and societal benefits that has the potential to move the needle. The nature of the transition is such that it needs be managed at the local level supported by the states and the federal government—another policy to enable this shift is to open electric markets across the country to third-party solar and fleet financing (solar can ensure availability of long-term electric supply for charging at low rates). Not all states allow third-party solar financing as of today, and the states which have exposed utilities to competition have witnessed signifi- cantly higher growth in distributed generation. The decision in 1998 in India materialized only be-


cause the Supreme Court took a long-term view and gathered the political will to deliver. In a time when the political environment is highly polarized and there is significant partisan divergence in policy and infra- structure improvements with benefits for all students in school districts all over the nation. This is something that in my opinion most people and


legislators can rally behind. The drive for cleaner fuels resulted in better health for millions of kids and adults in Delhi (including me) and zero-emissions buses, which deliver financial savings, can be one of the best invest- ments we can make today for the next generation and the planet. ●


Shivapriya Balasubramanian is the director of valuations at Madison Energy Investments in New York City. She has experience investing in clean energy infrastructure in the U.S. and India.


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