• The vendor takes responsibility for operating and maintaining the charging system, with a central focus on ensuring that each bus is fully charged at the start of its daily duty cycle.
The length of the contract may give school adminis-
trators pause. In our conversations, we have heard that 10-year contracts are not unrealistic, but they are cer- tainly not common. The reason for the extended length is a goal that is shared by both school districts and CaaS vendors: To keep the annual budget for pupil transporta- tion on an affordable track. We have studied the total cost of ownership of ESBs and
have verified one of the key premises of the CaaS busi- ness model: The economics of ESBs are likely to become more favorable than those of fossil-fuel buses over the next decade. This means that pupil transportation bud- gets will not need to increase beyond the normal pace of inflation. Rather, savings over the life of a contract can cover the charging system’s initial capital expenditure. The rate of annual savings will be modest enough that an extended contract length, such as 10 years, is needed to allow the payback process to be completed. Our school district conversations tell us that many ad-
ministrators will focus on the tradeoff embedded in the CaaS proposition. On the one hand, a CaaS arrangement offers the ability to “get electrification done” both tech- nically and financially. On the other, it can lock a school district into a relationship with a previously unknown and perhaps recently launched vendor for many years. We believe that finding an acceptable version of this
tradeoff will be possible for many school districts, but only if administrators conduct thorough due diligence on the key factors in the financial equation—including the four we listed above that may not be obvious at first glance. And not least in importance is this reality: Many aspects of ESBs, charging systems and the broader oper- ating environment are undergoing rapid evolution. This means that a good long-term contract will allow the par- ties to identify challenges and opportunities that appear down the road, and to modify the contract in ways that are workable and fair on both sides. ●
Ewan Pritchard is an engineering consultant and subject matter expert in sustainable transportation for the Energetics Sustainability Consulting Group of CLEAResult. Stephen Crolius is the president of business strategy firm Carbon-Neutral Consulting.
www.stnonline.com 25
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