Fuel-cost differential between natural gas and diesel is a crucial purchasing consideration.

OEMs spell out NGV costs

Oct. 3, 2012
Payback from fuel savings can occur in two years

Much must go into any decision to convert to natural gas vehicles (NGVs), powered either by  compressed natural gas (CNG) or liquefied natural gas (LNG), and operating costs and payback are chief among those factors for most fleets considering making the switch to this form of green power.

A good place to start is determining what the upcharge will be compared to ordering a diesel-powered truck—and it will by all measures be substantial. Acquisition cost “really depends on the engine and fuel system [spec’ed],” Charles Cook, Peterbilt’s vocational market segment manager, told FleetOwner. “It can be from $40,000 to $90,000 per vehicle.”

“With spark ignited natural gas, the cost between LNG and CNG are fairly similar at the chassis level, but there is an incremental cost increase compared with a diesel chassis regardless of LNG or CNG,”Curtis Dorwart, Mack vocational marketing product manager, explained to FleetOwner.

He noted that the cost has decreased in recent years as volumes have increased.  “The price of a chassis varies a lot,” Dowart added, “and the amount of driving range will also play a role in the price, but in round numbers [expect] somewhere around a 35% increase over diesel trucks.”

More specific in speaking with FleetOwner was Robert Carrick, vocational sales manager—natural gas for Freightliner Trucks.  “Existing Freightliner Business Class M2 112 with ISL-G production solution is approximately $37,000 to $42,000 incremental cost for LNG (which has a 150 gallon/82 diesel gallon equivalent [DGE]) over diesel.  CNG is priced slightly higher at approximately $40,000 to  $45,000 over a diesel (75 DGE fuel system). These prices do not include state and federal taxes.” He added  that “approximate pricing for the Freightliner Cascadia with ISX 12 G will be available in the near term."

As for the differential in maintenance costs between a diesel truck and an NGV, Peterbilt’s Cook observed that, “As with acquisition cost, it really depends on the engine selected.  “With spark ignited [vs. diesel-ignited] natural-gas engines, you introduce spark plugs and some additional top-end maintenance but eliminate DPF and SCR systems.”

Regarding maintenance, Mack’s Dorwart pointed out that “there are some things to keep in mind, such as the engine oil required is different compared with diesel. And in the case of spark ignition, there are spark plugs and coils with which to deal. Also, the fuel storage tanks need periodic inspection and at some point will need to be replaced once useful life is over.”

However, he added that “these additional costs are offset somewhat by the elimination of DEF,  the DEF dosing system, the DPF and SCR maintenance costs.”

“A number of maintenance items can impact the costs,” stated Freightliner’s Carrick. “The preventive-maintenance [PM] interval is 15,000 miles, so compare that cycle with the present diesel schedules to determine any additional costs that need to be considered for additional PMs during the course of the year.

“On spark- ignited engines, spark plugs need to be changed at 45,000 miles,” he continued. “Diesel fuel isn’t utilized [on spark-ignited engines], so all costs related to diesel maintenance, such as DPFs, regen's, or the SCR system can be deducted. As a result of these dynamics, our customers tell us that they see similar costs as with diesel-powered vehicles, but most forecast one to two cents per mile premium for an NGV to be safe.”

Fleets that decide to install on-site fueling stations for CNG or LNG will also have that cost to consider—which can be considerable, according to Mack’s Dorwart. “Fueling station cost varies dramatically depending upon a number of factors, including the selection of fuel type, LNG vs. CNG; proximity of the fleet location to natural-gas pipelines; how many trucks are to be filled and how fast you want to fill   them, for instance.  Let’s say we are talking $250,000 to  well over $1 million” for a fueling site.

 While acquisition prices can certainly be attained from OEMs and they can also advise on expected maintenance costs and NGV fueling-system providers can provide quotes on installing that infrastructure,  the resale value of NGVs at this point in time remains something of a wild card.

“It’s probably a little early to say [what trade-in values will be],” said Peterbilt’s Cook. “But as the infrastructure expands, the demand and therefore the price for used CNG and LNG vehicles will increase.”

Mack’s Dorwart remarked that resale value is “the 100,000 question” right now.  “It is still too soon to tell, but if the popularity of NGVs continues to rise,  I think  we  can expect resale values to be healthy in the future. “

“Resale value is certainly still in question, as the new products have not been in service long enough to run through the used market yet,” observed Freightliner’s Carrick. “There are several factors to consider. In the past two years, infrastructure has increased in North America, so the market available to sell used vehicles has also expanded greatly.

“That helps increase the value of natural-gas vehicles,” he continued. “Diesel fuel cost will be the greatest factor in the valuation of used vehicles.  You can estimate the percentage in used value based on the cost of diesel and the resulting premium over natural gas.  The higher the cost of diesel, the closer the natural gas vehicle will be to the value of a diesel truck.”

Something else that is known now--  and is a major if not the deciding factor for many fleets to make the move to NGVs--  is the price differential between CNG/LNG and diesel fuel.

“The fleets purchasing vehicles today (without subsidies) are doing so as they run an adequate number of miles and are purchasing fuel at a significant reduction from diesel,” pointed out Freightliner’s Carrick. “And [due to the fuel cost differential], they can expect to see payback on their acquisition cost in less than two years. “

“Current indicators point to low-cost natural gas,” said Mack’s Dorwart. “We expect CNG to be 40 to 50% the cost of diesel and LNG to be 30 to 40% the cost of diesel. “Even if the price of ‘raw gas’ would double tomorrow, the cost per diesel gallon equivalent [DGE] would increase less than $1 at the fuel  dispenser.”

On the other hand, Dorwart did allow that predicting the future price of fuel is another matter altogether. “If you have a crystal ball I am all ears. Predictions are just that--  predictions. 

“In fleet terms,” he continued, “the cost of fuel is huge.  It is at the top of the cost ledger these days, so the promise of less expensive fuel creates a lot of interest.  There are a number of downsides, however, to consider-- such as decreased range due to fuel-storage limitations of chassis frame-rail space, and you will not get the same MPG or GPH as compared to diesel, so that also figures into range.”

Nonetheless, fuel cost right now is the major catalyst for most fleets to consider running NGVs.  That’s more so the case also due to the expiration of federal incentives to run on natural gas.

“At this time, there are no funds available from the federal government,” said Freightliner’s Carrick. “However, there are many states that offer funding, some of it sizeable. The Natural Gas Vehicles of America (NGVA) and the DOE Department of Energy websites both provide excellent references on these.”

“The federal tax credits expired about two years ago,” noted Mack’s Dorwart, “but there are some local and regional incentives that vary greatly. My recommendation is to contact your local Clean Cities Coalition Coordinator, via the U.S. Department of Energy. You can look them up on the web at:  http://www.afdc.energy.gov/cleancities/coalitions/coalition_contacts.php.”

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