How To Make Electric School Buses As Cheap As Diesel-Fueled Transit

A yellow school bus is usually a pollution nightmare, but a new business model could make it easier for schools to go electric.

Electric vehicles don’t sell as well as they could largely because of cost. Even if buyers can make back money from cheaper fuel costs, many are not prepared to meet the extra upfront expense.


Take these electric Trans Tech school buses. They cost $230,000, compared to $110,000 for a typical diesel bus. At double the price, it’s little wonder which model school districts currently prefer.

There could be a way to neutralize the cost difference, and it doesn’t involve waiting for Tesla’s Gigafactory to produce better batteries. The idea is called vehicle-to-grid (V2G) and basically, it involves using EVs to back up the mainstream power system. Revenue from “grid services” could help offset the higher upfront cost of EVs themselves, research shows.

School buses could be an ideal application, says Lance Noel, a PhD candidate at the University of Delaware and lead author of a paper that explores the benefits of V2G. Because they’re used only for five hours a day, and in predictable patterns, they could be ideal storage batteries for electricity managers trying to balance out demand and supply on the grid. Noel says school districts could potentially make back thousands of dollars a year.

Noel and fellow graduate student Regina McCormack compared the cost of running a Smith Newton eTrans electric school bus over 14 years (the standard lifetime) compared to a conventional bus. They added in a $30,000 cost to retrofit the e-bus for two-way charging and assumed grid service revenue of $28 per megawatt-hour. That’s actually not a theoretical number. It’s the federally agreed rate for such services, and the amount a University of Delaware pilot is currently receiving.

The researchers found that an average suburban school district in Delaware could save $38 million across a whole fleet, and that the higher upfront costs would easily pay for themselves. That high number also includes climate and health benefits (from fewer diesel fumes). But then the calculation also works without those things. V2G would save $5,700 per bus seat over the EV’s lifetime, the paper says.

“The V2G revenues are essential to the cost effectiveness of the bus,” Noel says in an email. “Whereas a V2G-capable electric school bus would save the school bus operator a significant amount of money, a regular electric school bus is not cost-effective compared to a traditional diesel bus under average projections.” Electric buses aren’t likely to become cost effective on their own without either an increase in diesel prices, or a decrease in battery prices.


There are various efforts to make V2G-for-buses a reality. The Clinton Global Initiative is backing one six-vehicle pilot in California. There’s the University of Delaware trial with NRG and BMW (it’s providing the Minis). And Noel and McCormack themselves have formed a company. Their idea is to bring in outside funding so school districts would continue to pay diesel-bus prices. The extra costs would be met with a loan that would be paid off from the V2G revenues.

“School districts are restricted by budgetary concerns, and don’t really want to deal with the complications of V2G,” Noel says. “[But] in our talks with school districts, our business model has been incredibly appealing to some, since they essentially don’t have to assume any risk.”


About the author

Ben Schiller is a New York staff writer for Fast Company. Previously, he edited a European management magazine and was a reporter in San Francisco, Prague, and Brussels.