Metro’s proposed budget greatly reduces most capital outlays over the next several years. The RapidRide expansion has shrunk to just three funded lines, and base expansion plans have been mostly suspended. But there remains a $270 million investment in battery buses and associated charging infrastructure, $93 million of that by 2022.
Into the budget debate comes a remarkable report from Metro, laying out the steep opportunity costs of a transition to all-electric. Under the most likely assumptions, battery electric buses and infrastructure are 53% more expensive than a diesel hybrid fleet. Even with societal benefits including emissions priced in, it’s 42% more expensive. The added cost of a 100% transition from hybrid to battery is enough to buy 237,000 service hours annually through 2040.
The report shows the costs of electrification within Metro’s latest fleet plan. The fleet plan itself is remarkable, making stark how Metro’s plans have shifted with COVID and the recession. The number of buses operated by Metro will fall by more than one-fourth through 2026, and no service expansion is projected beyond that.
With budgetary reductions to the fleet plan amplified by the costs of electrification, Metro service levels will be reduced unless higher revenues are forthcoming. As Executive Constantine warned when transmitting the budget proposal a month ago, “Additional investments in electrification of the fleet [beyond 2028] will require a new revenue source, significant increased revenue forecasts, or a reduction in service levels”.
Battery bus economics
The Metro report updates an earlier analysis from 2017. Two scenarios are described. One is a “moderate case”, reflecting Metro’s current experiences with battery buses. There is also a “favorable BEB case where input variables were adjusted to favor BEBs.” The report doesn’t spend much time justifying the assumptions in the ‘favorable’ case, which include improved pricing for capital, fuel and operations vs current data, and also assume BEB operating costs decrease considerably as the technology develops. It is perhaps not so much a forecast as a description of the future technical progress one would need to see to make electrification cost-neutral. Metro’s conclusion: “Metro feels confident that the current modeling for the moderate scenario is an accurate estimate for the cost to procure, maintain, and operate a fully BEB fleet”.
Metro’s experience since 2017 has generally made their projections more pessimistic, largely because the earlier report seriously underestimated the costs of charging infrastructure. The assumption then was for charging equipment resembling that for cars and light-duty vehicles. The developing industry standard is overhead gantry systems at bases and layovers with a blend of slow overnight charging and fast daytime charging for the same vehicles. Metro’s updated numbers are based on contractor estimates and the experience of other agencies with more advanced construction projects.
Capital costs for battery electric are higher in either the moderate or favorable case, mostly reflecting the higher purchase price of the vehicles and the charging infrastructure. In the moderate case, it’s a $331,000 or 41% cost penalty for the battery buses.
The moderate case projects 56% higher operating costs vs hybrid. The favorable case has 18% lower operating costs. The wide range is mostly a debate around maintenance costs, with the favorable case reducing maintenance cost assumptions by more than half vs the moderate case. The moderate case estimates are based on higher costs observed to date, but this experience with battery bus technology is short enough to support a range of reasonable estimates for how maintenance expenses might evolve in the longer term.
Metro’s scaling back of the fleet does reduce the total cost of electrification. But it incidentally tilts the economics against battery buses because the base infrastructure for hybrid buses already exists. The battery buses will need expensive new charging infrastructure. Hybrid buses already have all the conventional infrastructure they need, excepting relatively modest spending on maintaining base facilities. The case for battery buses would look better if Metro were expanding and both hybrid and battery needed new base capacity.
The bottom line is that a BEB fleet is more expensive in budgetary terms in either scenario. In the favorable case, the increment is just 6%. In the moderate case, they are 53% more expensive. Adding in societal benefits such as noise and emissions reductions, the favorable case flips to 1% less expensive, and the moderate case is 42% more expensive. Neither calculation seems to include lost ridership from budget-driven service reductions which would make the societal benefits of BEB smaller.
The reduced fleet plan
The fleet plan underlying the proposed budget projects a cumulative 27% reduction in the size of the Metro fleet. About half of that occurs in 2020 and 2021, as service is reduced to a lower post-COVID baseline. By Spring 2021, just 1% of the remaining fleet will be ‘retirable’ under FTA requirements. The remaining reductions mostly follow in 2025-2026, after the opening of several ST2 Link extensions allows Metro to retire older buses and reduce service hours. After the reductions of the next six years, the fleet plan anticipates no service growth from 2027 through 2040. In all, the Metro operated fleet will shrink from 1,671 buses pre-COVID to 1,224 in 2026.
Metro’s capacity to serve the travelling public will be dramatically smaller. This will leave Metro unreachably far from the goals of Metro Connects. The plan had envisioned 70% more service hours by 2040 serving double the ridership of 2016. Meeting those goals would have required 625 more buses and corresponding base capacity.
This has appropriately made some King Council members ask harder questions about electrification, while others are determined to plow ahead. The questions need not be resolved in this budget cycle, as Metro is already committed to the purchase of 40 battery buses to start service in 2021. The larger uncommitted investments in the Capital Investment Program are preparing for 105 battery buses at South Campus by 2025, and another 155 at South Annex in 2027.
The County Auditor’s office is reviewing best practices for electrification. That’s an ongoing study, but the interim report released in August asks the right questions: “Given budgetary constraints, Metro Transit will have to balance bus service and electrification in order to work toward climate goals”. Metro is a large percentage of King County government emissions, but a tiny part of overall emissions in the County which are far more related to driving.
How much will the political commitment to battery buses subtract from Metro’s resources to provide transit services? The 2040 requirement for electrification (and aspirational goal for electrification by 2035) forces near-term procurement to be nearly all-electric because buses purchased today will be in service for a minimum of 12 years, and generally longer. It’s not yet clear how ready the technology is, and Metro’s testing to date reveals awkward questions about performance on hills and in cold weather. However, Metro’s reduced fleet plans makes some decisions less urgent by cancelling purchases that would otherwise have taken place in the next few years. At this time, the only hybrid purchases still scheduled are for 13 coaches on the Madison G line opening in 2023.