Although the solid waste industry has been an early mover in the transition away from diesel fuels, there are still many unanswered questions as to where the alternative fuel markets are heading in the sector.
To better understand the direction of the industry, Stifel hosted a fireside panel discussion with three leading producers of Class 8 (heavyweight) truck chassis who have adopted alternative fuel technologies to be used in solid waste collection, including CNG (compressed natural gas), BEV (battery electric vehicle) and FC (hydrogen fuel cell).
The discussion focused on the current state of play, necessary infrastructure, safety issues to be considered, operating expectations and return on investment (ROI).
“It has taken us quite a while to get [alternative fuels] mainstream,” said James Johnston, president of Hagerstown, Indiana-based Autocar. “I think what’s happened is there’s so much unknown; there have been so many massive investments and infrastructure relative to the [current diesel] gas program for it to work properly, and people are really kind of waiting to see.”
Currently, as much as 30 percent of North American routed solid waste fleets are CNG, but the panelists unanimously agreed adoption has been for the most part slowed due to a push by states and municipalities for zero emissions.
Johannes Kirchhoff, managing partner of Germany-based Kirchhoff Group, said the same was true in Europe, where CNG has experienced a minimal market penetration due to the region’s strong push towards urban vehicles being emission-free.
“We measure carbon dioxide (CO2) in [European] cities, and if they exceed a certain limit, then the cities have to stop traffic. So, there is big pressure from authorities to move towards emission-free vehicles,” he says. “Despite the [penetration in the U.S.], the CNG story never really started [here]. The engine and CNG quality did not match, and there were problems with cylinder heads. It did not take off in the garbage industry.”
With the industry’s general move towards newer fuel technologies, concerns of infrastructure requirements for BEV and FC have arisen. CNG fleets had similar struggles at first with operational limitations, but operators learned to establish orderly parking lines and refueling bays, training for drivers on how to operate a CNG truck within the limits of fuel range, and best practices for maintenance and repair techs. Johnston says something similar can be replicated for BEV and FC.
“It’s a huge investment,” says Kirchhoff. “If you imagine, there is already a big gas grid, but you can of course enable this grid to also partially carry hydrogen. For example, in Europe, it’s already allowed up to 10 percent. [You can] very easily add hydrogen to the grid, and in some areas, they have a grid where you can purely work with hydrogen. Of course, this is a big investment if 20 percent or 30 percent of fleets are switching to this energy, but it has to be done if you want emission-free traffic.”
Gary LaLonde, vice president of truck sales for Canada-based The Lion Electric Co. agrees, saying, “If you take a look at the concept of distributed energy, there is a possibility for those who have the availability of the space to generate some of their own energy. So, that takes some of the pressure off the grid that’s in play today. [However], the reality is, if everyone tried to flip over to electric today [both passenger vehicles and heavy-duty vehicles], the grid is not made for it.
“The advantage is some [utility companies] are already investing in growing the grid to make sure they will be able to meet that demand. We’ve talked to some operators, and the reason they haven’t invested in CNG precisely is because of infrastructure costs, but also because we view it as a bridge technology to go from the diesel world to the electric world.”
In addition to addressing alternative fuel infrastructure, there are some added investments needed in training and facilities before these solutions become a commonplace.
“When you take a CNG infrastructure that’s got all the stalls lined up and people have marked and coordinated their yards and they’ve put processes in place for entering the facility, leaving the facility, we’re better aligned than we’ve ever been to try to manage something like this going forward,” says Johnston.
LaLonde adds, “The refuse world is the perfect application for [BEV] because those vehicles are urban vehicles. They’re not over-the-road, 500-miles-a-day vehicles—that’s not their reality. And so, because they’re parked in the same location mainly overnight, then it’s easy to accommodate the charging infrastructure.”
Given this shift from CNG to BEV and FC, many customers have faced the same question of what battery replacement costs are compared to a CNG engine.
“One of the first questions customers ask us [is what the battery life expectation is] because it’s one of the unknowns,” says LaLonde. “What we’ve done to address this is we offer an eight-year warranty as standard for the battery, and then there is an extended warranty of up to 12 years where if we can’t meet a certain percentage of the initial capacity, we’ll swap it out.”
As for the cost for an EV battery replacement, LaLonde says it is about half the cost of replacing a CNG engine, running at $7,000 for the battery pack as well as the 12-year warranty.
“When you go into the EV space, there are so many tools available today, and we’ve actually tied our vehicles into those tools that make the smaller refuse companies … able to manage their routes effectively,” he says. “Identifying the routes and the ranges, determining how much energy is required and the geography [is something we’re still working out]. Obviously, if you’re going uphill a lot [there is a reduced mile range]. We provide those same tools so they can do that more effectively and so the price and the cost investment between [larger and smaller haulers creates a chasm that is] significantly less than it was five years ago.”
Although the technologies behind CNG, BEV and FC can vary drastically, the predominant safety risk for all three vehicle types is a thermal event, such as a gas leak or batteries overheating.
"When you take a CNG infrastructure that’s got all the stalls lined up and people have marked and coordinated their yards and they’ve put processes in place for entering the facility, leaving the facility, we’re better aligned than we’ve ever been to try to manage something like this going forward,” –James Johnston, president, Autocar
“Certainly, if you have a 200-kilowatt hour battery package, you have to take care of it,” says Kirchhoff. “Of course, you have these circuit breakers and you can disengage it, but you have to have strategies on how to do it. With the hydrogen in the fuel cell, it is not so complicated because hydrogen is the lightest element we have on earth, so it goes very fast. Let’s assume a tank gets a leakage, this is not a problem because hydrogen itself needs a ratio between hydrogen and air in order to do something. And so, when there is a leakage, the gas goes away and even if there is an ignition, it is very rare that it [would lead to a serious problem].
“One of the bigger problems [with electric vehicles] is the maintenance personnel. You have to educate them because its electric, it has 700 volts, and they should not touch it. On a normal garbage truck, they are used to touching everything because it’s a 48- or 34-volt system, so it’s a question of education, of course. Also, a gas-driven truck or a hydrogen-driven truck needs special education for the maintenance people to take care of.”
For BEV, if a battery does overheat, it has emergency cutoffs to disconnect the battery charge from the vehicle in the case of a thermal event.
“First and foremost, we do training any time we sell vehicles in an area with the first responders to show them how to disengage the high voltage,” says LaLonde. “We haven’t had any thermal events where it has caused significant [damage], and there haven’t been any fires with our vehicles [because of] our batteries. The reality is that operating with gallons of diesel fuel under a vehicle is a lot more dangerous than with a battery. It’s actually safer to operate with a battery where you can disengage them quickly.”
While BEV and FC have been labeled “the fuel of the future,” today without subsidies or tax credits, the economics do not support a BEV or BEV/FC conversion on the merits of the fuel and maintenance savings over the lifecycle given the steep upfront capital cost (more than twice the cost of diesel or CNG), says Michael Hoffman, managing director for Stifel.
“Of course, today it is very difficult to make a proper return on investment case out of [BEV/FC]. As long as the diesel is in the pricing it is today … and if there is no credit [or incentive] given for the zero emissions or less noise, then it’s almost impossible to make a competitive return on investment,” says Kirchhoff.
Johnston agrees, saying, “The biggest challenge is going to be total cost. People have such a hard time distinguishing between procurement capital and operating capital. The ROI of these vehicles will be over the lifecycle. It won’t be upfront; you are going to pay a premium for quite some time. And so, that’s going to be the struggle.”
The panelists concluded that CNG is well-established and the pros and cons are well understood. BEV and FC, on the other hand, have high expectations, but there is not enough data from vehicles in day-to-day operations to determine if the expected savings and operating performance will meet the needs and demands of the solid waste industry.