Interest is growing in a new state grant program aimed at helping owners of heavy-duty and high-mileage fleets with the costs of buying or converting their vehicles to run on the commonwealth's abundant natural-gas supply.
Since the application period opened three weeks ago, the state Department of Environmental Protection has seen about 30 electronic filing starts, but no final submissions.
"After the holidays, we expect to see applications come in from a variety of fleet owners, including commercial and nonprofit businesses, and local transportation associations," said Lynda Rebarchak, a DEP spokeswoman.
The application process can take several weeks to complete, unless the applicant did some of the work upfront, she said. DEP held statewide seminars throughout the fall to talk about the grant program, which is being funded by Act 13.
The natural-gas law passed in February authorized counties to levy impact fees on the deep wells drilled to tap Marcellus Shale deposits.
Given the wide range of interest at its seminars, DEP is expecting a strong turnout for this first portion of a three-year program, Deputy Director Daniel Lapato said.
Weight requirements and a five-vehicle minimum could keep some interested parties from applying for the grant funds. The absence of fleet refueling stations also presents a potential stumbling block for early adopters.
However, there are partnerships developing that could potentially aggregate natural-gas vehicle projects, which would help justify the construction of new stations, said Stephen Yborra, director of market development for NGVAmerica, a Washington, D.C.-based trade group promoting NGV.
"(Some) fleets are small enough that they might have difficulty generating the volumes of fuel necessary to create good economics for someone to build them a station," Yborra said, citing municipal agencies and state-funded universities who operate shuttle buses.
DEP has seen a lot of aggregation early in the application process, Rebarchak said.
Because of the shale play, many of the bigger drillers are approaching existing fuel station retailers about developing the infrastructure, he said. Drilling companies and their vendors are making the switch in their own fleets, which has led to growth in compressed natural gas, or CNG, stations in northeastern Pennsylvania.
In October, Republic Services of Pennsylvania LLC, a subsidiary of Phoenix-based Republic Services Inc., unveiled its facility for fueling natural-gas vehicles in York County. The announcement also included the first of a fleet of waste and recycling trucks there that run on natural gas.
High-fuel-use vehicles that return to their home base of operations each day are the best candidates for natural-gas vehicles, Yborra said.
"It's not right for everybody, but it's certainly right for a lot of people," he said.
The best applicants for the grant funds are step vans used by delivery services, he said, citing makers of snacks and other consumable goods, such as soda and beer.
"The lower the fuel use, the harder the payback is or the longer it might be," Yborra said.
For example, the average light-duty commuter car might save $1.50 per gallon by using natural gas. However, that vehicle might use only 500 gallons a year, so the premium payback could be as long as the car is in operation, he said.
Over-the-road trucks running back and forth between Philadelphia and Pittsburgh would be using a lot of fuel, and the payback time would be a lot shorter. Grocery store chains could save significantly, he said.
Transit buses and trash trucks also are good candidates, Yborra said.
Among those considering the move is the Lancaster County Solid Waste Management Authority, or LCSWMA. The authority board of directors will meet Dec. 21 to make a final decision on converting transfer trucks to CNG, CEO Jim Warner said.
"CNG is really well-suited for fleets that come back (at night)," he said.
Like Republic, LCSWMA would be looking to install a fueling station to serve as a central filling area for its transfer trucks and a fast-fill area for waste haulers delivering waste to its facility, Warner said.
"We could get a payback in about five years," he said of the possible multimillion-dollar investment.
East Pennsboro Township-based Gannett Fleming Inc. is in the process of assisting transit agencies and other clients with CNG conversions, including fueling stations for River Valley Transit and Endless Mountains Transportation Authority.
"Concern for many of the clients was cost. It's not cheap to get a natural-gas vehicle," said Scott Schriner, project manager and office manager for the firm's Williamsport office. "Act 13 funds will help those that are successful in offsetting some of those costs."
For the transit agencies, the cost differential is about $100,000 per bus, he said. However, the CNG vehicles generally last longer and are more efficient.
Schriner said he has heard from a lot of interested clients this year. The major concern has been the fueling infrastructure, he said.
He pegged the cost at $500,000 to several million for a station. Size of the station dictates the cost, which is driven by the type of users.
"Once the industry develops larger CNG engines, that's going to help a lot," Schriner said. "You're going to open the doors to the bigger contractors and just bigger fleets in general."
Construction on the fence
DEP has pitched the grant program to those in construction-related fields.
While the interest is there, companies are taking a wait-and-see approach, said Nate Pigott, a spokesman for Mid Atlantic BX, a Harrisburg-based multistate trade group that serves engineers, architects and contractors.
"Once one or two companies in the area adopt it, I think you will start to see more pop up," Pigott said. "People want to see some results before they move into it. It reminds me of green building and LEED."
When one company announces it has saved a lot of money and had no issues with natural-gas vehicles, more should quickly follow suit, he said.
NGV grant program
On Dec. 1, the state Department of Environmental Protection rolled out its natural-gas-vehicle grant program, which will provide $20 million over the next three years, including $10 million in the first year, to help cover purchase and conversion costs for fleet vehicles.
First-year applications, which must be submitted electronically, are due by Feb. 1. Grant awards will occur in late March.
The funds come from the natural-gas impact fee created under Act 13.
In the first year, $5 million of the initial $10 million is slated for local transportation organizations, including nonprofit agencies providing public transportation services, port and redevelopment authorities.
Nonprofit organizations, for-profit companies, local transportation organizations, state-owned or state-related universities, commonwealth or municipal authorities and the Pennsylvania Turnpike Commission are eligible for the remaining amount, the state said.
An additional $7.5 million in funding will be available the second year, with $2.5 million the third year.
Eligible vehicles must weigh at least 14,000 pounds and be fueled with compressed natural gas or liquefied natural gas. Bifuel vehicles also are eligible for grant funding.
Awards will be capped at 50 percent of the incremental purchase or retrofit cost per vehicle, with a maximum total of $25,000 per vehicle.
Eligible applicants must meet the following criteria:
• Plan to convert five or more eligible vehicles.
• Construct or use an existing natural-gas fueling station in Pennsylvania.
• Calculate the projected use of natural gas.
• Estimate project costs.
• Identify the source and amount of any matching funds.
• Intend to maintain operations in the commonwealth for at least six years.
• Register all purchased vehicles in Pennsylvania.
• Utilize federal funds where available.
• Explain whether the project includes a publicly accessible natural-gas fueling facility.
Source: Pennsylvania Department of environmental protection