Evaluation of future fuel options for Lafayette CityBus

Lin Yang, Purdue University

Abstract

In recent years, domestic natural gas production has increased markedly, and now has the potential to become a cleaner and less expensive energy source than diesel fuel for use in the public transportation sector. Also, in the face of increasing diesel fuel costs and increasing concerns regarding air emissions caused by its fleet, Lafayette CityBus Corporation is examining long-term fuel alternatives to maintain its current level of services. This study uses benefit-cost analysis to compare the total cost of three potential options for bus replacement. The candidate systems are standard diesel, hybrid diesel-electric and compressed natural gas (CNG). In addition, the environmental costs of these three fleet options are estimated. There are two main components of total cost: operating cost and capital cost. This study analyzes and compares the costs among the three candidate systems over a 15-year project horizon. Results suggest that the CNG option has the lowest net present value (NPV) of total cost, and that cost savings would be larger if the corporation could obtain a grant for the CNG fueling station or if the project lifespan could expand to 20 years. The CNG option would produce the least amount of emissions and largest environmental benefit. Monte Carlo simulation is used to examine the inherent riskiness of the three fleet options. CNG is always lower cost than hybrid diesel-electric. Depending on assumptions regarding the underlying price distributions, the CNG option has a 51 to 79 percent chance of being lower cost than the standard diesel option. With a 20-year project horizon, the CNG option has a higher probability of being lower cost.

Degree

M.S.

Advisors

Tyner, Purdue University.

Subject Area

Agricultural economics

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