Transitioning to Clean Energy Transportation Services: Life-Cycle Cost Analysis for Vehicle Fleets

Applied Energy, Volume 285, 1 March 2021, 116408

ZEW - Centre for European Economic Research Discussion Paper No. 20-054

36 Pages Posted: 23 Oct 2020 Last revised: 21 Jan 2021

See all articles by Stephen Comello

Stephen Comello

Stanford Graduate School of Business

Gunther Glenk

University of Mannheim

Stefan J. Reichelstein

Stanford University - Stanford Graduate School of Business; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: March 1, 2021

Abstract

Comprehensive global decarbonization requires transportation services cease to rely on fossil fuels for power generation. This paper develops a generic, time-driven life-cycle cost model for mobility services to address two closely related questions central to the emergence of clean energy transportation services: (i) the utilization rates (hours of operation) that determine how alternative drivetrains can be ranked in terms of their cost, and (ii) the cost-efficient share of clean energy drivetrains in a vehicle fleet composed of competing drivetrains. The model ranks alternative drivetrains with different environmental and economic characteristics in terms of their life-cycle cost for any given duty cycle. The critical utilization rate that equates any two drivetrains in terms of their life-cycle cost is shown to also provide the optimization criterion for the efficient mix of vehicles in a fleet. This model framework is then calibrated in the context of urban transit buses, on the basis of actual cost- and operational data for an entire bus fleet. In particular, our analysis highlights how the economic comparison between diesel and battery-electric transit buses depends on the specifics of the duty cycle (route) to be served. While electric buses entail substantially higher upfront acquisition costs, the results show that they obtain lower life-cycle costs once utilization rates exceed only 20% of the annual hours, even for less favorable duty cycles. At the same time, the current economics of the service profile examined in our study still calls for the overall fleet to have a one-third share of diesel drivetrains.

Keywords: decarbonization, clean energy vehicles, transportation services, life-cycle cost, fleet optimization

Suggested Citation

Comello, Stephen and Glenk, Gunther and Reichelstein, Stefan J., Transitioning to Clean Energy Transportation Services: Life-Cycle Cost Analysis for Vehicle Fleets (March 1, 2021). Applied Energy, Volume 285, 1 March 2021, 116408, ZEW - Centre for European Economic Research Discussion Paper No. 20-054, Available at SSRN: https://ssrn.com/abstract=3716750 or http://dx.doi.org/10.2139/ssrn.3716750

Stephen Comello (Contact Author)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, 94305
United States

Gunther Glenk

University of Mannheim ( email )

Mannheim Institute for Sustainable Energy Studies
Mannheim, 68131
Germany

Stefan J. Reichelstein

Stanford University - Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States
650-736-1129 (Phone)
650-725-7979 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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