State of the Art and Next steps in commercialisation of hydrogen buses

www.nexthylights.eu State of the Art and Next steps in commercialisation of hydrogen buses Ben Madden Element Energy 1 st March 2011 Oslo 1

Element Energy is a leading low carbon energy consultancy offering services spanning from strategy development to high end engineering solutions We operate in three main sectors Low carbon transport Low carbon buildings Low carbon power generation Low carbon transport Low carbon Buildings Low Carbon power generation We offer three main services to our clients Due diligence Strategy & Policy Engineering Solutions Due Diligence Strategy & Policy Engineering Solutions Element employs 15 consultants and modellers. 2

Secretariat to the Hydrogen Bus Alliance The Hydrogen Bus Alliance is a grouping of 10 cities and regions With a combined purchase of over 1,400 conventional buses per year. Amsterdam (GVB) Barcelona (TNB) British Columbia (BC Transit) Cologne (Regionalverkehr Köln) Madrid Hamburg (Hamburger Hochbahn) London (Transport for London) Oslo South Tyrol Perth The Hydrogen Bus Alliance has three main aims: 1.To share information 2.To promote the use of hydrogen buses 3.To develop a strategy for joint Alliance bus procurement 3

Contents Introduction Key findings of the State of the Art and Commercialisation Strategy Suggestions for next European steps 4

The three core deliverables cover different aspects of the bus roll out plan Targets State of the Art document (D3.1) Bridging the gap to Commercialisation Commercialisation Strategy (D3.3) Near-term actions for the FCH-JU Technical Work Plan under the JTI (D3.2) 6

We reviewed all bus projects back to 2003 The graph shows increasing competition in the space 14 Number of competitors in the FC bus market Cumulative number of firms 12 10 8 6 4 2 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 Bus Manufacturers FC Manufacturers 7

A next generation of hydrogen fuel cell bus fleets hit the roads in 2010 beginning with North America BC Transit 20 New Flyer buses for the 2010 Whistler winter Olympics AC Transit up to 16 new fuel cell buses for San Francisco and surrounds 8

And a number of European deployments These are will prove full operational reliability (equivalent to diesel) Daimler will deploy a fleet of 30 fuel cell buses in Europe by 2011 The Van Hool bus for Oslo and other projects. London launched a fleet of 8 buses to operate during the 2012 Olympics Amsterdam and Cologne are partnering on an 18m bus from APTS 9

FC buses could outcompete all other drivetrains overall environmental performance Operating benchmark Hybrid Fuel Cell Hybrid Diesel Trolley Fuel Economy* Diesel bus: 0.35-0.5litre/km (~ 3.5 5kWh/km) Up to 40% improvement over an equivalent diesel route at parity of calorific content Up to 25% -30% improvement over an equivalent diesel route Up to 50% improvement over an equivalent diesel route Range 500 km (for urban service) Up to 500km Equal to diesel buses Depends on the infrastructures in place Pollution from Exhausts CO, NOx, SOx, PMs Water vapour only CO, NOx, SOx, PMs (up to 30% reduction over benchmark) Absent CO2 emissions 1.15 1.6 kg-co2/km (diesel fuel carbon content: 2.3kg/litre) Depends on the hydrogen carbon content. Up to 100% reduction over benchmark (e.g. renewable hydrogen) Up to 30% reduction over benchmark Depends on the electricity carbon content. Up to 100% reduction over benchmark (e.g. renewable electricity) Infrastructures Minimal (maintenance depots and diesel refueling points) Need of hydrogen refuelling infrastructures (at bus depots) and delivery networks Equal to diesel buses Need of overhead contact wire networks throughout all bus route (approx. 400,000-1,000,000 per kilometre including substations) Operational flexibility -- Equal to diesel buses Equal to diesel buses Bus will be fixed to particular routes limiting operational flexibility

FC buses capital cost has substantially decreased over time.. 11

We also analysed bus capital cost rom the bottom up: High costs caused by the fuel cell system and high additional OEM costs Hybridised Fuel Cell Buses: Cost Break-down 2010-2020 1,800 (Thousands) 1,650 1,500 1,350 1,200 1,050 900 750 600 450 300 Approx. -40% to -50% Approx. -30% to -40% OEM Investment Costs Labour Power Electronics and Motors Hydrogen Storage System Energy Storage System FC Cooling System Fuel Cell System Chassis and Body 150 0 Cost Range 2010-2014: Upper and lower bound Cost Range 2015-2018 Bus based market: Upper and lower bound Cost Range 2018-2022 High FC car take-up: Upper and lower bound N.B.:Costfiguresfor12metres,lowfloorhybridfuelcellbusesonly.Busesareassumedtobepoweredbya150kW fuel cell system. Cost figures are based on industry s projections and several assumptions. For a detailed discussion, please refer to: NextHyLights, deliverable 3.1, http://nexthylights.eu/ 12

Key results from the TCO analysis: hybrid FC buses expected to provide a more flexible and cost effective solution than trolley buses for new routes in the period between 2015 and 2020 Total Cost Of Ownership (TCO): hybrid fuel cell buses in comparison with diesel, diesel hybrid and trolley buses (2010-2030) 6.00 Taxes on fuel Euro / Km / Bus 5.00 4.00 3.00 2.00 Approx. 75% Diesel hybrid buses Diesel buses Trolley buses CO2 price Overhead contact wire network - maintenance Extra maintenance facility costs Bus Maintenance Fee Propulsion-related Replacement cost Untaxed fuel Cost 1.00 Overhead contact wire network - Financing 0.00 2010-2014 2015-2018 2018-2022 ~ 2025-2030 Bus Financing and Depreciation Hybrid fuel cell buses : cost projections over time (150kW FC system) Alternative bus technologies as at 2015-2030 cost projections N.B.:Costfiguresfor12metres,lowfloorhybridfuelcellbusesonly.Busesareassumedtobepoweredbya150kW fuel cell system. Cost figures are based on industry s projections and several assumptions. For a detailed discussion, please refer to: NextHyLights, deliverable 3.1, http://nexthylights.eu/ 13

By 2025-30, the economics will be dictated by the relative cost of diesel and hydrogen Total Cost Of Ownership (TCO): outlook to 2030 hybrid fuel cell buses in comparison with diesel, diesel hybrid and trolley buses Taxes on fuel 2.5 Untaxed dieselprice: 0.58/litre Taxed price: 1.15/litre Untaxed dieselprice: 0.90/litre Taxed price: 1.70/litre CO2 price 2 Overhead contact wire network - maintenance Euro / Km / Bus 1.5 1 Extra maintenance facility costs Bus Maintenance Fee Propulsion-related Replacement cost 0.5 Untaxed fuel Cost 0 Hybrid FC buses Diesel buses at ~ 2030 cost (2030) (150kW & 75kW hybridisation, untaxed hydrogen cost at the pump: 4-4.5/kg Diesel hybrid buses (2030) Trolley buses (2030) Cost figures based on industry s projections please refer to the State of the Art review for key assumptions (NextHyLights deliverable 3.1 ) Overhead contact wire network - Financing Bus Financing and Depreciation 14

State of the Art key conclusions (1) Fuel cell hybrid buses have achieved the key technical performance metrics required for genuine commercialisation Less significant technical issues remain over fill times (longer than diesel equivalents) and passenger carrying capacities Reliability in hybrid configuration: will be proven in the current trials Assuming that bus reliability is achieved, the key barrier to commercialisation of the hybrid fuel cell bus technology is its high cost. The current capital cost of a hybrid fuel cell bus is over five times the cost of a conventional diesel bus, its ownership cost is over four times higher High capital costs are dominated by the high cost of the fuel cell and also its short lifetime (driving up the TCO).. 15

State of the Art key conclusions (2) The costs also include a significant OEM premium, associated with short production runs and higher risk. With planned cost reductions FC buses can achieve a plausible cost competition with trolley buses by 2018 (for new routes, TCO basis) Unsubsidised competition with diesel and diesel hybrid buses will not occur until towards 2025, at which point competition will be driven by the relative cost of diesel and hydrogen. Two phases are required towards reduction of costs: 1.The first step is a deployment of buses in the low 100 s by 2014/5 to stimulate cost reduction in bus fuel cell stacks and spread the OEM s premiums. 2.Up to 2020, a final cost reduction will require automotive stack uptake or global bus deployment policies aimed at low 1,000 s buses by ~ 2020/2. 16

Commercialisation studies example rollout strategy Real-world case studies: Over 7 strategies per city they differ in the cumulative number of buses deployed and in the period of deployment, which is assumed between 2010 and 2050. The long term cash flow of each option is compared against the reference case (deployment of diesel buses) Based on cities cost inputs 1,200 1,000 800 600 Cologne case study: roll out profile of 2,300 buses between 2011 and 2040 Bus purchase per year Cumulative number of buses in operation 100% fleet substitution by 2026 400 200 0 17

Our model calculates the cashflows from the operators perspective to analyse the overall business case 300,000,000.00 200,000,000.00 100,000,000.00 Cumulative undiscounted cash flow -lower bound cases (100% fleet substitution scenario) London (100% fleet substitution) Cologne (100% fleet substitution) 0.00 2011 2016 2021 2026 2031 2036 2041 2046-100,000,000.00-200,000,000.00-300,000,000.00 18

Key results - regional scale: 1. Even today. it is possible to demonstrate a long term economic case for investing in hydrogen bus technology 2. This result is apparent only when the investment is considered over the long term, i.e. for over 30 years the benefits from 2020/5 onwards can have a sufficient value to cover the high initial costs of technology deployment 3. Positive NPVs are possible only if the industry is able to meet the lower bound of their cost/performance projections 4. In addition to the above targets, the analysis proved that the net present values are extremely sensitive to the untaxed hydrogen and diesel fuel price. 19

Feedback from cities and regions suggests a program to heavily centralise deployment is not viable Centralisation of the bus fleet could play a role in reducing costs between 2010 and 2020. Cities and regions were consulted on their desire for ambitious bus rollout programmes. The cities and regions consulted indicate that realistic deployments might involve: 1. A maximum of 20 and 30 buses per city/region by 2015/6 (50 buses was mentioned in one extreme case) 2. Between 60 and 100 buses per city/region in the 2015/6 2020 time frame Realistic rollouts of hybrid fuel cells in European cities and regions in the 2010 2025 period is likely to require at least 30 cities across Europe. On this basis, total subsidy costs of a European rollout consistent with are estimated between 500 and 750 million euros by 2020 (total costs 1-1.5 billion euros) 20

Acknowledgement This project is co-financed by funds from the European Commission under FCH-JU-2008-1 Grant Agreement Number 245133. The project partners would like to thank the EC for establishing the New Energy World JTI framework and for supporting this activity. 21

NextHyLights Supporting Action to Prepare Large-Scale Hydrogen Vehicle Demonstration in Europe Preliminary inputs for MAIP revision / AIP development

3 core recommendations for the next calls 1. The FCH JU should require a bus availability equivalent to diesel buses as a precondition to any future large scale bus deployment. We also recommend two calls: 2. Call 1 (preferably AIP 2012): a cumulative bus deployment of 60 120 Large bus deployment of the order of approx. 100 buses is the next step towards cost reduction for fuel cell bus technology. 3. Call 2 (preferably AIP 2011): small bus deployments to encourage novel hybrid fuel cell bus concepts into the market by commissioning new bus prototypes. This call should stimulate the entrance into the market by a broader range of hybrid fuel cell bus options (from European OEMs which need to fill knowledge gaps, for example).

Timing and budget for the proposed calls Call 1 (call for a 60 120 buses project; preferably AIP 2012) The cities and regions consulted indicate that a realistic deployment project within the JTI timeframe might involve a maximum of 30 buses per city/region. It is unlikely that a plausible consortium can be established in time for the AIP 2011 The AIP 2012 would be preferable cities have indicated a likely interest here. Assuming a 35% contribution, the FCH JU would require approx. between 30 and 60 million to support 60-120 buses in total in, for example, three to six cities N.B.: These figures may exceed the FCH JU budget for the AIP 2012 Call 2 (small bus deployment for attracting new players; preferably AIP 2011) Call can be implemented already in the AIP 2011 (or at least it should not overlap with Call 1) Assuming a 35% contribution, the FCH JU would require approx. between 4 (5 buses project) and 7 million (10 buses project) for such call

Call 1 costs breakdown example Project's costs and financing - breakdown example 200 150 Million Total undiscounted cost: approx. 173 million Overhead costs per project Third parties (including national funding) JTI contribution (if at 35%) Total undiscounted cost: approx. 85 million 72 Diesel Buses Capex 100 Diesel Buses Opex 35 60 H2 infrastructures Opex 50 H2 infrastructures Capex 30 FC Bus Opex 0 60-bus project (e.g. two cities/regions) 120-bus project (e.g. six cities/regions) FC Bus Capex

Call 1 practicalities The aspiration for a large bus project in the 2012 call of approx. 100 buses is ambitious. There are a number of risks: Availability of local funds Early engagement with local politicians and bus operators is required Timing it is very challenging to introduce large bus fleets with new technologies into a city in a single year. A longer period for the deployment of the buses should be allowed (start of deployment between year 1 and 3 of the project). Industry availability the project will also fail if manufacturers are unable to supply enough buses early engagement with manufacturers is key

Final recommendations over and above the calls The FCH JU programme office also has a role in preparing the market beyond the existing FCH JU calls. Most notably, the FCH JU should reach out to key stakeholders: 1. Stimulate a discussions within national administrations on support concepts for fuel cell bus deployment schemes from 2015, established on a national level. 2. Stimulate a dialogue with bus OEM s who have not yet engaged with hydrogen vehicles 3. Work with the hydrogen bus industry to improve the overall certainty in the economic projections. 4. Engage regional administrations and bus operators e.g. foster longer term procurement partnerships across Europe.

Thank you for your attention!!!! 28

Acknowledgement This project is co-financed by funds from the European Commission under FCH-JU-2008-1 Grant Agreement Number 245133. The project partners would like to thank the EC for establishing the New Energy World JTI framework and for supporting this activity. 29

Back-up slides 30

FC buses expected to ultimately cost 100,000 and 200,000 more than a basic diesel bus and approx. 50,000-100,000 more than diesel hybrid buses by 2030 Hybridised fuel cell buses: cost break-down outlook to 2030 400 Diesel hydrod bus (projection) Basic diesel bus (Thousands) 300 200 100 Power Electronics and Motors Hydrogen Storage System Energy Storage system FC Cooling System Fuel Cell System 0 150kW hybridisation 75kW hybridisation Hybrid fuel cell bus, outlook to 2030 Diesel Bus (2030) Diesel hybrid Bus (2030) Chassis and Body 31

TCO analysis key assumptions Euro / km /bus 2.50 2.00 Total Cost Of Ownership (12 years life, 12m platform): comparisons at 2018-2022 costs (high FC car take-up) Taxes on fuel CO2 price Principal Assumptions: Hybrid Fuel Cell bus Fuel cell bus capital cost: 350,000-550,000 Euro Fuel cell bus maintenance fee: 20,000 Euro /year Fuel cell system cost: 140-350 Euro/kW Fuel cell system specs: 150kW; 10,000-12,000 hours warranty Fuel economy: 8-9 kg-h2/100km Hydrogen refueling station throughput: 500-1,000 kg-h2/day Hydrogen refueling station maintenance fee: 100,000-120,000 / year Hydrogen cost at the pump: 4-5 Euro/kg 1.50 Overhead contact wire network - maintenance Extra maintenance facility costs Hybrid Diesel bus Bus capital cost: 230,000-335,000 Euro Bus maintenance fee: 16,000-20,000 Euro /year Fuel economy: 28-36 liters / 100km Diesel price: 1.15 Euro / liter (taxed), 0.58 Euro / liter (untaxed) 1.00 0.50 0.00 Upper Bound Lower Bound Upper Bound Lower Bound Upper Bound Lower Bound Upper Bound Hybrid Fuel Cell Hybrid Diesel Diesel Trolley Lower Bound Bus Maintenance Fee Propulsion-related Replacement cost Untaxed Fuel Cost Overhead contact wire network - Financing Bus Financing and Depreciation Diesel bus Bus capital cost: 170,000-250,000 Euro Bus maintenance fee: 12,700-20,000 Euro /year Fuel Economy: 36-44 liters/ 100km Diesel price: 1.15 Euro / liter (taxed), 0.58 Euro / liter (untaxed) Trolley bus Bus capital cost: 500,000-600,000 Euro Bus maintenance fee : 30,000-50,000 Euro /year Overhead wire network cost: 500,000-1,000,000 Euro / km Overhead wire network maintenance fee: 3,000-30,000 Euro/km/year Overhead wire network life: 20 years Fuel Economy: 187kWh/ 100km Electricity Price: 0.1 Euro / kwh (taxed), 0.085 Euro / KWh (untaxed) Service route: 7km lenght / 30-50 buses in service Common Financial Inputs Discount period : 12 years Discount rate: 3.5% Annual mileage: 70,000km (5,000 hours) CO2 price: 30-60 Euro/tonne 32

The TCO analysis assumed an untaxed hydrogen price at the pump of 4-7 / kg-h2. This price seems achievable with 350bar tech. Untaxed hydrogen cost at the pump, including refueling station capital and maintenance costs / kg 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Hamburg case study (50% on-site production from electrolysis) Cologne case study (Trucked-in gaseous, 100-300kg/day) Cologne case study (Piped-in gaseous, 100-300kg/day) London case study (Trucked-in liquid, H2 purchase price: 3-6/kg) JTI targer (2015) HBA target (2015) DOE target (2015) Canada target (2015) US taxed diesel 2010 US untaxed diesel 2010 EU taxed diesel 2010 2010 price range 2015 targets EU untaxed diesel 2010 33

Key messages form the refuelling station case studies : A key technical challenge will be refuelling: risks becoming an unacceptable level of inconvenience for transit operators when dealing with fleets of over 100 buses. The refuelling time experienced by fuel cell bus operators range between 7 and 10 minutes per bus, assuming 30-40kg of on-board hydrogen storage at 350bar. N.B.: refuelling times for diesel buses are less than 5 minutes (closer to three minutes per bus). Solutions could be logistic (e.g. installing additional dispensers at depots), practical (e.g. altering route patterns to allow fuelling during the day), technical (e.g. operating 700 bar tanks and refuel only every two days). It is recommended that these types of solutions are explored in the near term projects for hydrogen bus demonstration such as the CHIC project. N.B: It is worth noting that refuelling time does not need to reduce to diesel bus levels. Interested bus operators have signalled that refuelling time close to 5 minutes per bus may be suffice if in-depot cleaning of the buses is allowed during refuelling 34

TCO results for different hybridisation options: the 150kW and 75kW hybridisations example Total Cost Of Ownership (TCO): 150kW & 75kW FC bus in comparison with diesel, diesel hybrid and trolley buses (2010-2020) Taxes on fuel Euro / Km / Bus 6 5 4 3 2 Cost projections based on a set of assumptions please refer to the contents of this study CO2 price Overhead contact wire network - maintenance Extra maintenance facility costs Bus Maintenance Fee Propulsion-related Replacement cost 1 Untaxed fuel Cost 0 Overhead contact wire network - Financing Bus Financing and Depreciation figures as at 2015-2020 cost projections 35

NPV sensitivity to the untaxed diesel and hydrogen price London example Untaxed hydrogen fuel price 2010 baseline ( / kg) Untaxed diesel fuel price 2010 baseline ( / litre) Diesel Fuel price increment per year: 0.03/litre 0.51 0.60 0.70 1.00 1.20 1.50 2.00 1 403,131,588 470,443,375 545,068,415 768,943,536 918,193,617 1,142,068,738 1,515,193,940 2 261,608,947 328,920,734 403,545,774 627,420,895 776,670,976 1,000,546,097 1,373,671,299 3 120,086,306 187,398,093 262,023,133 485,898,254 635,148,335 859,023,456 1,232,148,658 4-21,436,335 45,875,452 120,500,492 344,375,613 493,625,694 717,500,815 1,090,626,017 5-162,958,976-95,647,189-21,022,149 202,852,972 352,103,053 575,978,174 949,103,376 6-304,481,617-237,169,830-162,544,790 61,330,331 210,580,412 434,455,533 807,580,735 7-446,004,258-378,692,471-304,067,431-80,192,310 69,057,771 292,932,892 666,058,094 8-587,526,899-520,215,112-445,590,072-221,714,951-72,464,870 151,410,251 524,535,453 9-729,049,540-661,737,753-587,112,713-363,237,592-213,987,511 9,887,610 383,012,812 10-870,572,181-803,260,394-728,635,354-504,760,233-355,510,152-131,635,031 241,490,171 Untaxed diesel fuel price 2010 baseline ( / litre) No diesel Fuel price increment per year (price frozen over project life) Untaxed hydrogen fuel price 2010 baseline ( / kg) 0.70 1.00 1.30 1.60 1.90 2.20 2.50 1-14,099,648 209,775,473 433,650,594 657,525,715 881,400,836 1,105,275,957 1,329,151,079 2-155,622,289 68,252,832 292,127,953 516,003,074 739,878,195 963,753,316 1,187,628,438 3-297,144,930-73,269,809 150,605,312 374,480,433 598,355,554 822,230,675 1,046,105,797 4-438,667,571-214,792,450 9,082,671 232,957,792 456,832,913 680,708,034 904,583,156 5-580,190,212-356,315,091-132,439,970 91,435,151 315,310,272 539,185,393 763,060,515 6-721,712,853-497,837,732-273,962,611-50,087,490 173,787,631 397,662,752 621,537,874 7-863,235,494-639,360,373-415,485,252-191,610,131 32,264,990 256,140,111 480,015,233 8-1,004,758,135-780,883,014-557,007,893-333,132,772-109,257,651 114,617,470 338,492,592 9-1,146,280,776-922,405,655-698,530,534-474,655,413-250,780,292-26,905,171 196,969,951 10-1,287,803,417-1,063,928,296-840,053,175-616,178,054-392,302,933-168,427,812 55,447,310 36

The study analyses the economics of a range of fuel cell bus deployment strategies both at a region and European level European rollout scenarios: Based on the same assumptions of the regional case studies Each scenario describe a bus deployment volume compatible with the cost reduction process described in the State of the Art review Hence, the scenarios differ in the number of buses per city and the number of cities involved only Bus sales volume Unsupported market Sales volume few 1000's buses by 2020 / 2025 Scenarios E,F,G,H,I 1,000's buses 100's buses Sales volume few 100's buses by 2015 / 2016: Scenarios A,B,C,D 2010 2015 2020 2025 2030 2035 37

Targets recommendations for Call1 and Call 2 Parameter Current Status Expected best of class targets according to industry projections Targets for Call 1 (2012-2013) 2015-2017 Targets 2020-2022 Targets * Buses availability defined as in the HyFLEET:CUTE and CHIC projects Availability* 80% 90% Fuel Economy** 8 15kg/100km Close to 10kg/100km (previous target is suffice) 10kg/100km (preferably close to 8kg/100km) (previous target is suffice) 8kg/100km Capital Cost > 1 million < 1 million < 500,000 < 400,000 Fuel Cell System Warranty Fuel Cell System Cost Bus Platform Buses in service 10,000 15,000 hours 12,000 hours ~ 20,000 hours or equivalent on a whole life basis*** (previous target may be suffice) > 3,500/kW < 3,500/kW < 1,000/kW < 400/kW Variable (6, 10, 12, 18 meters) up to 54 hybrid fuel cell buses No precise requirements Approx. 100 or more No precise requirements Few hundreds (up to 300 500 buses) No precise requirements Thousands ** Indicative average operational fuel economy for a 12m bus on a flat city route *** Note that two approaches are being developed for fuel cell bus stacks, one with dedicated long life stacks for buses where stack lives over 20,000 hours are expected. The other involves automotive stacks where shorter warranties will be more likely, but with reduced stack replacement costs. It is worth noting that there is not a consensus within the industry on this issue yet. N.B: targets refer to 12 metre, low floor bus platforms only. Targets for Call 2 should be as for Call 1, except for buses capital cost. www.nexthylights.eu Page 38