Today, there’s more funding available for electric school buses than ever before, helping to usher in a new era for student transportation. But these grant programs alone won’t be enough to electrify the U.S. school bus fleet.
Financing provides a potential solution as it can extend public dollars and allow school districts to monetize future maintenance and fuel savings and apply these toward capital investments.
WRI’s Electric School Bus Initiative, the Alliance for Electric School Buses, and Clean Energy Works partnered to host Demystifying Finance: Opportunities to Scale the Adoption, a webinar held on Wednesday, November 8, 2023, to dive deeper into this topic and possibilities that financing provides for the electric school bus transition.
You can view a recording of the webinar below, to hear green bank officials, school districts and finance experts to discuss how finance can complement current funding to scale school bus electrification.
Looking for a quick summary of each section of the webinar? Here’s what was covered:
Introduction (0:00 – 6:10)
- Introduction to the Alliance for Electric School Buses, Clean Energy Works, and World Resources Institute’s Electric School Bus Initiative, along with ways to further engage with our organizations.
- To learn more about the Tax Credit for Qualified Commercial Clean Vehicles (section 45W), check out this explainer.
Funding & Financing Insights (6:10 – 14:55)
- This section gave an overview of the Total Cost of Ownership (TCO) for electric school buses, describing how financing is needed to electrify all the school buses in the U.S., highlighting how the lifetime operational fuel and maintenance savings on electric school buses can be used for financing.
- Also described here were the different financing mechanisms that can be used to drive electric school bus adoption, followed by insights and experiences of school districts with financing.
- For more information on inclusive utility programs for buildings and transport applications, check out these page from Smart Electric Power Association and the Environmental Protection Agency.
- To learn more about how financing can work hand-in-hand with funding, see our new explainer: Powering Electric School Bus Adoption with Complementary Funding and Financing Solutions.
Community Facilities Program – U.S. Department of Agriculture (14:55 – 21:01)
- Stan Hale, Asset Risk Management Specialist at USDA, gives an overview of the USDA Community Facilities Program that offer direct loans, loan guarantees, and grants to develop or improve essential public services and facilities, which is applicable to electric school bus projects.
Fireside Chat – (21:07 – 52:44)
This panel consisted of Kirsten Stasio from Nevada Clean Energy Fund, Kris Hafezizadeh from Austin Independent School District, and Jennifer Weiss from NC Clean Energy Fund, moderated by Margarita Parra from Clean Energy Works. The panelist discussed various topics regarding financing opportunities, including the following:
- Green Banks – Blended Finance
- Green bank capital is more flexible than many other options, offering low-cost capital interest rates through clean energy bonds, and opportunities for the recipient to improve their credit. When thinking about transitioning to electric school buses, fleet operators may be able to stack multiple sources of funding and financing. For example, a fleet operator may be able to combine green bank capital with tax credits, funds from the VW settlement and more.
- Connecting with utility partners is also important as some offer infrastructure incentives, such as Make-Ready or electric-vehicle-ready incentives.
- Austin Independent School District’s Process of Transitioning with a Bond
- Every four to five years, Austin Independent School District (ISD) has bonds for varying projects. In their most recent bond, there was one specific bond item focused on purchasing low-emission school buses. The school district began to think about transitioning to electric school buses around nine years ago and highlighted their process of engaging with an ecosystem of partners to fulfill this idea – including working with their electric utility, who assisted with infrastructure development. With their bond committee, Austin ISD was able to use their bond contingency fund to purchase three of their electric school buses. Currently, they are working on a holistic master plan that lays out their process of school bus electrification, with the hopes of going in the direction of engaging with further bonds.
- Importance of Collaboration – Different Actors
- As mentioned earlier, capital stacking is important in electric school bus adoption, and leveraging multiple financing options can increase an applicant’s competitiveness when applying for grants. A community in Missouri was able to stack the VW settlement fund, grant money from their electric co-op, a grant from the U.S. Department of Agriculture (USDA), a disaster declaration fund and other sources to be able to purchase their electric school buses.
- Currently the USDA has a fixed 3.875% interest rate for municipal loans.
- For any projects that involve electrification, the USDA needs to go to the Rural Utilites Service (RUS) program first, although the USDA has often been involved with charging infrastructure projects through their direct program.
- How to Gauge Loan Risk that can Impact School Districts’ Creditworthiness
- Green banks expect to use various funding sources for financing, such as the USDA, Environmental Protection Agency, Department of Energy and others to provide credit enhancements such as loan loss reserves and loan guarantees. This allows green banks to reduce risk for themselves, and allows for other private lenders to enter in cases in which the savings from financing are not realized.
- As green banks are focused on clean energy, they expect the transportation sector to go in the direction of electrification, and therefore view investing in electric transit as a risk reduction opportunity.
If you have interest in discussing financing options for your school district or require additional information, please feel free to reach out to our team, email@example.com. We appreciate your interest in learning more about utilizing financial mechanisms to scale the electric school bus fleet.