May 6, 2015 Vol. 12 No. 9

Natural gas truck sales are indeed slowing, as we’ve known here in Canada for a while. But it seems to be true across the continent. More specifically, perhaps, the NG take-up rate is not meeting expectations.

Truck operators have been ordering new equipment in record numbers lately, but they’re not turning to trucks fuelled by natural gas as quickly as was projected two years ago, according to a new report from ACT Research.

ACT attributes the rapidly declining cost of diesel with making the adoption of natural gas less attractive. The return on investment just isn’t there at present.  Original industry projections suggested that 2015 would see a 5% penetration of NG heavy-duty trucks, but based on 2014 actual results and the sharp drop in oil prices starting in Q4 last year, the report now calls that optimistic.

“With the price differential between diesel and natural gas narrowing, the ROI to convert from diesel to natural gas is moving in the wrong direction: payback periods are lengthening,” said Ken Vieth, ACT’s senior partner and general manager. He added that ACT has developed an NG equipment payback index as a quick reference tool for fleets evaluating a switch from diesel to natural gas, available on the company’s website.

ACT’s ‘Natural Gas Quarterly’ provides information on the current status of multiple factors that affect a decision to adopt natural gas. Included is a ‘dashboard gauge’ that looks at the fuel-price spread between diesel and NG, public fueling infrastructure, equipment, and the number of NG heavy-duty truck sales.

BUT NG ISN’T DEAD by any means, and the case for the use of CNG in fleet applications has been made by Colorado’s National Renewable Energy Laboratory (NREL) in a recent report. Entitled ‘Building a Business Case for Compressed Natural Gas in Fleet Applications‘, it aims to help readers assess the various aspects of the CNG idea to determine its viability in their own situation.

The publication details an enhanced version of a previously available online modeling tool developed by NREL — the Vehicle Infrastructure and Cash-Flow Evaluation (VICE) model — that helps businesses and fleets see the financial soundness of CNG vehicle and fueling infrastructure projects. The tool, VICE 2.0, can now help assess projects to acquire vehicles and infrastructure, or vehicles only.

It offers what NREL calls “robust visual and reporting enhancements, including graphic images of return on investment, cumulative cash flow, and payback periods.”

It also calculates diesel displacement (annual and cumulative) and annual greenhouse gas reductions, and displays them based on the fleet’s specific attributes. The report features an overview of VICE 2.0 and the default values for such factors as investment type, tax exemption status for fuel, and operations and incentives for base-case vehicles. In addition, the report addresses profitability and its sensitivity to parameters such as fuel cost and vehicle miles traveled.

Bear in mind that the incentives discussed relate only to the American scene, of course, so the tool’s usefulness in Canada may be somewhat compromised.

The report and model are especially beneficial to fleets that are well suited to using CNG, such as those with routes that start and end in the same location and are therefore able to refuel at a central location.

THERE’S AN APPROACHING DISINCENTIVE to natural gas, of course, by way of the latter part of  Phase 1 and the coming Phase 2 of the U.S. government’s fuel economy and greenhouse gas emission rules that mandate big improvements. Back in 2010, with so-called ‘criteria’ pollutants like nitrogen oxide (NOx) under control, President Obama ordered the Environmental Protection Agency and the National Highway Traffic Administration to move on. He told them to cut carbon dioxide (CO2) emissions, along with other gases in lesser amounts, while improving fuel economy in medium- and heavy-duty trucks.