At its meeting of July 14, 2022, the TTC Board received a Green Bus Update. By the time a contract is awarded later this year, it will be almost five years since the TTC began this process.
Among the issues not yet resolved are the status of various potential vendors, the degree to which the head-to-head comparison of buses will actually influence product selection, and the financial arrangements in the short and long term for a major shift in bus propulsion technology.
The whole Green Bus process at TTC began with a presentation to the Board on November 13, 2017, under the guise of a “deputation” by representatives of BYD. This was engineered in advance by a member of the Board, our about-to-retire Deputy Mayor, in a manner that no vendor should have been allowed. This was not the TTC Board’s brightest hour. At the time, Andy Byford was CEO. He was not pleased with the situation, but already had one foot out the door on his way to New York City.
To its credit, the Board launched a comparison of then-available “long range” battery buses rather than just swallowing BYD’s promotion. Originally, the trial fleet was to be 10 buses from each of three vendors, but this was expanded on June 12, 2018, to a further 10 each. BYD was unable to deliver, and so their extra 10 were allocated between the other vendors, New Flyer and Proterra, giving a 10-25-25 fleet mix.
Although BYD deliveries were late and they performed poorly in the comparison, there is no indication that they were excluded.
Also in June 2018, the Board passed an important qualifier on its Green Bus program:
The TTC confirms its target for procurement of only zero-emissions propulsion technology starting in 2025 and define zero-emissions propulsion technology as fossil-fuel-free.
Just how serious they will be about “fossil-fuel-free” remains to be seen depending on the degree to which electric power generation that is truly “clean” is in the mix. Ontario’s potential shift to gas-fired plants could threaten that goal.
Coming into 2020, the TTC received a new infusion of capital financing through Toronto’s City Building Fund, an add-on to the property tax that would be directed to housing and transit. The TTC allocated $750 million of its share to new buses ($686m) and to charging infrastructure ($68m). This was expected to fund about 614 vehicles with roughly half being hybrids, and half battery buses.
Although Toronto is keen to shift to a zero emissions bus fleet, that move cannot begin until there is actually a supply of vehicles that can sustain day-to-day transit operations. As an interim measure, the TTC has placed what it hopes to be its last order for hybrid buses for delivery in 2022-23.
In February 2022, contracts were awarded to Nova Bus (134 40-foot) and New Flyer (134 40-foot and 68 60-foot artics).
The TTC also began to examine the provision, financing and operation of charging stations through a partnership with hydro utilities. On February 10, 2022, the Board approved a contract with a subsidiary of Ontario Power Generation Inc. “for the co-investment, ownership, design, build, operation and maintenance of electrification infrastructure”.
Although the “head-to-head” comparison of vehicles was expected to winnow the field, it suffered from the absence of Nova Bus who did not, at the time, have a long-range version of their eBus. Their hybrid bus was used as a comparator in terms of construction and reliability. There was a clear difference in results from the three vendors, but this was downplayed as more an exercise in figuring out what a major order should look for in vehicles and vendors, rather than excluding vendors from the next round of bids.
On April 14, 2021, the Board received the results of the head-to-head comparison of battery buses. Of the three vendors, New Flyer fared best, while both Proterra and BYD “need improvement”. However, this was qualified by the following observation:
When reviewing this report, it is important to understand that the findings are specific to the eBus models procured, and to how those buses have performed in the TTC’s operating environment. As a result, the findings of this report may not be applicable to other transit authorities. Further, as the results are preliminary, we expect that action plans across all vendors will result in improvements to vehicle and vendor performance that will be reflected in our next report on the eBus head-to-head evaluation in Q1 2022.
As well, new eBuses offered by BYD, NFI and Proterra are expected to address system compatibility issues, which for the TTC will be critical for the successful adoption of this technology.
Authority to award the contract was delegated to the CEO at its April 14, 2021 meeting:
The Board delegate authority to the TTC CEO to undertake a public procurement through issuance of a negotiated Request for Proposal (nRFP) and enter into up to two contracts for the supply of approximately 300 long-range, battery-electric buses (eBuses), based on the following:
a. Limit the total contract award amount, including all applicable taxes, and project delivery costs to within the approved funding of approximately $300 million;
b. Apply lessons learned through the TTC’s eBus Head-to-Head Evaluation to prequalify potential suppliers based on demonstrated compliance with system compatibility requirements and Transport Canada’s Motor Vehicle Safety Standards;
c. All 300 eBuses to be delivered between Q1 2023 and Q1 2025; and
d. Negotiation of an acceptable agreement that is satisfactory to the TTC General Counsel.
The final report on the comparison came to the Board on April 14, 2022. It sets out the goals of the trial as:
1. Evaluate all three eBus types in the TTC’s operating environment and leverage lessons learned to inform eBus technical and commercial specifications for future procurements; and
2. Share our findings with the broader transit community through an open exchange of best practices to assist with eBus planning and adoption.
Rather than exclude vendors from bidding, the TTC set out “must haves” for any new buses:
1. Altoona and shaker table testing has been successfully completed;
2. A full stainless steel structure with a minimum of six years of in service experience;
3. A minimum usable battery capacity of 400 kWh;
4. A maximum overall bus length of 12.8 m (42 ft.) including a stowed bike rack;
5. A maximum overall height of 340 cm (134 in.) including any roof-mounted equipment;
6. Ability to charge via roof mounted pantograph charging interface, capable of accepting a minimum charge rate of 300kW (400 ADC) at 750 VDC or greater via SAE J3105/1; and
7. Two rear-mounted charging ports capable of accepting a minimum charging rate of 150 kW (200 ADC) at 750 VDC or greater via SAE J1772.
For a detailed review of the final report, please see my article TTC eBus Study: Final Results.
The Board further delegated authority to the CEO regarding subsidies for and possible expansion of this program on April 14, 2022 to:
a. Enter into contribution agreement(s), where required, with government partners to receive any net new funding / financing for the TTC’s Green Bus program; and
b. Subject to commitment of matching funds from provincial and/or federal government partners, amend existing and pending contract(s) to increase the eBus procurement quantity and associated infrastructure works in proportion to the additional funds committed.
The contract award for purchase of battery electric buses will likely occur in September 2022.
The Green Bus Fleet Plan
The fleet plan and anticipated benefits are set out in the Presentation included in the Board’s agenda.
Procurements over the next decade are expected to be almost all battery-electric buses with the last of the hybrid purchases coming in the recently-awarded contract.
The bus fleet now contains a mix of diesel, hybrid and a few battery buses as shown below. As the older technologies are replaced, the emission rate from the fleet will drop.
System requirements for diesel fuel will also decline until the late 2030s when all vehicles will be electric.
These charts are based on current service plans which foresee only a gradual increase in bus service with some offset from conversion of major routes to LRT or subway. This does not provide for substantial service expansion that would accompany an aggressive move to shift travel onto transit.
A major technical issue for the TTC is the range of a vehicle on one charge. Diesel and hybrid buses can remain in service for an extended period without refilling. Battery buses are limited by the charge they can carry and the rate at which this will be depleted depending on route characteristics and driving conditions.
The TTC, compared to many transit systems, has a high proportion of its fleet operating outside of peak periods. This means that the opportunity to recharge during a break in service is reduced.
Depending on the range that will be achieved by future battery buses, this could force the TTC to expand its fleet to account for change-offs so that buses can return to the garage before they run out of power.
This factor has not yet been built into fleet plans, and the TTC appears to be hoping that technology will catch up with their requirements before this becomes an issue.
Here are the pre-pandemic (January 2020) bus requirements for TTC service.
The report does not discuss on-route charging with “top up” stations at key points. However, the “must have” list does include pantograph charging as well as plug-in capablity, and the TTC is considering pantograph-based charging at Birchmount Garage. This has potential benefits both for day-to-day operations in service as well as for simplified vehicle charging at garages.
The problem facing an electrification project is that the cost of buses is higher than their hybrid equivalents, although might improve over time. There is also the cost of retrofitting existing garages and providing charging facilities to support hundreds of buses at each location rather than only a few as today.
The TTC expects to save $50,000 annually per eBus of which $40,000 would be in fuel cost (electric vs diesel) and $10,000 would be on maintenance. Future diesel costs might go up relative to electricity, but the degree to which that will happen is not known.
That $40,000 figure is based on comparison with clean diesels, even though the fleet is now almost half hybrids which have a $12,700 annual fuel cost lower than diesels. Therefore, the actual saving available for half of the fleet is only about $27,000. Throughout the eBus program, the TTC has made a bad habit of comparing eBuses with the worst of the diesels they would replace. However, there is much less “saving” when the actual fleet is already cleaner than the point of comparison.
There is no provision in the report for a possibly longer-lived electric bus fleet, but this will be an issue as the first eBuses come due for replacement in the mid 2030s. If they can continue to operate without driving up maintenance costs, this could save on future capital spending. However, it is too soon to know if this will really happen and whether the eBus industry will produce longer-lasting vehicles than the diesel/hybrid buses now in use.
The TTC forecasts substantial savings over coming decades. Note that the saving in each five years rises as more of the fleet converts to electric operation. As noted above, these numbers do not factor in the savings already achieved with the hybrid bus fleet.
At this point, the financial sleight-of-hand gets tricky.
The chart above mentions using the savings to offset budget pressure or (a very important “or”) to secure recoverable debt. Such a scheme would load capital costs onto the operating budget where they would compete with service, maintenance and fare policy. For many decades, TTC funding has treated operating and capital budgets separately, but this could be compromised if debt service becomes an operating cost. The Board moved to:
Endorse TTC staff’s continued efforts to develop a financing strategy to enable the TTC to contribute to the funding of its Innovation and Sustainability Program implementation such that operating savings, from fleet electrification and other innovation and sustainability initiatives, can be reallocated to fund any new operating costs and secured to service debt borrowing costs for capital works arising from the implementation of TTC’s Innovation and Sustainability Program.
The chart above postulates a $900 million avoidance over almost two decades on the assumption of rapidly rising diesel costs versus electric. It is important to distinguish between “saving” and “avoidance”. The distinction is between an actual cost reduction on the current spending base, as opposed to a notional saving against what future budgets might face.
Savings against today’s budget one can spend today. Possible savings tomorrow cannot actually be spent, and “avoidance” in this case could simply mean redirection of spending from operating costs (buying fuel) to debt service.
If the TTC were profitable, one could treat this as an investment of surplus funds. However, the TTC has not been profitable since the mid-20th century, and any “savings” in opex would simply reduce its deficit. Presenting this as a funding stream is misleading, and the tactic risks confusing just what the annual “operating” subsidy would pay for.
To put it another way, the City of Toronto will be required to provide operating subsidy to pay off capital costs even though the new buses will “save” money. Why this is not simply treated as one more of the TTC’s many capital projects is a mystery. If there are true savings, they should go into better service, or fare restructuring, or reducing operating subsidies.
Every year, we go through the exercise of pinching pennies in the operating budget, a practice that can be lauded as “good business” but which constrains service growth and can lead to substandard maintenance. Toronto has been down this path before. If the operating budget must now carry an unavoidable capital funding component, this portion will not be available for “efficiency”.
This smells of an attempt to disguise the true long-term cost of more-expensive buses. One way or another, Toronto has to pay to move to green buses. The report and presentation on one hand suggest that savings could be used to finance electrification, and on the other that they could reduce budget pressures. We cannot have it both ways. Accounting trickery is not the way to go green.
Either we buy more expensive infrastructure that will yield savings we can invest in operations, reduced subsidies, or new fare policies, or we scoop those savings to pay for the infrastructure.
The TTC is hoping to obtain $350 million from Infrastructure Canada’s Zero Emission Transit Fund. This would pay for 160 more eBuses and 540 charge points. This effectively reduces the cost/bus to Toronto over the early years of the conversion. However, there is no guarantee that the federal government will continue this level of subsidy through the entire cycle of diesel/hybrid bus replacements, let alone for any growth in the fleet. [This paragraph was revised at 10:40 pm, July 27, to fully explain the use of the federal funds.]
Another possible source of funds is the Canada Infrastructure Bank lending to the City of Toronto. However, it is not yet clear whether the rates CIB might charge the City are any more attractive than it can obtain on the open market where the City has a good credit rating.
Between City and Federal money, the TTC can jump-start the conversion program, but there remains the cost of over 1,000 more eBuses through the 2020s and early 2030s, and the ongoing cost of vehicle replacement thereafter.
Overall, there are many questions about how Toronto will afford its move to green buses among its many other priorities both for transit and in other portfolios.