World Resources Institute

How to Help Your Community Fund Electric School Buses in the US

To date, most electric school buses have been procured through direct public aid, but where these funds do not cover the full incremental cost of an electric school bus, financing can be a crucial tool. Even after electric school buses reach total cost of ownership parity with diesel versions in future years, low-cost financing and alternative business models are likely to play a role in enabling districts to accommodate the higher capital requirements of an electric bus fleet compared to one comprised of their diesel predecessors.

Financing solutions enable school districts to monetize future maintenance and fuel savings and apply these towards the initial capital investments that electric buses require. Financing allows districts to restructure school bus electrification costs so that they more closely resemble the budget and cash flow characteristics of incumbent diesel vehicles and can enable districts to make the investments necessary to realize cost-effective projects.

Private lenders (like commercial banks) or public lending institutions (like state clean energy funds and green banks) provide upfront capital to borrowers that then pay back this amount, generally with interest, over the term of the agreement. Other private lenders are also active in the financing space, such as the financial institutions associated with vehicle manufacturers that facilitate leasing and tax-exempt financing, as well as transportation and infrastructure services companies such as Highland Electric Fleets , Levo Mobility, eTransEnergy and Amply Power, where financing is embedded in subscription fees. Another potential source for financing could be the local electric utility through a tariffed on-bill program, where the utility recoups its upfront capital investment via a surcharge on the customer’s bill.

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