Alternative Fuel Fleet Planning 101

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by | Sep 5, 2013

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WEX logoWhile alternative fuels make good business sense for commercial and government fleets, cost-effective implementation isn’t always easy, says WEX, formerly known as Wright Express.

In a new white paper, Going Green, Saving Green: A fleet manager’s guide to alternative fuel best practices, the fleet fueling payment card system company gives fleet operators five tips to help with alternative fuel decision making and planning. While an alternative fuel fleet does not make sense for all companies, where it does, it will provide considerable cost savings, WEX says.

WEX’s five tips are:

  1. Know the station coverage in your area. Most fleet operators worry that they won’t find alternative fuel stations at strategic points and will be forced to operate within a smaller boundary if they switch to alternative fuels. WEX says that while this used to be a valid concern, things have changed. The US currently has 11,800 stations across the country. But it also notes that most electric vehicle (EV) stations are located on the East and West coasts, while ethanol stations are concentrated in the Midwest, close to the corn producers. So it advices fleet operators to do their homework.
  2. Compare historical fuel costs. Since gasoline prices spike and fuel costs become volatile, it makes sense to switch to alternative fuels for price stability. But operators do have to take into consideration the cost of switching over and the lifetime costs of hybrid vehicles and EVs. Private stations that cater only to fleets can offer bulk rates that would make economical sense, while other stations may be more expensive.
  3. Think in terms of total ownership cost. Alternative fuel vehicles are selling for a lot more than conventional gasoline vehicles, but for fleets that put a lot of miles in their vehicles, it makes sense to fork up more for greener fleets. Operators need to look at investment costs, maintenance costs, replacement costs and other indirect expenses.
  4. Find and use tax credits wherever you can. Credits, rebates, grants and incentives from state and federal governments can lower the cost of ownership considerably. The Department of Energy maintains a list that details all possible avenues.
  5. Think holistically about fleet fuel costs. Rather than trying to guess which alternative fuel will emerge the clear winner and opting for that, it’s better to think of what will suit a fleet’s needs, depending on distances, downtime and risk profile, WEX suggests. Operators can also convert to alternative fuels in phases, instead of trying to do it all at once, to alleviate costs and risk. Another option would be to convert vehicles to use flex fuels, instead of buying new vehicles. Overall, a holistic approach will serve a fleet better than swapping it out piecemeal, WEX says.

Last month, fleet operator MGM Resorts announced that it had converted six vehicles in its fleet to compressed natural gas. Also in August Range Resources expanded its corporate vehicle fleet to about 184 CNG vehicles, with 100 serving its southwestern Pennsylvania operations. Range purchased Chevrolet Silverado 2500 and General Motor’s Ram 2500 vehicles. The company estimates that the payback for the investment is approximately two years.

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