IS THE HYDROGEN ALTERNATIVE IN PUBLIC TRANSPORT REALLY SUSTAINABLE?

Evaluation of Total Cost of Ownership (TCO) and comparison with mileage charges

Hydrogen is back at the centre of the world energy discussion. The reasons for this turmoil stem from the fact that hydrogen, producing only water, is perceived as the ultimate solution to replace fossil fuels.

Hydrogen is produced from renewable sources and can be stored and transformed into electricity.

The transport sector is the most complex to decarbonise.

To date, efforts on the hydrogen front have focused on using the fuel cell, an electrochemical device that directly converts the chemical energy of the fuel (water) into electrical energy without any thermal combustion process taking place(GREEN-Università Bocconi &Enel Foundation, 2021).

Hydrogen-powered buses with technology fuel cell, especially in urban transport, have been tested on roads all over the world, including in Italy: in Turin, Bolzano, Trento, Milan, since the early 2000s.

All projects have contributed to the spread of hydrogen in Europe, with Germany leading the way.

Although hydrogen-powered vehicles, like those that use electricity, are incentivised by European standards, the latter are considered competitors to internal combustion vehicles, while the same cannot be said for hydrogen-powered buses.

THE COSTS OF HYDROGEN

Hydrogen (H2) alone is very rare in nature, but it is abundant in organic and inorganic compounds, such as methane (CH4) or water (H2O), from which it can be separated in the gaseous state.

In fact,grey hydrogen must be produced and production still requires more energy than can be obtained.

For this reason, common grey hydrogen is not of great interest for the green energy transition.

Instead, experts encourage governments to invest in the blue hydrogen and especially on the green one, differing mainly in the methods and technologies of extraction. The blue hydrogen is derived from fossil hydrocarbons in specific installations, while the green hydrogen is the best from the point of view of environmental sustainability because is extracted from water through electricity produced by renewable energy plants.

THE COST AND USEFUL LIFE OF THE MEANS

The current costs of hydrogen buses can be deduced from recent deliveries in some cities. In general, from a study conducted by Bocconi University in collaboration with the Enel Foundation, we can estimate a commercial value of around EUR 670,000 for a new 12m hydrogen bus. This figure is set to decrease in the coming years, forecasting a 43% drop in 2030 compared to prices in 2021.

Prezzo medio di acquisto autobus ad idrogeno

The average service life of hydrogen buses is around the same number of years as that of diesel vehicles. It can be seen that the service life of electric buses is significantly shorter than that of hydrogen buses due to the need for battery revamping after about 7-8 years.

Vita utile media dei veicoli per alimentazione
OPERATING COSTS

Estimates from the Bocconi University and Enel Foundation study of operating costs, based on average consumption data (approximately 12.5 km with one kg of hydrogen and a cost of €10/kg), roughly resulted in a traction cost of €0.8/km. This is expected to decrease in the coming years due to the increased efficiency and technology of the new buses both in terms of production and hydrogen storage and distribution.

Maintenance costs at 0.27 €/km have been assumed to remain constant for the next few years: the expected improvements, and consequently cost reductions, relate to the entire system related to production, storage, transport and distribution, rather than specifically to maintaining the operational efficiency of the vehicles.

Costo di trazione bus ad idrogeno
THE COST OF INFRASTRUCTURE

The average cost for a refuelling station that can serve around 25 buses per day could be around EUR 5 million, taking commercial values as a reference, a figure in line with the PNRR's plan to build 40 stations by 2026.

Hydrogen transport is particularly difficult due to the very small size of hydrogen molecules, which increases the risk of leakage. For this reason, the vast majority of hydrogen production takes place locally.

TCO analysis: how much does it cost to maintain a hydrogen bus?

In order to analyse the cost of maintaining a hydrogen-powered public transport vehicle, the experts from the Basco&T Consulting team focused on providing a comparison of the cost per km of purchase, maintenance, fuel consumption, personnel, other operating costs and infrastructure of the different types of buses in the Italian public transport fleet today.

HYDROGEN IN PUBLIC TRANSPORT: THE INADEQUACY OF FEES
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The analysis shows that vehicles full electric are more competitive on fuel consumption than diesel and CNG. As far as hydrogen is concerned, the cost of consumption nowadays strongly affects the total cost per km.

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Considering the personnel and other operating costs per km estimated by the experts of Basco&T Consulting, the €/km cost incurred by public transport companies for the operation of hydrogen vehicles is significantly higher than the current Italian average fees. In fact, the average Italian fee, taking into account the average fees in the regions of Northern, Central and Southern Italy, stands at €2.59/km.

It is therefore clear that the current average fees paid to public transport companies are insufficient to cover the costs of operating a hydrogen fleet.

In general, therefore, wanting to make a comparison between zero-emission vehicles, we can conclude that:

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In recent years, local, national and international authorities have spoken out many times and in many initiatives on the need to decarbonise the transport sector, starting with the public sector.

The turnaround of local public transport companies towards hydrogen-powered engines is mainly supported by the PNRR, which has started experimentation with the use of hydrogen in road transport. This experimentation, which is the subject of Minister Giovannini's decree, lays down the modalities for implementing the investments, which amount to 230 million euros. The aim is to develop hydrogen experimentation through the construction of at least 40 refuelling stations for light and heavy vehicles by 30 June 2026. For the location of refuelling stations, priority will be given to strategic areas for heavy road transport, such as areas near inland terminals, routes most affected by the passage of long-haul freight vehicles, and connections to local public transport systems with hydrogen-powered vehicles.

In addition, EUR 1.9 billion is earmarked in the NRP for the purchase of electric and hydrogen-powered buses in large municipalities.

Today's panorama, however, shows a increasing conversion to electric, even in public transport, rather than hydrogen, for which there is still talk of experimentation.

It is clear that administrations and authorities intend to focus on electric and hydrogen in the coming years, but are the fees that public transport companies receive really sufficient to cover the operating costs arising from the management of this type of vehicle?

Analyses by Basco&T Consulting show that the conversion of the Italian bus fleet to electric buses is well established: the operating costs of a service operated with full-electric vehicles are in any case partially sustainable with the current fees.

As far as hydrogen is concerned, operating and investment costs are still so high that they clearly exceed the average fees charged to Italian public transport companies.

It can be said that the transport sector is today in a phase of continuous transition and mutation, where technologies are advancing at an unprecedented speed. The funding boost, however, is not enough to convince public local transport companies to convert to hydrogen. Experimental hydrogen refuelling facilities will probably help from 2026 onwards to reduce the operational and investment cost of the infrastructure.

The transitional moment the transport sector is experiencing today, firstly due to rising traction costs and then to the conversion to renewable energy sources, will also be reflected in the recontracting of fees that are currently insufficient to cover the operational costs of the service in many cases.

For further information and insights please contact us at info@basco-t.com

Data source: GREEN - Bocconi University &Enel Foundation. (2021). «Scenarios and perspectives of electrification of public road transport - An innovative benchmark analysis: The TCRO - Total Cost and Revenues of Ownership».

Authors:

Edoardo Tartaglia

Managing Partner