Grants fueling growth of compressed natural gas stations
By Zachary S. Fagenson
The switch to compressed natural gas as a widely used auto fuel is going to take some time and will probably rely on government grants and subsidies throughout the process, say the heads of one South Florida company working in the trenches.
About a year ago Fort Lauderdale-based Wise Gas applied on behalf of several municipalities and itself for the federal Compressed Natural Gas Fleet Fueling Facilities Grant.
The grant required an existing fuel station. For municipalities it offered to cover 50% of the upgrade cost and for private companies 25%.
Among the municipalities were Florida City, Broward County and the City of Okaloosa. Additionally Wise Gas applied for grants on behalf of TECO subsidiary Tampa Electric the Clearwater Gas.
"At that point in time there were 17 compressed natural gas stations, all private, in the state," said Wise Gas Business Development Manager Jeff Greene. "We approached all of them and made them aware of the grant, offered to write the grant for them provided they used our equipment.
"Eight of the 17 locations chose to make an application. We were successful in all eight and six [including Broward County]… have proceeded," he added.
And that, essentially, is a big part of the business model at the moment.
It's "to seek municipal or private individuals interested in doing it and getting the project ready and when the grants come around, we're ready for them," Mr. Greene said. "Out of all of the compressed natural gas stations that have been built, I would say 80% have received some" sort of government grant money.
Wise Gas opened the first public compressed natural gas station in early July in Fort Lauderdale. A second was to open in late summer in Miami Gardens, according to the Florida Natural Gas Association, a non-profit industry group.
"The opening of both stations was nicely timed with the Ford Focus $4,000 tax credit, the largest grant amount earned by an American-made CNG vehicle to date," the association said. "The Ford Focus runs entirely on natural gas and the tax credit is available to households, businesses and municipalities starting immediately."
But for the near term, public dollars for the efforts seem scarce.
"Right now there's a lot of flux in the federal government [as to] whether they're going to extend federal tax credits and grants associated" with compressed natural gas, Mr. Greene said. Part of the stimulus program included the $100 million Transit Investment for Greenhouse Gas and Energy Reduction program to fund public transit projects that could reduce greenhouse gas emissions.
"As for other grants coming down the pike, the Environmental Protection Agency and the Department of Energy are looking at different ways to help fund the infrastructure," he added. Their fiscal years ended Sept. 30, he said, and they've yet to announce the 2011 programs.
Still it seems municipalities will probably be the biggest users of the fuel, which the association said reduces greenhouse gas emissions 21% to 26%, though they have an important part to play in pushing it out to the greater public.
"Private entities are far more likely to have a public access station. Public entities are always going to be concerned about liability," said Wise Gas President Christine Slager. Mr. Greene said the company has been pushing for private and government fleets to open their stations to the public.
Meanwhile, the company is always watching both energy economics along with federal and state grants and incentives to get an idea of what's coming.
"It's interesting. If we see the price of oil go over $80 a barrel, interest goes up anywhere from 25% to 100%," Mr. Greene said. For "most of the fleet managers, their fuel budget is a large percentage of their annual operating cost, especially in transit, where they're getting their vehicles fully funded by the feds but they're responsible for fuel."
But with a return on investment coming in three to seven years, a fuel cost "30% to 50% cheaper than diesel," automakers and aftermarket companies getting behind compressed natural gas and huge domestic reserves, Mr. Greene said the fuel will play an important part in the transition away from traditional, petroleum-based energy.
"We don't believe it's a silver bullet," he said. "Biodesel, electric will all have a place, but we feel it's one of the components that will get us off" gasoline.