2008 bus survey

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2008 Bus Survey

Lisa Callaghan Jerram

Fuel Cell Today

December 2008

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www.uelcelltoday.com

2008 BUS SURVEY

Contents

1. Introduction

2. Market developments in 2007 and 2008

2.1 Annual units produced

2.2 Cumulative units produced

2.3 Technology choice

2.4 Region o adoption, 2003-2008

2.5 Region o manuacture, 2003-2008

3. Market dynamics

4. Anticipated highlights o the coming year

Graphs

Figure 1: Annual units produced

Figure 2: Cumulative units produced

Figure 3: Region o adoption

Figure 4: Region o manuacture

Glossary / Defnitions

APU auxiliary power unit

CARB Caliornia Air Resources Board

CUTE Clean Urban Transport or Europe

EC European CommissionECTOS -- Ecological City Transport System

EU European Union

JTI -- European Fuel Cell and Hydrogen Joint Technology Initiative

NRW -- North Rhine-Westphalia

PEM Proton exchange membrane

R&D research and demonstration

SOFC Solid oxide uel cell

STEP Sustainable Transport Energy or Perth

UNDP GEF -- United Nations Development Programme Global Environmental Fund

ZEB Zero Emission Bus

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1. Introduction

The uel cell bus market is in a transitional period. In the two years since the last Fuel Cell Today bus survey was pro-

duced, there have been ewer than 15 new uel cell buses introduced, and there are actually ewer total buses in op-

eration worldwide, since most o the HyFleet:CUTE programs buses have concluded demonstration service. What

we are seeing now are several development pathways happening simultaneously. On the one hand, we are seeing

a ramping up o bus orders at a small number o transit agencies, with single agency procurements o as many as

20 buses or delivery in the 2009 to 2010 timerame. Fuel cell and bus companies are taking what they learned rom

the last several years o demonstrations to develop the next generation o uel cell transit systems; some are pursu-

ing these new procurements and some are waiting to introduce new product based on their own internal schedule.

At the same time, governments are continuing to und R&D projects and demonstrations to spur development and

testing o new uel cell systems and drivetrain congurations that can help uel cell buses meet transits demanding

perormance requirements. So, there is a bit o a mixed message on the path toward commercialisation, with some

parties moving to the next stage o higher volume deployments, and others continuing R&D and demonstrationwith small numbers o buses.

2. Market developments in 2007 and 2008

2.1 Annual units produced

In 2007 and 2008, only a handul o new uel cell buses were delivered or entered into service. These include the

th Van Hool 12-m (40-t) bus placed into demonstration in the US, the rst outside o Caliornia; the rst uel cell

bus in Brazil, under the United Nations Development Programme; two 7-m (22-t) buses with automotive uel cells

being tested by US universities; two additional Hyundai buses in South Korea; and various small-size bus platorms

using Hydrogenics stacks in Europe. These buses are all prototypes being deployed or multi-year demonstration

periods.

0

5

10

15

20

25

30

35

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Year

Units

Figure 1: Annual new units produced rom 1994 through 2008

As Figure 1 shows, the production o new units in the past two years is slightly lower than the annual numbers havebeen since 2003, when production peaked with Daimlers introduction o its 33-bus eet or the European CUTE and

ECTOS and Australian STEP programmes. This irregular growth rate is not surprising given that this application is in

a pre-commercial phase. Production o new units is still being driven largely by government policies and unding,

and much o the support is still targeted to single prototype development or very small eets. Several larger pro-

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curements are underway, however, and in the next three years we will see slightly ramped up production volumes

or 12- and 20-bus procurements. There is not any single production line as large as the CUTE eet planned as o yet,

but, unlike that eet, these large procurements are or one operator, rather than being dispersed at multiple sites.

Nevertheless, at this stage o development, buses are still essentially hand-made in small batches, and this will keep

manuacturing costs high. (For example, while purchase prices vary widely based on vehicle specications, the Van

Hool bus delivered to Connecticut Transit in 2007 cost US$ 2.4 million. Encouragingly, the price was 25% lower than

the price or the comparable bus delivered to AC Transit just two years earlier.)

2.2 Cumulative units producedAs Figure 2 shows, cumulative production levels did not increase much in the past two years, and the total number

o buses produced worldwide remains relatively low at around 115. Besides reecting the act that buses are being

produced primarily at the behest o government unded programmes, this low number is indicative o how small

the transit bus market is (all uel cells buses produced to date have been ull size or shuttle bus transit models,

not motor coaches) compared to the passenger vehicle market. Annual global transit bus demand hovers around

50,0001 compared to 46 million2 or light duty vehicles. This could be a barrier to commercialisation since low levels

o market penetration may not provide the economies-o-scale needed to reduce manuacturing costs to make uel

cell buses competitive with conventional technologies. For example, annual transit bus demand in the US averages

around 4,000 - 5,0003; i uel cell buses initially capture 1% o new purchases, as happened when in the early com-

mercial phase o compressed natural gas buses, this equals only 40-50 buses a year. Fuel cell manuacturers have

indicated that production o 100 units will be needed to start seeing major cost reductions.

0

20

40

60

80

100

120

140

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

U

nits

Year

Figure 2: Cumulative new units produced rom 1994 through 2008

It should also be noted that this chart represents all uel cell buses produced, not the total number in service. Since

all uel cell buses to date have been prototype or demonstration models, they are typically put into service or a

short, pre-determined evaluation period not the seven to 12 years that is standard or transit buses. Most have been

run or one to our years and then been decommissioned. (Indeed, there appear to be diminishing returns rom

operating these pre-commercial uel cell systems more than a ew years; since the technology is continually being

modied to advance toward commercialisation targets, a uel cell system can become obsolete airly quickly.) As a

result, the worldwide eet o uel cell buses in operation has actually declined in some years. The biggest drop-of

occurred with the removal o most o Daimlers eet ater the conclusion o the HyFleet:CUTE demonstrations in

2007 and 2008 (Hamburg continues to run six buses). While Fuel Cell Today does not have an exact total o buses in

service as o 2008, we estimate it to be only around 35. Announced vehicle introductions will increase the operating

eet by over 150% by 2011, although some current vehicles will be removed rom service (e.g., AC Transits current

Van Hool buses), and many more are anticipated through government programmes such as the European Fuel Cell

and Hydrogen Joint Technology Initiative (JTI).

1 The global market or buses, 2000-2010, Ealey et al, published by Business Economics.2 International Organi2ation o Automobile Manuacturers 2005 data3 American Public Transportation Associations 2008 Public Transportation Fact Book.

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2.3 Technology choice

PEM technology reigns supreme in the bus market, as it does with light duty vehicles. Fuel Cell Today is not aware

o any plans to produce a non-PEM uel cell or integration into a bus platorm, not even or APUs along the lines o

the SOFC APU that BMW is reported to be planning or its hydrogen ICE 7-series.

2.4 Region o adoption, 2003-2008

Since so ew buses were shipped in 2007 and 2008, this section summarises the regions o adoption over the past

ve years. This period marks the rst time that a large number o buses were placed into extended service as part o

multi-city demonstration programmes, as opposed to isolated prototypes. The next generation o uel cell buses tobe introduced in 2009-2010 will eature advancements in perormance, durability and cost improvements made as

a result o lessons learned rom the 2003-2008 generation o buses.

As Figure 3 shows, Europe has taken the lead on promoting uel cell bus deployment. There are around 17 European

cities that have demonstrated buses in the past ve years as the result o government-unded programmes. The ma-

jority were participants in the ten-city CUTE and ECTOS programmes unded by the EU. Other key programmes are

the EC-unded HyChain Project, which supports deployments in Germany, Spain, Italy and France, and the German

state o North Rhine-Westphalia (NRW)s Fuel Cell and Hydrogen Network project.

Asias activities have been ocused in Japan, China and South Korea. In Japan, the only reported activity is Toyotas

eight Hino buses; this eet was introduced in 2003 and 2005, and has been demonstrated in a variety o settings,mainly or short-term service rather than multi-year service as has been the case in Europe and the US. China has a

two-pronged approach to promoting uel cell buses. First, the country is participating in the United Nations Devel-

opment Programme and Global Environmental Fund (UNDP GEF) Fuel Cell Bus Programme to deploy buses in the

developing world. In the rst phase o this activity, Beijing became one o the HyFleet:CUTE cities and took delivery

o three Daimler buses. China is also promoting a domestic uel cell bus industry through its National High Technol-

ogy Development Plan (the 863 plan). This programme has unded development o two generations o locally

produced uel cell buses in the last ve years. Beijings Tsinghua University is the programme lead, with the PEM

uel cells being developed by the Dalian Institute o Chemistry and Physics and the Shanghai Sun Li High Technol-

ogy Company. South Korea has deployed our buses rom Hyundai, with the support o the governments National

RD&D Organisation or Hydrogen and Fuel Cells.

North America 15%

Europe 53%

Rest of World 5%

Asia 27%

Figure 3: Fuel cell bus deployment rom 2003 through 2008

In North America, Caliornia is the locus o uel cell bus activity due in part to the Caliornia Air Resources Board

(CARB)s regulation requiring zero emission bus deployment but also to the states long-standing role in pushing the

envelope on new environmental technologies. Outside Caliornia, buses have been deployed at the transit agency

in Hartord, Connecticut; at a US military base in Hawaii; and at universities in the states o Delaware and Texas. All

o these programmes are supported by ederal and/or state unding. Canada did not see any signicant uel cell bus

deployments in this period, but rather is gearing up or the big 20-bus deployment in British Columbia in 2010.

Outside North America, Europe and Asia, there continues to be little uel cell bus activity. At this stage, uel cell

buses still need substantial government subsidy, and, with the exception o Perth, Australia, governments in the

rest o the world regions have not been inclined to spend public unds this way. While air quality is an issue or

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many developing world cities, the preponderance o older, more polluting bus models means that upgrading eets

to modern, conventional buses has a huge air quality impact at relatively low cost. Moreover, in many o these re-

gions, bus transport operations are privately owned, and operators are much more cost-conscious. The one major

government-unded initiative to bring uel cell buses to the developing world is the UNDP GEF uel cell bus pro-

gramme, although this has scaled back signicantly. It is still unding buses in Brazil and China, but has dropped

plans or projects in Mexico, India and Egypt. Earlier this year, Sao Paolo took delivery o a Marcopolo bus equipped

with Ballards uel cell engine or a demonstration scheduled to start next year.

2.5 Region o manuacture, 2003-2008The regions o manuacture breakdown essentially mirrors the regions o deployment. Bus manuacturing tends to

be localised, with cities purchasing rom bus companies in their own country or region. Moreover, these projects

are dependent on government unding which typically will be directed to support native industries. However, as

Figure 4 shows, Europe has an even higher percentage o uel cell bus production than it does deployments. There

are two reasons or this. First, Beijing and Perth were both partners in the CUTE/HyFleet:CUTE programmes and de-

ployed Daimler uel cell Citaros. Second, in the US, the biggest eet o uel cell buses are rom Belgian bus company

Van Hool. The procurement was driven by AC Transit, which selected Van Hool or its eet, and then SunLine Transit

and Connecticut Transit leveraged their uel cell bus procurement of o AC Transits. As a result, ew uel cell buses

have actually been produced in North America. This will change in the next two years as the BC Transit 20-bus eet

is produced by Canadian company New Flyer.

North America 9%

Europe 67%

Asia 23%Rest of World 1%

Figure 4: Fuel cell bus region o manuacture rom 2003 through 2008

3. Market dynamics

As already noted, the uel cell bus market has been in a transitional phase over the last two years. Although there

have been some noteworthy new deployments, most activity in this application is going on behind the scenes or in

the orm o announced procurement plans and government unding schemes. We will see these activities coming

to ruition starting in 2009 and 2010.

In terms o technology developments, we are starting to see some diverging strategies regarding the size and de-

sign o the uel cells systems being introduced or planned. The majority o demonstration buses to date have been

ull size with uel cells as the primary propulsion. In the last two years, there have been more buses incorporating

smaller modules rom automotive or specialty vehicle applications adapted or transit usually in smaller chassis. Hy-

drogenics has secured a niche adapting its small (under 20 kW ) modules to power minibuses or as APUs and range

extenders. Toyota has adapted its light duty uel cells or its transit application, integrating two 90 kW modules and

nickel metal hydride battery into a hybrid drive system or its 10.5 m Hino buses. And, although Ballard is currently

ocused on the next version o its heavy duty engine, it was asked to provide its 19 kW automotive uel cells or two

7-m shuttle buses in use as research tools at US universities and automotive uel cells or a 130 kW system used in

the Marcopolo hybrid drive or Brazil.

By contrast, UTC Power, one o the dominant players in this market, is primarily ocusing its transit uel cell R&D on

modules that meet the demands o the ull-size transit vehicle market. Based on data rom current demonstrations,

UTC has already incorporated a new version o its 120 kW PureMotion system in the ve Van Hool buses to address

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stack degradation issues, and the company is currently developing its next generation 120 kW uel cell. The uel cell

warranty can be extended up to 10,000 hours, dependent on the uel cells meeting certain perormance milestones,

a major advancement over the 4,000 hour warranty on the current PureMotion uel cells, and a big step toward the

2015 commercialisation goal o 20,000-hour stack lie set by the Hydrogen Bus Alliance.

Another dominant player, Ballard is developing its next generation engine, the HD6, to be deployed in the BC Transit

and London ull-size bus eets in 2010. The HD6 will have a 75 kW and 150 kW module that Ballard says it will sell

as a plug and play device that can be integrated into a range o hybrid uel cell platorms. This would be a big step

toward making uel cells a commercial product that can be sold of the shel and incorporated into multiple buschassis, as is the case with conventional engine manuacturers. According to Ballard, the HD6 will have a warranty

o 12,000 hours or ve years.

Daimler has been working on its next generation uel cell transit bus while winding down the HyFleet demonstra-

tions. Reportedly, the company will demonstrate a new prototype in 2009. It will have a hybrid drive equipped

with two uel cells used in Daimlers B class light duty vehicles. We can expect to see more manuacturers looking to

leverage their investment in low power uel cells or the transit market.

We are also seeing some new players enter the eld, as well as new drivetrain and energy storage congurations,

through the US National Fuel Cell Bus Program. This $49 million programme is unding development o 11 new

buses. In addition to UTC, Ballard, and Hydrogenics, technology participants include Nuvera, which is providing an82 kW uel cell; BAE Systems, which will integrate a small uel cell APU into its hybrid bus drivetrains; and GE, which

is developing a uel cell system using advanced batteries. When the results o these on-going R&D activities are

unveiled in the next two years, it will be interesting to compare the return on investment o this $49 million invest-

ment spread across multiple bus platorms against BC Transits comparable investment into a single, 20-bus eet.

While technology development is happening behind the scenes, there have been several high prole procurement

announcements. This year, AC Transit signed a contract with UTC or eight o its new generation uel cell systems

and an option or 13 more. The agency will begin operating 12 new Van Hool buses integrated by the Belgian bus

company with the new UTC system. These are being deployed to comply with the new round o advanced uel cell

bus demonstrations mandated by CARB. To comply with the state mandate, the ve afected transit agencies are

partnering to und deployment o the 12 buses at AC Transit.

Plans or BC Transits ambitious uel cell bus procurement have continued apace, with the agency announcing the

awards or the uel cell bus and inrastructure contract in 2007. As much as possible, BC Transit is attempting con-

duct this bus procurement as it would a conventional one, speciying a standard vehicle warranty as well as high

reliability and perormance standards (or example, the bus is expected to meet 85% availability). The bus contract

was awarded to New Flyer, which will use ISE Corporation to integrate Ballards new HD6 uel cell into the hybrid

drive train. Contracting directly with the bus company is another key step toward commercialisation as this is the

standard arrangement in transit procurements. In another positive sign or the maturation o this industry, Ballard

signed a ve-year agreement with New Flyer to supply uel cell modules or use in New Flyers shuttle buses, with an

eye toward submitting bids or Canadian bus procurements.

Looking outside North America, China issued an RFP or three to six new uel cell buses under Phase II o the UNDPGEF programme. The buses will be demonstrated in Shanghai or two years, including at the 2010 World Expo. Un-

like Phase I, which used Daimler-Ballard buses, these are likely be domestically produced as China seeks to build

its uel cell expertise. Elsewhere in Asia, there were no major announcements in Japan, as Toyota is continuing to

demonstrate its older eet o Hino uel cell buses through the government-unded Japan Hydrogen and Fuel Cell

demonstration program. Most o the governments substantial support seems directed toward light duty vehicles,

and, outwardly at least, Toyota seems mainly interested in pursuing light duty uel cell vehicle development and

leveraging this into the bus applications. South Korea has a national R&D Programme or Hydrogen and Fuel Cells

which will continue to drive uel cell bus adoption over the next several years.

Londons high prole efort to procure ten hydrogen buses 5 uel cell and 5 hydrogen ICE is continuing, having

been spared the ate o light duty hydrogen vehicle procurement, which was scrapped by the new mayor. Fur-ther procurements in Europe will be spurred the Fuel Cell and Hydrogen Joint Technology Initiative (JTI) launched

this year. This massive programme, which will see investment o 470 euros by government and industry through

2013, includes a uel cell bus demonstration component. Other programmes working independently on in col-

laboration with these eforts are happening across Europe like HyRamp, HyChain, and the Scandinavian Hydrogen

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Highway. Germany will continue to be a centre or uel cell activity in Europe with several ederal and state und-

ing programmes. The National Innovation Programme supports lighthouse projects including some uel cell bus

demonstrations, and the North Rhine Westphalia uel cell programme announced it would unveil an articulated bus

equipped with Nedstack uel cells next year.

There are also two orward procurement activities underway that, i successul, could have a major impact on uel

cell bus adoption in the next several years. The Hydrogen Bus Alliance was launched in 2007 to bring together cities

that were willing to make a uel cell bus purchase commitment. To date, ten cities or regions have joined. The goal

is to demonstrate demand and to share inormation on procurement activities. The Clinton Climate Initiative is alsopursuing a joint orward procurement among the C40 cities.

In terms o uture adoption in North America, outside the BC Transit eet, Caliornia will continue to be the centre

or uel cell bus activity because o the CARB rule requiring that 15% o new bus purchases be zero emission buses.

Around hal o the transit agencies afected by this rule must begin by 2011, the others by 2012. The rule stays in

efect through 2026. It will be important to watch CARBs bi-annual review o the zero emission bus rule next year to

see whether the agency could decides to postpone the purchase requirements as they did in the last review.

Finally, an intriguing announcement came out o India late this year. The national nuclear agency has developed a

prototype uel cell system or buses. Reportedly, the agency will seek to work with Tata Motors to integrate the uel

cell into a bus platorm. The government has ambitious plans or deploying one million hydrogen vehicles by 2020.So ar there are only news reports on this item, but it could be a major breakthrough or uel cell adoption outside

the developed world regions i the project is successul.

4. Anticipated highlights o the coming year

In the US, several o the FTA unded buses will begin testing and evaluation. These projects will eature newplayers in the uel cell bus market, as well as new hybrid drive and energy storage congurations.

The next uel cell demonstration under the CARB Public Transit ZEB rule is set to begin in January 2009, with 12buses at AC Transit.

In mid-2009, CARB will reviews the status o uel cell bus technologies and determine whether to amend its rulerequiring that 15% o new bus purchases be zero emission beginning in 2011.

BC Transit will continue to prepare or the launch o 20 New Flyer buses equipped with Ballards new HD6 mod-ules, in time or the 2010 Winter Olympics. This will be the biggest single agency eet ever launched.

Daimler will unveil its next generation uel cell bus, the next generation o Van Hool buses or Caliornia, usingUTC uel cells, will be launched, and Nedstack will enter the uel cell bus market with an articulated bus powered

by Nedstack modules.

In the rest o the world, Brazil will begin operating its rst uel cell bus in Sao Paolo while India plans to introducea new uel cell bus prototype.

Keep an eye out or new bus projects announced through programmes like the JTI and or potential orwardprocurements schemes rom the Hydrogen Bus Alliance or the Clinton Climate Initiative.

About the author

Lisa Callaghan Jerram specialises in transportation applications, and has over ten years experience in analysing the

progress o transportation uel cells toward commercialisation. Based in North America, Lisa also ocuses on legis-

lation and regulations at the state, regional and national levels, and uel cell activity in Latin America. Lisa can be

contacted on [email protected]

About Fuel Cell Today

Fuel Cell Today is the leading organisation or market based intelligence on the uel cell industry. Covering key

trends and developments in industry and government, Fuel Cell Today provides relevant, unbiased and objective

inormation allowing decision makers to take advantage o the opportunities that our new industry ofers.

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