The largest public transportation system in America is not one of trains or subways; it’s school buses. Every day, nearly half a million school buses move 26 million kids to and from school.
And while the rise of electric school buses might seem like it’s a story about transportation, it’s in fact a fascinating glimpse into an energy arbitrage business merely in its infancy.
It starts with buses’ lack of utilization. While commercial airplane utilization is nearly constant, school bus utilization is nearly the opposite. America’s half a million buses sit idle for more than 18 hours per day, and sometimes 24 hours per day, every day, during the summer.
Today only 1% of school buses are electric, and while the upfront costs are more significant than diesel buses, the businesses in this space have grand plans to lean into an energy arbitrage.
Energy is more expensive during hours of peak demand: weekdays between morning and evening. It’s the same reason the New York City skyline is full of water towers: they pump water up to the top of the building during off-peak demand–at night–to avoid pumping when energy prices are at their high. Then, during peak hours, the work is simply left to gravity.
As more electric buses come online, they can essentially be used in the same way as the water tanks, but with electricity, charging up their massive batteries overnight during off-peak hours then selling energy back to the grid during the day. This would bring lower energy prices for consumers and could offer an edge to electric school bus companies entering the energy industry.
It’s similar to what Telsa is doing with their Powerwalls. But bus usage schedules are even more predictable, leading to more price stability and thus lower pricing.
In addition to the fascinating future business opportunity for electric buses, there are also significant benefits to schools. In addition to eliminating kids’ daily exposure to exhaust pollution, electric buses are safer: kids scream less in electric buses as they don’t need to yell as loudly in order to hear one another over the loud engine noise.
It’s also much cheaper in the long run. Schools spend 14 cents per mile on electric buses, 3.5x cheaper than diesel buses. And while they’re more expensive upfront, some bus companies today are selling access to electric buses essentially as a subscription for schools.