A great example of innovation, collaboration and sustainability in the transportation sector, this is a project we're proud to have played a role in and were excited to unpack for an audience of energy professionals.
The roundtable offered attendees an insider's perspective on the objectives, challenges, and lessons learned throughout this groundbreaking initiative. Despite facing hurdles such as financial constraints and technical complexities, the project produced innovative solutions that have become the gold standard for depot electrification across the country.
Moderated by Smart Commercial Solar's Executive General Manager, Max Stenning, and featuring key stakeholders from Smart, Zenobē and Transit Systems, this candid discussion delved into the driving forces behind the project's success and the enduring impact it has had on sustainable transportation practices.
PANELLISTS:
Max Stenning, Moderator: In 2021, Transport for NSW committed to transitioning its fleet of 8000 buses to zero emission technology by 2030. The transformation of the Leichardt depot, now housing Australia's largest fleet of 59 electric buses for transit systems, was the pilot project.
Despite receiving significant support from the federal government, the project faced numerous challenges. However, through the collaboration of the teams at Zenobē, Transit Systems and Smart Commercial Solar, innovative solutions were found, which now form the blueprint for depot electrification. Today, we are joined by several experts who played key roles in this project. Through this conversation, we'll gain insight into the objectives, challenges, outcomes, and key learnings of this cool project.
Mark Peters (MP): It was a priority for the government because they needed to transition 8000 buses from diesel internal combustion engine to zero emissions by 2030, although those timeframes have now been adjusted. At the time, we were the innovators and while we only had 5 electric buses in operation, that was considered an achievement.
Taking it to the next step - trialling different technologies, different charging technology, the Zenobē control software, the solar and the battery and learning how that ecosystem would work in a bus depot - was cool to see. It helped us see what the blueprint would look like moving forward and allowed us to take that step from five to 59 electric buses which we have now. The next step is even bigger again, i.e. going 100% electric.
Each project has its risks. This project was a key stepping stone which took us from a handful of buses to a decent fleet. It informed decisions moving forward so that the government could transition the remaining buses.
Gareth Ridge (GR): We’ve done these types of projects in the UK before, but never in Australia. So, it was about trying to take the learnings of what we've done in multiple depots over there and putting it into place here. We worked with parties like Smart Commercial Solar and Transit Systems to answer questions like "How do the batteries and solar work in this instance?" and "How does this new software work with operations?"
For us, it was also about the integration of all the different components - from telematics, buses, batteries, stationary batteries, solar, and chargers – and making all that work together. And then (managing) all the different subcontractors that go into those different models, Smart Commercial Solar being one, and some other contractors that made it all work. That was probably the key learnings or integration challenges that we had to face.
MP: Some of the challenges from my perspective were around the level of construction going on, because at the end of the day, it's still an operational bus depot with approximately 220 buses and around 500 bus movements per day. Part of the construction was digging two 2.7-metre-wide trenches completely across the main traffic flow so managing that from an operational, safety and risk perspective was one considerable issue that we had to manage. We pulled it off, we did it all in stages and were able to keep the bus depot moving and keep construction moving at the same time.
Kealy Day (KD): I think from an installation perspective, batteries, and especially Tesla batteries, are quite fussy pieces of equipment. There's a lot of engineering that goes into designing them to work a certain way and they're designed to be implemented all over the world in all sorts of environments. There are very stringent standards on exactly what you can do with them how they can be installed. So, you're trying to terraform an existing environment to meet a strict set of standards for how this thing can operate, which obviously presents heaps of challenges. Civil (works) are always a challenge on these battery projects, and it was no different at this. There was quite a lot of civil works involved in preparing the site - that was probably one of the greatest challenges, just making everything fit around the battery in a way that it can operate as it’s supposed to for the lifetime of the asset.
KD: Broadly speaking, the project in and of itself was a technological innovation. There's no parallel in the Australian market that you could look to say, "this is how they did it, this is how we could improve, and this is how we could do it differently". So, you find you make all the mistakes along the way and try to find the best way as you go.
Using a Tesla Megapack in this format (on a single site with a single unit) is also something that hadn't really been done in the Australian market. Megapacks are obviously a very popular utility piece of equipment, but taking one and deploying it on its own on a single site is pretty different. The quality control systems in Tesla products are geared towards utility scale projects. So, making it work for a single asset on a single site was a challenge and required some creative thinking in the way that we designed things. Every step of the way, in designing a system like this, you have to be thinking, "how can I innovate on what we would normally do, or what would normally be done in the industry, so that we can make this work long term?"
GR: ... A lot of early testing and integration work with the vehicles that you're looking to use. Another lesson is the engagement with the utility in getting them involved with the concept of what we're doing here. That took a bit of time, (to gain) understanding of what the battery's going to be used for, how it's going to work with solar, how it's going to work with flexible charging requirements of bus depots. The utility is now getting more familiar with bus depots, (although) they're still not there yet, but really getting them engaged early would have helped with some of the challenges. There are lots of different lessons learned, but those are some of the more delivery and construction-related ones coming to mind.
MP: From a bus operator point of view, contract negotiations were a bit of a challenge for us, and a lesson we learned was to build those negotiation periods into your timeframes. Because the project (timeframes) did slip due to negotiations, with just the way that our bus contracts are set up and the number of different parties. Usually, a two-party contract negotiation process can be protracted, but once you once you invite other parties, everybody's trying to protect their risk profile. Trying to come to agreement on every clause in the contract can take a little bit time. So that was both a challenge and a lesson learned to make sure that you factor that time into your schedule.
KD: I think broadly speaking, there's a few. Like what Mark was saying, understanding how to take a series of steps and eliminate the drag between each one. When you've got multiple contractors that are coming to site, the civil contractors need to tie in with the electrical, (who) need to tie in with Tesla commissioning engineers, and we’re there as well. Every step of that, there's a chance for there to be a few days in between where there's downtime and nothing's happening. The more times you do this, the better you get at seamlessly flowing from one to the other and protecting that timeline as much as possible to get the same or better result.
The other thing that is difficult with projects like this and that I think we learned some lessons about, is top to bottom goal setting and top to bottom alignment between different people in the picture. For example, when we're looking at the stringent requirements from Tesla, on what the environmental needs are for the battery. We understand that and we know exactly what it needs to be like. But then you bring in a contractor and they're not seeing that document. So, you need to communicate to them effectively, that this is what's important to get this project off the ground, because otherwise, they're going in with their own sort of opinion on what the optimal outcome is. And they might come up with an idea, but that might take you away from exactly what you need. There were some lessons in aligning everyone on common goals, to have exactly what they need to deliver, to make it work across the board, which is a lesson you learn on every project. I think this one really made it stand out for us.
GR: There's typically a lot of procurement done in isolation of the different work packages. So, like procuring a bus procuring a charger, procuring electricity, procuring different telematics systems. I guess what we're doing, which is not done by a lot of people globally, is taking everything in that and delivering it as one service. That has a lot of challenges. But it also has a lot of positives that we can bring, because we're getting rid of those integration risk points between how the telematics speak to the chargers – i.e., (determining) is that charger going work with that particular bus.
Then we have the ability, because we can do the whole project end-to-end, to repurpose the batteries at their end of life as well. That gives us an ability to use that residual value of that battery and put it into the financial model as well. It's quite different to what's being done: no one's really doing that full end-to-end and looking at how you can finance the whole package, and how you can take away the points of risk. What we tried to do and emulate with this project was take everything - bells and whistles, solar, battery, smart charging - and show how it can be done, which I think we did successfully.
MP: For our customers, we have been bombarded with compliments on the smoother, cleaner, quieter, and more environmentally friendly journey aboard the bus. The buses are smoother, they're more responsive, and our customers enjoy that. From a resident's point of view, we terminate our services out in the network at several different quiet streets. We’re operating all night, at four o'clock in the morning. To have a bus sitting outside your place of residence idling or just starting their journey and then accelerating away, as you know, noise is a lot louder at four o'clock in the morning when there's less ambient noise. The residents have enjoyed having the new zero emission buses around the neighbourhood.
From a community point of view, particularly where we are in the West, there's a lot of alfresco dining. Right near Leichardt Bus Depot, there are people having breakfast, lunch, dinner, within a metre of buses, zooming up and down Northern Street. And I'm sure you've all heard the loud roar of a diesel engine. It's not great when you're having breakfast, lunch or dinner. But the electric buses, they're just silent, a little bit of road noise at speed. But it's much more pleasant than the roar of the diesel engine.
KD: In the case of this site, you're getting a substantial portion of the site's energy from solar and batteries. So, you’re insulated financially from volatile power prices, because you've got a portion of your electricity that's purchased upfront, basically. You've got an asset that's going to generate for several years, so that cost is fixed against the grid power, which is going to be changing every year, or every 3 years, or whatever your contract period is.
On top of that - and it's a little bit more of abstract - but contributing power to your own site and to the local electricity network increases the resilience of that area as well. You may be a drop in the ocean, but there’s less chance of having a grid outage, for example, if you've got more of these assets in the network that are performing their services and supplementing their own power. By contributing, you’re doing your bit in improving the resiliency of the whole network, which flows down to improving everyone's business.
GR: Working with these large organisations, there was a lot of due diligence that went into the project. So being the first of its kind, we had to do a lot of different due diligence streams; technical, financial, tax, and others, like legal. That took months and cost a lot of money, but it meant that the financiers could really get comfortable with the risk profile, and that this project would work, and it would stack up and everything that we'd talked about and put into (the) design was something that would work. That allowed them to then put money behind the project.
This is an innovative project, as Mark said, to provide a blueprint for future bus depots and how this can be done, looking at all the different technology and assets that can be all pulled together. That's why they were willing to put in some money and try and bridge that TCO gap so that for future projects, we don't have to spend quite as much on due diligence fees. Because we've done this, now the industry can leverage that and be like, okay, this works, we now don't have to put as much emphasis on due diligence and worry about all these risks. I think it opens it up for future projects now to be financed.
For organisations, whether it's bus operators or people like us, it's always about starting small. That's what we started out with only a 9-bus depot back in the UK, 6 or so years ago. Start small and then you can do that well, and then grow from there. Even this project, it's big for its kind, it was one of the biggest, but now it enables even bigger and bigger projects. We're not trying to go too big and that's why 40 at that time seemed like the right number.
MP: I think it’s definitely one of the blueprints for future rollouts of the zero-emission landscape across bus operations. We have sort of gone into a bit of a holding pattern, since the project there hasn't been too much activity. Since that project has finished, the government has been working on their strategy, identifying the financials that they have available. They've come up with stage one of the electrification, which was 11 depots.
The blueprint is starting to shift its way into the stage one design. There's the potential for large parts of this project that are now shifting into different depot strategies that we're identifying. So, whether that be the financial model, the telematics, the solar and the battery, energy storage systems, components of this job are flowing into future projects, which is exciting. It's good to see the work that that this partnership has done work its way into future projects.
GR: We tried to put everything in this one, knowing that not everything is going to be used in every other project. Pieces are being pulled out. We're seeing some sites just do solar, some sites just battery, most have smart charging; some don’t, but that's becoming a thing of the past. Commercial model-wise, this financed everything and now we're seeing some people just take the battery management risk on the battery on the bus, just that as a contract on a standalone basis. Some doing just financing of the charging infrastructure, taking away the risks associated with all the things that can fail on the charging infrastructure. Lots of components of this have served as blueprints. We're not replicating that whole thing in every depot.
MP: Gareth spoke before about the financial model and the TCO model that we identified: it's a complex model. There are some fixed costs in there, but there are also variables. The way the bus contracts work is that revenue is indexed based on diesel prices. Obviously, diesel fuel has been one of our significant expenses in bus operations. But through this process, there was an indexation method identified for electricity. We're still using a fuel but then we had to come up with a completely different indexation model. We did that and that was all a part of the contract negotiation process, which did take a little bit of time. But it has set up that blueprint for moving forward. Hopefully, we can leverage off some of those negotiations and some of those models that we've come up with and use that in the future to shorten that window of contract negotiations.