Report No: AUS0001853 . Latin America Clean Bus in LAC Lessons from Chile’s Experience with E-mobility . September 11, 2020 . TDD . . Document of the World Bank . © 2017 The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved This work is a product of the staff of The World Bank. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. 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Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Executive summary Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago 1 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Content Acknowledgements 4 Abbreviations 5 01 Executive Summary 7 02 Introduction 13 Context of the report 14 Structure of the report 15 03 Sustainable mobility context 17 The city of Santiago 18 National commitments on sustainable mobility 34 Environmental impact of e-mobility 36 Modeling the emissions of fleet renewal scenarios 42 04 E-mobility business model 43 Timeline of the introduction of e-buses in Santiago 48 Santiago´s e-mobility business model 53 Key elements for e-buses implementation 59 Next steps 64 05 Service improvement using new technologies 81 New technologies with the renewal of fleets 74 User´s perceptions 74 06 Lessons learned and recommendations 91 07 References 97 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Acknowledgements This report is the result of a joint Nationally Determined Contributions initiative of the World Bank’s Climate pledged by countries under the Paris Change Group and the Transport Agreement in 2015. The NDC SF is Global Practice. Its publication is also a contribution to the Global NDC a contribution to the 25th United Partnership. The support to Chile was Nations Climate Change Conference overseen by Ana Bucher, from the (COP25), convened under the Climate Change Group. presidency of the Government of The team gives special thanks to Chile in Madrid, Spain. the report’s technical reviewers: The report’s preparation was overseen Ignacio Abud (coordinator of the by a World Bank team led by Bianca bidding process for bus operations, Bianchi Alves and comprising Metropolitan Public Transport Rebekka Bellmann, Leonardo Samuel Board, DTPM), Ana Elisa Bucher Leyton Abalos, and Francisco Javier (Senior Climate Specialist, World Winter Donoso, under the guidance Bank), Mauricio Funes (national of Franz Drees-Gros, all of the World coordinator of e-mobility, Ministry of Bank’s Transport Global Practice. Transport and Telecommunications, MTT), Sebastian Galarza (energy and The report was prepared by the firm transportation leader, Mario Molina Steer. Key contributors include Center for Strategic Studies on Energy Carolina Buneder Humud, José De la and the Environment), Alejandro Vega, Ana Maria Puebla Gallardo, Tais Hoyos (Senior Transport Specialist, Fonseca, David Pinzon Rojas, Ester World Bank), Ivan Jacques (Senior Villavicencio, Luis Fernando Garzon, Energy Specialist, World Bank), and Jonathan Llevenes Valdebenito, Santiago Larraín (coordinator of the all of Steer, with the input of Matthew bidding process for bus operations, Clark, Katerina Espinoza, and Leon DTPM), Fernando Saka (executive Garcia Medrano. director, DTPM), Carolina Simonetti This work was made possible by (cabinet chief, MTT), and Rubén the financial contribution of the Triviño of the Secretary of Transport World Bank National Determined Planning (SECTRA). Contribution Support Facility (NDC SF), a multidonor trust fund created to facilitate the implementation of This report is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors denominations and other information shown on any map in this work does not imply any judgement on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 4 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Abbreviations 3CV Centre for Vehicle Control and MW megawatt Certification MWh megawatt hour AC alternating current N2O nitrous oxide AFT Transantiago financial NDCs Nationally Determined manager Contributions CAPEX capital expenditure NH3 ammonia Ch$ Chilean pesos NOx nitrogen oxide CH4 methane OPEX operating expenditure CNE National Energy Commission PM particulate matter (Comisión Nacional de PPDA Pollution Prevention and Energía) Decontamination Plan for the CO carbon monoxide Metropolitan Region CO2 carbon dioxide PPP public-private partnership CO2eq carbon dioxide equivalent Red Red Metropolitana de Movilidad (previously COP25 25th United Nations Climate Transantiago) Change Conference SEC Superintendence of Electricity DC direct current and Fuel (Superintendencia de DTPM Metropolitan Public Electricidad y Combustibles) Transport Board (Directorio SECTRA Secretary of Transport de Transporte Público Planning (Secretaría de Metropolitano) Planificación de Transporte) e-bus electric bus SEREMITT Region Secretary of the e-depot electric depot MTT (Secretaría Regional e-fleet electric fleet Ministerial de Transportes y Telecomunicaciones) e-mobility electromobility SOx sulfur oxide ESTRAUS Strategic Model of Santiago SPV special purpose vehicle EV electric vehicle TCO total cost of ownership GDP gross domestic product TPES total primary energy supply GHG greenhouse gas UITP International Association of GREET Greenhouse gases, Regulated Public Transport Emissions, and Energy use in Transportation model VAT value added tax HC hydrocarbon WHO World Health Organization IEA International Energy Agency km kilometer km2 square kilometer kWh kilowatt hour MAC marginal abatement cost MMA Ministry of Environment (Ministerio del Medio Ambiente) Mt megatonne MTT Ministry of Transport and Telecommunication (Ministerio de Transportes y Telecomunicaciones) 5 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report 6 01 Executive summary Executive summary Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report This report aims to increase awareness of effective ways to reduce emissions in the transport sector by outlining the planning, implementation, and management of electric buses (e-buses) in the fleet of Santiago’s public transport system. The study considers the contribution of e-buses to sustainable mobility and the methods used to measure associated reductions in emissions, in addition to the importance of these new technologies in raising public transport standards and complying with climate change commitments. Currently, the public transport system in Santiago is going through a transition to green technology with the introduction of electric and diesel Euro VI buses, and toward a new bidding process that aims to separate the operation of bus services and provision. This change brings new regulatory challenges, but also opportunities for the introduction of new technologies. This report looks into some of the main challenges and opportunities Santiago and other cities face as they move toward a cleaner fleet. Sustainable mobility context the renewable energy sector, in particular solar, has been growing for many decades, electricity demand is Chile is composed of 16 regions, one of them being increasing rapidly, along with economic growth. Under a the Metropolitan Region. Almost 40 percent of Chile’s business-as-usual scenario modeled by the Ministry of population is concentrated in Santiago, making it Chile’s Energy, electricity demand would more than double by most densely populated urban area with a population of 2050. 6.8 million in 2019. This is the area covered by the city’s integrated public transport system (Red Metropolitana de Chile aims to derive a growing share of electricity from Movilidad, previously Transantiago). renewable sources. The country has vast resources of solar energy and abundant unexploited potential for wind, Chile has become a regional leader in financial matters in hydro, and geothermal (IEA, 2018). In its National Energy Latin America, based on a market-oriented economy, with Policy 2050, which was adopted in 2015, the government a democratic political system and a solidly open market set targets for a 60 percent share of renewable power that for many years has offered an attractive business by 2035 and 70 percent by 2050. The share is currently environment, showing the best financial risk ratings in around 50 percent. Latin America. Chile has 26 trade agreements covering 60 countries. Specifically, its trade agreement with China Over the past decade, Chile has implemented several is considered a tariff liberalization program, facilitating domestic policies related to sustainable mobility. product exchange. Despite the benefits of economic and Particularly, in its commitments to the Paris Agreement, political stability, underlying social problems related to Chile’s unconditional target is to reach a 30 percent inequality recently sparked protests in October 2019. reduction in CO2 emissions per gross domestic product Attempts to find political solutions to the crisis include (GDP) unit below 2007 levels by the year 2030 (and proposals to produce a new constitution over the next two a conditional target of 35–45 percent), besides other to three years. measures related to black carbon mitigation in urban areas. In environmental terms, Chile is highly vulnerable to the impacts of climate change because of its geography and The National Electromobility Strategy seeks to contribute variety of climatic zones. The transport sector is currently to the mitigation of greenhouse gases by improving the responsible for nearly 25 percent of Chile’s carbon dioxide mobility and quality of life of Chileans. It outlines the equivalent (CO2eq) emissions. While this impact is directly actions that Chile must take in the short and medium related to a high motorization rate and the use of private term to ensure that 60 percent of private vehicles and 100 cars, conventional buses also have an impact on the percent of urban public transport buses will be electric by emission of particulate matter (PM) and nitrogen oxide 2050. (NOx). Over the past 30 years, several mitigation measures The Nationally Determined Contributions in the context have been adopted, such as cleaner fuels and emissions of the Paris Agreement, the National Electromobility standards for new vehicles, both private and public. These Strategy, and other programs such as the Pollution include the recent addition of e-buses into the city’s fleets, Prevention and Decontamination Plan for the and have achieved significant reductions in emissions, Metropolitan Region of Santiago, the National Climate especially in PM2.5 and PM10. Change Plan 2017–22, and the Energy Route 2018–22, Oil is the largest primary energy source, accounting for aim to reduce Chile’s level of emissions and mitigate 41.5 percent of the total primary energy supply in 2018; the impacts of climate change. They have produced renewable energy represented 27.6 percent. While considerable impacts, particularly in the transport and energy sectors. 8 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Executive summary The effects of these policies in terms of reduced emissions payments to cover three elements: fleet provision, can be measured using various methodologies, software, charging infrastructure, and energy supply. and tools (such as the MAC, Greet, and MODEM models). Following several e-bus pilots in Santiago’s streets and The emissions model used in Chile is MODEM, an the development of associated studies on e-mobility in application that allows atmospheric emissions from the city, the bus operator Metbus was the first to include mobile sources to be estimated using information on e-buses in its fleet (285 BYD vehicles), operating the first vehicle flows from transport modeling outputs, vehicle e-corridor in Latin America, followed by Buses Vule (76 flow profiles, and emission factors. Yutong vehicles) and STP (25 Yutong vehicles), and finally by RedBus (25 King Long e-buses expected in 2020). These buses represent approximately 6 percent of the fleet (411 Implementation of e-mobility in e-buses in a total fleet of 6,849 in 2019). Santiago The first e-buses implemented as pilots (BYD buses) in The public transport system in Santiago is based on the Santiago cost around $450,000, more than twice the operation of six bus companies: Metbus, Buses Vule, STP, diesel Euro VI cost. This changed significantly with the RedBus, Subus, and Express. Each is assigned a group of incorporation of a bigger e-bus fleet; the prices negotiated bus services (business units), integrated with a seamless were much lower, as bus manufacturers BYD and Yutong electronic payment system that uses a smart card (bip!). saw an opportunity to introduce e-bus technology in the Revenues are collected and managed by the regulator. The Latin American market. This time, the e-bus price was original length of the concessions’ contracts was 10 years, around $300,000, making it much more competitive with the first operations starting in 2007, but most of them relative to diesel Euro VI buses. were extended. The life cycle of a bus fleet is defined as at The current contracts allow the operators’ quotes for least 1,000,000 kilometers and/or 12 years of operation; fleet provision to be paid directly to the bus provider (and once this has been reached, there is an imminent need to investor). The AFT (a financial entity in charge of collecting renew the fleet. revenue and managing operators’ payments) deducts, The remuneration scheme for bus operators is based on from each operator’s payment, the amount corresponding a payment per transported passenger (approximately to the leasing contract that operator has with the energy 70 percent of bus operator revenues) and a payment per company. This has reduced the risk for investors. The kilometer traveled (equivalent to the other 30 percent). providers and the operators sign provision contracts, An operator may see its payment reduced because of approved by the state, that specify that, no matter what noncompliance with operational standards. company is operating the e-buses, the state guarantees The business model used for the implementation of that the buses will remain in the system until the debt is e-buses in Santiago consists of a public-private partnership paid. This also minimizes the risk to the financing entity, as (PPP) between the state and private companies. As the loan is secured by the state. with any PPP, each party had different motivations The payment that operators receive from the system and responsibilities governing its initial involvement is adjusted if any of the concession’s conditions that and further participation in the process. The Ministry affect the financial equilibrium of the contract change of Transport and Telecommunications (MTT) and the significantly. Where new buses correspond to a fleet participating private companies have so far introduced increase, the state covers the difference between the almost 400 e-buses together with the renewal of a large cost of the new technology and the old buses, through part of the bus fleet to the Euro VI diesel standard. an update of the monthly payment to the bus operator The state has played a supporting role from the company. Thus, for the first 200 e-buses, the state beginning. As the system was going through a brand assumed the increase in capital costs associated with the transformation led by the government, from Transantiago new technology. to Red Metropolitana de Movilidad (“Red”), there was an Importantly, operators project that e-buses will have opportunity to renew the fleet and introduce better and lower operational costs than diesel buses. The difference cleaner technologies. Government actions to facilitate in capital expenditure between electric and diesel the process, reduce approval and authorization times, and technology is compensated by the reduction in operating support the planning and regulation of these buses, were expenditure (approximately 66 percent), so the business is critical to the success of the transition. expected to break even within 10 to 14 years of payment, The energy companies Enel and Engie, in order to boost with an operation of 6,000 kilometers/month. This has their core business (centering on energy sales and the encouraged various operators to start renewing their installation of charging infrastructure), have financed the old fleets to become electric without any state financial provision of buses and electric charging infrastructure support, not only because of the savings in operating using leasing contracts with the private bus operator expenditure, but also because forecasts indicate that the companies. The leasing contracts involve monthly prices of electric technology are expected to decrease over time. 9 Executive summary Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Maintenance costs are also approximately 66 percent operation of buses in the street. This modification changes lower for e-buses than diesel buses. There are two main the basis of the current business model of Santiago’s approaches to the maintenance of e-buses. In the case of public transport system, as the state will have two different bus operator Metbus, the bus manufacturer BYD oversees contracts with independent companies that will respond preventive, corrective, and predictive maintenance of the to different incentives and penalties. It is expected that e-buses, in addition to the management of spare parts, this new proposed design will set a good base for the and suffers a reduction in monthly lease payments when further growth of the e-mobility market within the public the buses are not charged and available to be used when transport system in Santiago. needed. On the other hand, both bus operators STP and Buses Vule oversee maintenance issues themselves, so that the bus manufacturer Yutong has no responsibility Standard improvement of electric buses other than providing spare parts. The implementation of e-mobility in public transport, The implementation of an e-fleet introduces new together with the new standards of Red Movilidad, offer challenges related to the capabilities and performance several benefits. The new buses in Santiago feature air of e-buses. Elements such as the charging of batteries, conditioning, Wi-Fi, USB chargers, padded seats, and low- custom modifications for urban operations in Santiago, floor entrances, in addition to the benefits associated with guarantee schemes, availability of and alternatives using electricity instead of fossil fuel. The results obtained to spare parts, plans for the disposal of batteries, and from a user experience survey, conducted as part of this approval type processes, among others, are crucial to study, highlight passengers’ very positive evaluations of consider when selecting the bus technology and designing the e-buses. The attributes most mentioned in the survey the service. were that they generate less environmental pollution (83 Chile’s Centre for Vehicle Control and Certification (3CV) percent), have good air conditioning (72 percent), offer a has a technical laboratory to certify the characteristics of smooth ride (67 percent), and are less noisy than diesel different types of vehicles operating in Chile, and recently buses (59 percent). conducted analyses of the emissions and energy efficiency When asked to rate the different characteristics of the of buses in the public transport system, including both e-buses on a scale of 1 to 7, respondents gave the best electric and diesel buses. The characteristics considered ratings to environmental sustainability (6.7), comfort in the certification process of e-buses include safety, (6.2), and design (6.2). In an overall evaluation of the dimensions, type of engine, and energy efficiency. These different technologies, the diesel buses of the Transantiago are tested in a controlled laboratory environment that standard received an average rating of 3.4; diesel buses of aims to represent the street conditions the e-buses will the Red standard, a 4.3; and e-buses a 6.4. face. A small choice exercise between two trip alternatives There are also relevant elements to consider in the was included in the survey: 89 percent of respondents design, construction, and installation of depots, such were willing to wait one extra minute to board an e-bus as the approval times needed for the construction of instead of an old diesel bus (Transantiago standard), 66 infrastructure, the existence of electric infrastructure and percent an extra 3 minutes, and 39 percent would wait the capacity of the electric grid, the power and number of extra 5 minutes. Finally, the survey included open-ended chargers needed for the operation of buses, the charging questions regarding what people liked, resulting in positive management mechanism (smart or other), the technology evaluations regarding the use of clean technology, the of the buses and the chargers, the maintenance of the reduction of noise, and the comfort of the buses. For infrastructure, and the possibility of energy storage, among e-buses operating on the Grecia corridor, suggestions others. included increasing the frequency of service. The planning of electric services, meanwhile, requires considering the performance of a bus in real-life situations and how this might affect the design and implementation Forecasted emissions reductions of operational plans, mainly in terms of capacity and As part of this study, estimations of reduced emissions for autonomy. The training of workers in the use of this new two scenarios were modeled with MODEM, to consider technology is essential to achieve savings in operation and the impacts of fleet renewal in different proportions and maintenance, especially for bus drivers and personnel in years. MODEM simulations were conducted, projecting a charge of maintenance and charging processes. Technical theoretical scenario of 50 percent diesel Euro VI and 50 teams in charge of defining the operation must also be percent of e-buses for 2030, as follows: prepared for the transition to e-buses. ▸ 2019: Current situation with 409 diesel Euro VI and The new tender process for the public transport system 411 e-buses (including the already confirmed arrival of in Santiago is challenging the current business model by buses expected for the end of 2020). separating fleet provision and depot ownership from the 10 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Executive summary ▸ 2030: 50 percent of the fleet Euro VI diesel and 50 percent electric. Under these assumptions, the current scenario produces a slight reduction in emissions, while the 2030 scenario would produce a much more significant reduction in emissions. The modeled technological change significantly reduces CO2, NOx, hydrocarbon (HC), and carbon monoxide (CO) emissions. When comparing the different 2030 scenarios, the most notable decreases are of NOx and HC emissions, both by approximately 90 percent, compared with a 2030 scenario with no fleet renewal; CO2 would be reduced by 15 percent. The model predicts that for the 2030 scenario with the Red standard (electric and Euro VI) buses, PM2.5 and PM10 emissions would be reduced by 70 percent and 56 percent, respectively, compared to the 2030 scenario with the current fleet composition. These estimations confirm that, in conjunction with coordinated actions to boost the e-mobility market, the first stage of introducing e-fleets in the public transport system has set a good basis for achieving national environmental goals and international compromises in terms of sustainability and emissions reductions. To meet the Nationally Determined Contributions’ targets for CO2 emissions, this process of bus renewal in Santiago needs to be combined with measures to increase public transport’s share of the entire system, encourage low-emission technologies in private vehicles and taxis , as well as extend the implementation of e-mobility to other Chilean cities’ public transport systems. The study offers valuable lessons and knowledge from Chile’s experience introducing e-buses in Santiago and its impacts on green development. It is hoped that this information will be useful for the planning, implementation, and management of e-buses, as a way to further low-carbon growth and sustainable development in other cities around the world. 11 Executive summary Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report 12 02 Introduction Introduction Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Context of the report The global use of electric vehicles has increased At present, the system is going through a transition to significantly in recent years. In 2018 alone, the stock green technology with the introduction of electric and of electric passenger cars grew by around 63 percent, diesel Euro VI buses. The entry of new actors and business reaching 5 million in total (IEA, 2019a). This trend has had, models around the provision and financing of the fleet and will continue to have, an impact on energy markets, also present new challenges in the implementation and prompting stakeholders throughout the world to take regulation of these new technologies from an energy and actions to adjust. In 2017 there were 385,000 electric transport perspective. buses (e-buses) globally, 99 percent of them in China, Nowadays, Chile has the second-biggest e-bus fleet in where they composed about 18 percent of the bus fleet in the world, after China. As of November 2019, Red’s 386 2017 (Bloomberg New Energy Finance, 2018). e-buses, in addition to the recently arrived 490 Euro VI The responsibilities Chile assumed under the Paris buses, represented nearly 15 percent of the bus fleet Agreement, such as its commitment to achieve carbon operating on Santiago’s streets. neutrality by 2050, and its creation of a National Electromobility Strategy, Energy Route 2018–22, and Pollution Prevention and Decontamination Plan for Objectives of the report the Metropolitan Region of Santiago, have driven the modernization of Santiago’s public transport system to The main objective of this report is to raise awareness include a growing number of e-buses. In addition, the regarding pathways to reduce emissions in the transport Chilean government recently approved a Decarbonization sector, by highlighting Chile’s transition toward sustainable Plan in the context of the 25th United Nations Climate mobility in Santiago. Three topics are covered: Change Conference (COP25) (CCAP, 2019). ▸ The contribution of e-buses to sustainable mobility, and Santiago’s public transport system (formerly known as the methods used to measure reductions in emissions. Transantiago and now as Red Metropolitana de Movilidad, ▸ Experiences related to planning, preparation, and or “Red”) uses a concession model for the operation of management, including contextual elements that have its buses, which complement 140 kilometers (km) of facilitated the introduction of e-buses in Santiago. urban subway and a relatively new suburban rail service, Metrotren Nos. On an average day, transactions within ▸ The importance of technology in the raising of public the public transport system reach 5.5 million, within an transport standards, and their relation to climate integrated fare system that uses smart cards for fare change commitments. collection. It is important to mention that in the current concession, the firms in charge of bus operations own the fleets they operate. 14 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Introduction Structure of the report As described in the methodology (Appendix A), the report is based on desk research as well as interviews and passenger surveys. It is organized into seven chapters. 3 After an executive summary and introduction, various aspects of Chile’s context are described in chapter 3. Santiago’s sociopolitical, economic, environmental, energy, and transport profiles are outlined, followed by an analysis of national commitments to sustainable mobility and the impact that e-mobility and specifically electric buses may have on them. Additionally, an exercise in modeling the emissions of various scenarios of fleet renewal is conducted. 4 Against that backdrop, chapter 4 explains the new business model for the adoption of e-mobility, starting with a timeline that considers public-private coordination and the main changes to e-mobility to be expected with the introduction of e-buses. Next, a description and analysis of the public-private partnership (PPP) are conducted, reviewing the new actors involved, the enablers of the adoption of e-buses, and the main risks associated with different fleet provision models. In addition, the key elements of e-buses’ implementation, e-depots’ construction, planning and operations of e-mobility, and changes in the requirements of human resources are analyzed. Finally, next steps for Chile are discussed, such as the implementation of e-mobility in other cities and future bidding processes for Santiago’s public transport system. 5 Chapter 5 addresses how technology is leveraged in the field of public transport to improve service and standards. Passengers’ experiences gathered from surveys are presented. 6 In chapter 6, lessons learned and recommendations are presented, to extract knowledge from Santiago’s experience that might be relevant to other cities. 15 Introduction Introduction Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report 16 03 Sustainable mobility context Sustainable mobility context Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report The city of Santiago Santiago’s experience with e-buses is influenced by the city’s political, social, and demographic context as well as the setup of its transport and energy system. These factors also determine the barriers and enablers for the integration of e-mobility in the city’s public transport system. Political, social and demographic context Chile is composed of 16 regions, one of them being the Region’s 7.2 million in 2019.1 Santiago is not a proper Metropolitan Region. This is divided into 6 provinces administrative division but a territorial extension defined and 52 municipalities; almost 40 percent of Chile’s by its urban continuity, which includes 34 municipalities. population, or 7.2 million of an estimated 18.8 million, was One of them is the Municipality of Santiago, commonly concentrated in this region as of 2019 (Instituto Nacional known as “downtown.” de Estadísticas, 2019a). For this report, Greater Santiago will be referred to as Santiago, known as Greater Santiago (Gran Santiago), is Santiago, since it is the area covered by the integrated the capital of Chile and part of the Metropolitan Region. It public transport system (Red Metropolitana de Movilidad, is the most densely populated urban area in the country, or “Red,” previously Transantiago). holding about 6.8 million inhabitants of the Metropolitan Figure 3-1: Santiago’s administrative definition Santiago Las Condes Paci c de Chile Pudahuel Santiago Ocean de Chile Maipú San Bernardo Chile Puente Alto Chile Metropolitan Region Greater Santiago 16 Regions 52 Municipalities 34 Municipalities Source: Original compilation Table 3-1: Summary of administrative – sociodemographic divisions City/ Region Population (2019) Municipalities Area (Km2) Density (inhab/km2) Greater Santiago 6.8 million 34 ≈ 650 km² 9,821/ km² Metropolitan Region 7.2 million 52 15,403.2 km² 460/km² Chile 18.8 million 346 756,102 km² 25.07/km² Source: Fieldwork conducted for the present study in 2019 1 The last census of 2017 indicates that 7.1 million inhabitants live in the Santiago Metropolitan Region 18 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Sustainable mobility context The main public organizations in Chile that oversee issues related to e-mobility are the Ministry of Transport and Telecommunications (Ministerio de Transportes y Telecomunicaciones, MTT) and the Ministry of Energy. Although Chile’s Ministry of Environment (Ministerio del Medio Ambiente, MMA), through its Climate Change Division, is responsible for the proposition of policies and formulation of plans, programs, and actions in climate change matters, it is not a direct participant in current e-mobility initiatives. ▸ Ministry of Transport and Telecommunications (MTT): Created in 1974, the organization oversees national transport and telecommunication matters and is responsible for the direction and control of its implementation. The MTT supervises public and private companies that operate the means of transportation and communications in the country, coordinates and promotes the development of these activities, and monitors compliance with relevant laws, regulations, and standards. ▸ Ministry of Energy: Created in 2010, the agency prepares and coordinates plans, policies, and standards for the adequate functioning and development of the energy sector; ensures compliance; and advises the government in all energy-related matters. The energy sector includes all the activities of study, exploration, exploitation, generation, distribution, transmission, consumption, efficient use, import and export, and any other matter that concerns electricity, coal, gas, oil and its derivatives, nuclear energy, geothermal and solar energy, or any other energy source. The Ministry of Energy has played a fundamental role in the boost Chile has given to e-mobility through initiatives such as the National Electromobility Strategy (2016) and the Energy Route 2018–22, detailed later in this report. ▸ Ministry of Environment (MMA): Created in 2010, this state organization is in charge of coordinating the design of policies and regulatory frameworks, plans, and programs of environmental matters such as the adoption or creation of decontamination plans and emissions standards for vehicles, as well as air quality monitoring. The MMA also oversees the protection and conservation of biological diversity and renewable natural resources and water, promotes sustainable development, and ensures the integrity of environmental policy and its regulation. The ministry, through its Climate Change Division, is responsible for the proposition of policies and the formulation of plans, programs, and actions that aim to mitigate climate change. Figure 3-2: Organizational chart: Public entities relevant to e-mobility State Ministry of Transport and Ministry of Energy Ministry of Environment Telecommunications OVERSEES THE WORK OF THE OVERSEES THE WORK OF THE Bus type regulation and standardization processes 3CV Superintendence of Superintendence of Electricity and Fuel (SEC) Environment Manages the relationship Regulation for the consumption of energy and Compliance with quality and emission with the bus operators and DPTM construction of electric infrastructure standards other participants in the system Inspection Department that undertakes reviews in relation Inspection National Energy to technical norms Department Climate change division Commission (CNE) Secretary of Transport Planning, State entity in charge of pricing and technical Responsible for the proposition of policies and in charge of the development of requirements for the generation, transport formulation of plans, programs and actions in SECTRA a project´s social appraisal and and consumption of energy climate change matters the estimation of emissions Regional support of the Ministry of Transport and Regional Support Telecommunications “SEREMITT” Source: Original compilation 19 Sustainable mobility context Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report The MTT is responsible for granting concessions to Meanwhile, the Climate Change Division contributes operators in Transantiago; other tasks relevant to the to sustainable development resilient to the impacts of transport system are undertaken by MTT-dependent climate change, and helps the country in its transition entities such as the Metropolitan Public Transport Board to a low-carbon economy through the integration and (Directorio de Transporte Público Metropolitano, DTPM), promotion of better sectorial public policies that allow the Inspection Department (Fiscalización Nacional agencies at a local level to face climate change and de Transportes), the Secretary of Transport Planning implement mitigation actions that serve as an example at (Secretaría de Planificación de Transporte, SECTRA), and a global level. the Regional Secretary of the MTT (Secretaría Regional In 2016, the Sustainability and Climate Change Agency Ministerial de Transportes y Telecomunicaciones, was formed. Its main role is to promote the inclusion of SEREMITT). climate change problems and sustainable development in The DTPM is the executive office that manages relations the private sector through public-private agreements and with bus operators and other participants in the the execution of programs and projects that contribute to system, like Metro, Metrotren, and companies providing the construction of a low-carbon economy and compliance complementary services. The DTPM’s structure features with Chile’s commitments in the Paris Agreement. Its divisions with a focus on, for example, operations areas of action are the promotion of entrepreneurship control, planning and development, infrastructure, users, and innovation, the implementation of efforts to mitigate regulation and system finance, technology, legal issues, and adapt to climate change, the encouragement of communications, and administration. technologies and financing required for these efforts, and the development of relevant capacities. The Inspection Department undertakes reviews compliance with technical and environmental norms. For instance, it ensures that buses comply with technical requirements, and also protects bus lanes from being used Economic, regulatory and financial by private vehicles. The Centre for Vehicle Control and context Certification (3CV) implements vehicle-type approvals and Table 3-2 summarizes economic figures for Chile in standardization processes, and SEREMITT maintains a bus comparison to Latin America and the Caribbean as a registry and grants permits for buses to operate within the whole. system. On its part, SECTRA oversees the development of transport projects’ social appraisal and emissions Table 3-2: Summary of the economic characteristics of Chile compared estimates. to averages for Latin America and the Caribbean (prices in USD$ as of October 2019), 2018 In the energy field, the Superintendence of Electricity and Fuel (Superintendencia de Electricidad y Combustibles, Index Chile Latin America SEC) regulates the consumption of energy across uses GDP $ 298 Billion USD - (domestic and industrial) and regulates the construction of electrical infrastructure and its characteristics. The GDP Growth 3.9% 1.2% National Energy Commission (Comisión Nacional de GDP per Capita $15,000 USD $ 8,500 USD Energía, CNE) is an entity within the Ministry of Energy that is in charge of pricing and technical requirements for Unemployment 7.2% 9.3% the generation, transport, and consumption of energy. Inflation 2.9% 7.0% The MMA oversees the competencies of other sectors Source: Central Bank of Chile, National Statistics Institute and World Bank, Latin through the Council of Ministers for Sustainability (CMS). America GDP per capita: https://datos.bancomundial.org/indicador/NY.GDP.PCAP. This is a deliberative body focused on public policy CD?locations=ZJ-CL, Chile and Latin America unemployment rate, inflation and GDP growth; https://repositorio.cepal.org/bitstream/handle/11362/44605/1/ and general regulation in environmental matters. It is S1900308_en.pdf composed of the minister of the environment, who leads it, and representatives of the agriculture, finance, health, Chile has a market-oriented economy characterized by economy, development and reconstruction, energy, a high level of foreign trade and a reputation for strong public works, housing and urban planning, transport and financial institutions and sound policy that have given it telecommunications, mining, and social development the strongest sovereign bond rating in South America. This departments. In 2014, this council initiated procedures market orientation is supported by a low level of economic to change its name to the Council of Ministers for protectionism, allowing Chile’s trading partners to send Sustainability and Climate Change, which was to be joined and receive goods and products with remarkably few by the Ministry of Foreign Affairs (MINREL) in its role in tariffs, quotas, or other constraints (Forbes, 2018; World international negotiations. Bank, 2019). The Superintendence of the Environment oversees Chile’s 26 trade agreements cover 60 countries and compliance with quality and emissions standards. include agreements with the European Union (EU), the 20 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Sustainable mobility context South American trade bloc Mercosur, India, the Republic of countries to do business in 2019, Chile ranks 33rd—the Korea, Mexico, and China. The trade agreement between first in Latin America (Forbes, 2018). Chile and China is considered a tariff liberalization program. Since 2015 more than 97 percent of Chilean Environmental context goods that enter the Chinese market do so without tariffs. Some of the greatest challenges facing cities today are Similarly, all about 2 percent of Chinese products enter related to climate change and air quality, especially in duty-free into Chile (Undersecretary of International developing countries. Climate change and deteriorating Economic Relations, 2017). air quality threaten to have serious consequences for In general,2 the only tax that falls on imported goods is public health and tend to increase social vulnerability the same value added tax (VAT)3 applied to any product in a scenario of scarce public resources. Chile is highly (internally produced or imported) that is marketed in vulnerable to the impacts of climate change due to its Chile. Thus, the import tariffs that would likely be applied diverse geography, several features of which are considered to the purchase of buses in other countries of the region risk factors associated with the negative impacts of climate are not present in Chile (World Bank, 2019). change. Its length and diverse topography provide for a varied climate with different challenges in different areas. Regarding financial risk, Chile shows the best ratings in Chile’s geography includes an extremely long coastline, the Latin America (Diario Financiero, 2019). According to Fitch, world’s driest desert—the Atacama Desert—in the north, the risk rating for Chile remains an A. 4 All this is based a Mediterranean climate in the central region, and a snow- on the country’s credible policy framework focused on a prone Alpine climate in the south, with glaciers, fjords, and regime of inflation targets, flexible exchange rates, and a lakes. relatively strong sovereign balance (San Juan, 2019). Given its position as an emitter of greenhouse gases Fitch’s rating is consistent with the evaluations made by (GHGs) and other pollutants, the transport sector plays an Moody’s and S&P, which grant Chile A1 and A+ rankings, important role in the country’s climate change policies. In respectively (Diario Financiero, 2019; S&P Global Ratings, 2013, the transport sector accounted for 23 percent of all 2019), demonstrating that Chile’s ability to meet its fossil-fuel-related carbon dioxide (CO2) emissions worldwide financial commitments is strong. (IEA, 2019b). Despite technological developments leading to Chile has become a regional leader in financial matters significant reductions in GHG and other pollutant emissions due to a stable democratic system and a solid open market per vehicle and the implementation of reduction targets, that guarantees a safe business environment (Ministry of transportation in and around cities remains a major source Foreign Affairs, 2017; Badenhausen, 2018). Among the best of emissions that have detrimental impacts on human health, ecosystems, and the climate. Figure 3-3: Carbon dioxide emissions in Chile, 1960–2016 (kt) 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2015 Source: World Bank: https://datos.bancomundial.org/indicador/EN.ATM.CO2E.KT?locations=CL 2 Chile has, in its economic regulations, specific taxes for different types of products due to the negative externalities that they produce: for example carbon, green taxes, the alcohol tax, and the cigarette taxes. There is no such tax that affects the import of buses. 3 The VAT in Chile is 19 percent. 4 Fitch’s national long-term credit rating scale ranges begins at AAA and ends in D. In addition to the rating options AAA, AA, A, BBB, BB, B, CCC, CC, C, RD, and D. In addition, the modifiers “+” or “-” can be added to a rating to denote the relative position within a category. 21 Sustainable mobility context Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report The transport sector is currently responsible for nearly 25 percent of Chile’s carbon dioxide equivalent (CO2eq 5) emissions. In 2015 total emissions of CO2eq across all sectors (not only transportation) were estimated at roughly 120 Mt.6 According to the Mitigation Action Plans and Scenarios (MAPS) project, without considering mitigation, the transport sector is expected to remain responsible for around 25 percent of emissions in 2030, with total emissions (excluding AFOLU7 ) of 180 Mt CO2eq (MMA, 2019). In Santiago, air pollution has been a prime challenge, and even though private vehicles have been responsible for a great part of the pollution, particularly in terms of carbon monoxide (CO) emissions, during the previous decades buses represented the major source of particulate matter and NOx 8 pollution in the city. Nevertheless, from the beginning of the 1990s, several actions have been adopted, including the regulation of cleaner fuels and emissions standards for new vehicles, measures that have produced a continuous improvement in the annual average of emissions, particularly in PM2.5 9 levels measured in Santiago. The average PM2.5 level in 2015 was 68 percent of what it was in 1989. With this, buses are no longer the primary source of emissions in terms of PM and NOx, reinforcing the rationale to increase their share of public transport. This is an important point of relevance to e-mobility, since the shift of polluting vehicles to cleaner technologies has been the catalyst for changes to both private vehicles and the public transport system. Figure 3-4: Annual average concentrations of PM2.5 in Santiago, Chile, 1989–2015 (μg/m3) 80 70 60 50 40 30 20 10 0 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 PM2.5 Chile's national Norm PM2.5 (20μg/m3) Sources: Based on the Pollution Prevention and Decontamination Plan for the Metropolitan Region of Santiago, 2016, and WHO Air Quality Guidelines Simultaneously, the share of the transport sector has increased in relative terms. It was estimated that in 2012 transport contributed approximately 40 percent of the city’s total fine particulate matter (PM2.5), whereas in 1998 transportation emissions were estimated at 24 percent of the total urban PM production (Barraza et al., 2017). PM2.5 is primarily produced by direct emissions from the combustion processes of fossil fuels. Its main sources are the processes that occur during combustion in cars, buses, and trucks (diesel and gasoline); thermoelectric plants; industrial processes; biomass combustion; residential firewood heating; agricultural burns; and forest fires. A large contribution to PM emissions is through residential heating and road transportation: they emitted up to 1,800 and 2,700 tonnes/year of PM2.5 in 2012, respectively (USACH, 2014). The level of PM emissions in Santiago is above that recommended by the World Health Organization. 10 Also, it is highest of the major cities in Latin America (World Bank, 2019).11 5 CO2eq unit measures the environmental impact of one tonne of these GHGs in comparison to the impact of one tonne of CO2. 6 Mt = megatonne, one million tonnes. 7 Agriculture, forestry, and other land use. 8 Nitrogen dioxide is an irritant gas, which at high concentrations causes inflammation of the airways. NOx gases react to form smog and acid rain, and are central to the formation of fine particles (PM) and ground-level ozone, both of which are associated with adverse health effects. 9 PM2.5 is particulate matter 2.5 micrometers or less in diameter; PM10 is particulate matter 10 micrometers or less in diameter. The health effects of particulate matter may include cardiovascular effects such as cardiac arrhythmias and heart attacks, and respiratory effects such as asthma attacks and bronchitis. The size of particles is directly linked to their potential for causing health problems. So, PM2.5 poses the greatest health risk. 10 Values from the WHO Air Quality Guidelines. 11 The study compares the emission levels of PM2.5 and PM10 for Santiago, São Paulo, Buenos Aires, Montevideo, and Mexico City. 22 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Sustainable mobility context These emissions are not evenly distributed throughout seasons (PM10 emissions remain constant during the year). the year. Residential combustion emissions occur mostly Moreover, air pollution in Santiago is strongly influenced during the winter season, from May to September, by the complex topography surrounding it. The southern contributing to extreme events of air pollution that Andes in the east, the coastal range in the west, and frequently affect the city of Santiago with significant the transversal mountain chains in the north and south impacts on public health. Although the number of surround the basin, preventing the dispersion of pollutants these extreme events and average concentration levels and thus leading to the accumulation of gases (CO, NOX, decreased over the last few decades, such events still and volatile organic compounds [VOCs]) and aerosols (PM10 occur and are a matter of public concern. and PM2.5). The central problems in the Santiago Metropolitan Region occur when PM2.5 emission concentrations reach their maximum values, during the autumn and winter Figure 3-5: Average annual variation of PM2.5 and PM10, Pudahuel station, 1998–2015 100 90 80 70 60 μg/m³ 50 40 30 20 10 0 y ry ch ril ay ne ly st r er r r be be be ar Ju gu ua ob Ap M ar Ju nu em em m Au br M ct ce Ja O pt ov Fe De Se N PM 2.5 Values for PM2.5 in Air Quality Guidelines of the WHO PM 10 Values for PM10 in Air Quality Guidelines of the WHO Sources: Based on the Pollution Prevention and Decontamination Plan for the Metropolitan Region of Santiago and WHO Air Quality Guidelines Energy field In terms of energy, Chile largely depends on imports; its domestic production of fossil fuels is only about 34.7 percent (in 2016) of its total primary energy supply (TPES). Oil is the largest primary energy source, accounting for 41.5 percent of the TPES in 2018, followed by coal (18.1 percent) and natural gas (12.8 percent). Industry and transportation account for more than three-quarters of total final consumption (TFC). Oil is the most important energy source for both sectors, although the dominance of oil in the industry sector is not as prominent as it is in the transport sector. Renewable energy has been an important energy source for many decades, comprising 25–30 percent of the TPES; in 2018, it accounted for 27.6 percent of the TPES. This category comprises biofuels and waste (20.0 percent), hydropower (5.1 percent), and wind and solar energy (2.5 percent). In comparison with the member countries of the International Energy Agency (IEA), Chile’s share of fossil fuel in electricity generation (61 percent) was the twelfth largest in 2016, just above the mean (58 percent), and between Italy and the Czech Republic; specifically, Chile had the fifth-largest share of oil and seventh-largest share of coal. 23 Sustainable mobility context Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Figure 3-6: Chile’s total primary energy supply, by source, 1990–2018 (ktoe) ktoe 45,000 40,000 35,000 Coal 30,000 25,000 20,000 Natural gas Biofuels and waste Hydro 15,000 10,000 Oil 5,000 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Coal Natural gas Hydro Biofuels and waste Oil Wind, solar, etc. Source: IEA 2019b: https://www.iea.org/statistics/?country=CHL&isISO=true Current composition of the energy mix The electricity generation of the system is the result of the work of 540 power plants. The type of energy used for the generation of these power plants, by share of the total, is shown in figure 3-7. Figure 3-7: Types of energy generation within the national energy system, as of July 2019 Wind Solar 6.8% 5.4% Biomass 1.4% Geothermal 0.3% Hydro 25.1% Thermoelectric 61.0% Source:Based on information from Chile’s Electricity Generators (2019). The total installed power corresponds to the sum of the capacities (megawatts, MW) of each of the 540 plants. Considering the above, table 3-3 and figure 3-8 summarize the energy mix of the system. 24 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Sustainable mobility context Table 3-3: Total Installed Capacity by July 2019 (MW) Building a low-carbon national electricity system Renewable 11,814 In its National Energy Policy 2050, which was adopted in 2015, the government set targets for a 60 percent share Hydroelectric dam 3,383 of renewable power by 2035 and 70 percent by 2050. The Run-of-river hydroelectricity 3,380 share is currently around 50 percent. According to the IEA, the country has great potential for solar and wind Bioenergy 446 energy developers. New legislation encourages investment Wind Power 1,938 in generating capacity across the electricity sector. Integrating growing shares of variable renewable energy Solar Power 2,622 requires a flexible power system, and more transmission Geothermal Energy 45 infrastructure, storage, and demand-side response. Policy makers would do well to ensure that the electricity market’s Non-renewable 13,334 design and infrastructure facilitate the integration of solar Gas 4,876 and wind power. By exploiting its vast renewable energy potential, Chile can help reduce electricity prices and Coal 5,535 dependency on fuel imports, as well as reduce the carbon Petroleum 2,924 intensity of power generation. Total 25,148 In January 2018, energy-generating companies signed Source: Based on information from Chile’s electricity generators, 2019 an agreement with Chile’s government to not build new coal plants in the country and to support the growth of Figure 3-8: Share of total installed capacity, by energy type, as of July other energy sources such as natural gas and renewables. 2019 (MW) However, the latest coal plant was inaugurated in 2019 by Petroleum Hydroelectric dam Engie. 11.6% 14.5% Meanwhile, new legislation has been adopted to encourage investment in new capacity across the electricity sector. Run-of-river In particular, the 2016 Transmission Law not only created hydroelectricity a single Independent System Operator (ISO), but also 13.4% enhanced the role of the state in energy planning and the Coal expansion of the transmission system. The law introduced 22.0% Bioenergy several new features to Chile’s electricity sector: it created 1.8% the National Electricity Coordinator, a unified independent Wind Power system operator; it supported grid expansion and cross- 7.7% border connections; and it also modified transmission toll payments to increase competition in generation. Gas Solar Power A major achievement is the interconnection, in November 19.4% 10.4% 2017, of the two main electricity systems—the Central Geothermical Energy Interconnected System (SIC) and the Greater Northern 0.2% Interconnected System (SING). As a result, the National Source: Based on information from Chile’s electricity generators, 2019. Electricity System (Sistema Eléctrico Nacional, SEN) was created (IEA, 2018). Furthermore, electricity demand is increasing fast, along with economic growth, and is expected to keep growing Electricity distribution and price rapidly. Under the Ministry of Energy’s business-as-usual Electricity distribution is organized through concessions, scenario, demand would more than double by 2050, with a total of 32 distribution companies that have a growing significantly faster than the population. Despite permanent supply of energy to enable them to meet this strong growth, electricity demand per user remains the total consumption of their regulated customers low in Chile. In 2016, it was 4.1 megawatt hours (MWh) per in their concession areas. In terms of tariffs, domestic capita, less than half the IEA average of 8.7 MWh. customers with a connection higher than 2 MW (the so- At the same time, Chile aims to derive a growing share called “free clients”) pay a nonregulated tariff negotiated of electricity from renewable sources. The country has with the power company,12 while customers with a lower vast resources of solar energy and abundant unexploited connection pay a regulated fare. However, consumers that potential for wind, hydro, and geothermal (IEA, 2018). have connections between 0.5 MW and 2 MW can choose to be in the regulated or free market. Customers who opt for the free market scheme would need to stay there for at 12 A scheme by which the consumer negotiates an individual fee for consumption. least four years and inform the distributor at least a year in In this scheme, it is possible that the consumer is supplied by other sources of electricity, including auto generation. advance to change to a regulated fare scheme. 25 Sustainable mobility context Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report The government is studying a new regulatory framework for the distribution sector. The CNE is working on a proposal for a new distribution law that would ensure the modernization of the distribution sector, with the objective of encouraging the development of a more efficient and more intelligent distribution grid, introducing new technologies and new companies, and expanding business opportunities in the sector. Transport system figures Urban mobility in Santiago has historically followed a path of car-oriented development. In 2019, almost 2.2 million active motorized vehicles registered within the Metropolitan Region. In the same year in Santiago, private cars had a modal share of 47.8 percent during morning peak hours, while public transport buses had 41.1 percent, for a total of approximately 2.5 million trips within the city.13 Even though the number of trips has grown during the last years, the modal share of public transport has slightly decreased, which challenges authorities to think of ways to promote and improve the system’s quality. Santiago’s integrated public transport system (known as Transantiago until March 2019, when its name was changed to Red Metropolitana de Movilidad, commonly known as “Red”) operates in the metropolitan area of the city of Santiago with an integrated fare that encompasses surface bus services, a metro line, and the suburban train service Metrotren Nos. The system is regulated by the MTT and, more specifically, by its undersecretary of transportation through the DTPM. The decision level of the entity is national (neither metropolitan nor municipal). The DTPM is the public transport authority in Santiago and the executive entity responsible for regulating the requirements of vehicles, routes, frequencies, and rates. The system has three components: ▸ Buses - 6,756 buses,14 are operated by six different operators, with 380 different routes and covering more than 2,900 kilometers of road network ▸ Metro - 7 lines totaling 140 kilometers; ▸ Metrotren Nos - an extension of more than 20 kilometers and 10 stations Currently, there are six bus operator companies15 —Metbus, Buses Vule, STP, RedBus, Subus, and Express—each of them assigned to the operation of a group of bus services (business units). With the implementation of the Transantiago system in 2007, and continuously after that, several changes have been introduced in contracts with the objective of improving service quality, financial conditions, fleet renewal, and technologies, such as through the introduction of emission filters. Before the establishment of Transantiago, there were high levels of informal employment and market fragmentation in the public transport field (Muñoz and Gschwender, 2008). The current concession contracts for bus operators measure their operational performance based on indicators reflecting users’ travel experiences.16 These indicators include frequency, regularity, transport capacity, quality of user service, and quality of vehicles, among others. If these indicators are under certain compliance thresholds, companies can suffer reductions in their remuneration and/or fines for a breach of service quality levels. Red features an integrated payment system for the bus, metro, and the commuter train service Metrotren Nos, which uses a contactless smart card (called Tarjeta bip!). The fare is fixed for buses, allowing up to two transfers between buses with no extra cost in a period of 120 minutes. An extra payment is added for the use of Metro or Metrotren Nos in any of the three stages of a trip. According to the DTPM, more than 1.6 billion transactions were made in the system in 2018 (DTPM, 2018). 13 According to simulations conducted in ESTRAUS (the official transport model for Santiago) for the year 2019. 14 Includes base operating fleet, reserve fleet, and auxiliary fleet (DTPM, 2018). 15 Previously seven, but one of the company’s contracts ended in 2019 (Alsacia). 16 The DTPM is in charge of these measures and reduces payment to the operators depending on their compliance. 26 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Sustainable mobility context Figure 3-9: Trips and transactions, 2010–18 2,000 1,800 1,600 1,400 1,200 Millions 1,000 800 600 400 200 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 Transactions Trips Source: Based on DTPM (2019) Figure 3-10: System coverage Legend Buses Metro Metrotren 0 2.5 5 7.5 Kilometers Source: Based on DTPM (2018) 27 Sustainable mobility context Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Cleaner public transport initiatives The primary technological mitigation measures introduced over the past 30 years in Santiago include stricter vehicle emission standards (Euro V has been mandatory for light duty vehicles since 2012), improved fuel quality for both gasoline and diesel (unleaded gasoline since 1994 and a maximum of 15 ppm17 sulfur content in diesel since 2013), as well as a massive introduction of after- treatment devices (three-way catalytic converters since 1992 and diesel particle filters since 2010). Since 2012, new policies are being developed, such as the Zero-Emissions Mobility Program, launched by the MMA. This program, which includes several initiatives such as the PM2.5 Decontamination Plan and the Public Transport Improvement Plan, aims to promote electric transport, putting greater emphasis on the environmental and health impact of pollution, and incorporating electrical vehicles. Moreover, in early 2016, the MMA announced that Euro VI or USEPA 2010 technology would be mandatory for every new bus purchased and operating in the public transport system as of January 2019. Table 3-4 shows the differences among the different technologies for buses in terms of NOx and PM10 emissions. Table 3-4: Comparison of the environmental performance of diesel bus technologies Pollutant (gr/km) Euro III diesel Euro IV diesel Euro V diesel Euro VI diesel NOx 8 8 7 0.1< PM10 1.9 1.1 0.9 0.1< Source: Fleet test on warmed-up engines (Nylund, 2017) The evolution of the buses technologies during recent years is shown in figures 3-11 and 3-12. Figure 3-11: Santiago bus fleet technology proportions, 2008-19 100% 0.02% 0.04% 1.5% 3.7% 0.15% 0.15% 5.6% 6.3% 12.2% 18.4% 90% 17.5% 20.8% 21.9% 21.7% 9.0% 28.4% 32.9% 80% 43.0% 21.8% 70% 41.8% 65.4% 41.5% 40.2% 0.01% 60% 40.9% 39.7% 39.2% 69.5% 50% 36.3% 58.1% 40% 58.4% 30% '&"($ 48.4% 45.1% !#")$ 41.0% 40.7% 39.0% 38.1% 37.4% 20% 31.9% 27.2% 26.7% 10% 13.5% 8.7% 0% 2.6% 0.1% 2.2% 1.0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Euro I Euro II Euro III Euro III+Filter Euro IV Euro V Euro VI Electric Source: Based on data from DTPM (2020). 17 Parts per million. 28 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Sustainable mobility context Figure 3-12: Number of buses in fleet, by technology, 2012–19 8,000 7,000 6,681 6,756 6,849 6,550 6,646 6,493 6,513 6,298 6,000 5,000 4,000 3,000 2,000 1,000 0 2012 2013 2014 2015 2016 2017 2018 2019 Euro II Euro III Euro III+filter Euro IV Euro V Euro VI Electric Source: Based on data from DTPM (2020). During 2019, more buses with cleaner technologies were included, reaching 620 Euro VI buses and 385 e-buses in a total fleet of 6,849. This means that 5.6 percent of the public transport fleet was electric by the end of 2019. The adoption of ultraclean bus standards is only the latest example of Chile’s role as a regional and global leader in cleaner fuels and vehicles. In the context of the Pollution Prevention and Decontamination Plan for the Metropolitan Region of Santiago, Santiago became the first city in Latin America to adopt ultralow sulfur diesel and gasoline fuel standards in 2011. The country has led the way in the region in terms of cleaner fuels and vehicles, becoming the first Latin American country to adopt a joint CO2 and pollutant tax in October 2014 that applies to light duty trucks and sports utility vehicles in addition to light duty vehicles. New Bus tendering process in Santiago By 2018, the first contracts in the system were expected to expire. The former administration had started a bidding process that would have tendered around 50 percent of the operating kilometers at the beginning of 2018, involving the renewal of at least 1,500 buses and up to a total of 3,000 in the following years. This bid requested contractors to introduce at least 90 e-buses into the system. However, the incoming administration, led by the minister of transport, decided to discard this process, based on technical and political differences with the previous terms of reference, and to ensure equitable access for new operators. In this context, some companies extended their contracts for a couple of years. The transport minister has anticipated that changes such as smaller business units, shorter contracts, and incentive modifications would be included in the new terms of reference. This new tender process would divide the operation of buses from their acquisition. For this purpose, fleet suppliers would be responsible for the purchase of the vehicles and the availability of spare parts. Companies would operate smaller fleets of 350–400 buses on average. The process also establishes Euro VI buses as a minimum standard for emission technologies and offers incentives for the use of e-buses, encouraging operators to choose them. Standards for buses were also raised to improve users’ experience, with features such as air conditioning, Wi-Fi, USB ports, and low entrance floors, among others. The new bidding process and higher standards constituted the first step in a broader shift toward a new system that was renamed Red Metropolitana de Movilidad (Red). Besides designing a new tendering process, the new administration took steps toward the declared goals of the new transport system. Since many buses were close to the end of their expected lifetime (at least 1,000,000 km and/or 12 years) and one of the contracts had ended (Alsacia’s contract), the MTT sought to ensure the continuity of public transport services by introducing 411 new e-buses (all made in China; see chapter 5 for details). 29 Sustainable mobility context Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report National commitments to sustainable mobility In 2016, 35 percent of Chile’s final energy consumption came from the transport sector, of which 98 percent corresponded to petroleum products. Transportation is therefore responsible for about 20 percent of the country’s total GHG emissions (Ministry of Energy, 2018). In this context, Chile has made various commitments to mitigate and adapt to climate change. Nationally Determined Contributions (NDC) targets The Paris Agreement seeks to redirect the global development trajectory on a course toward sustainable development, aiming at limiting warming to 1.5°–2° Celsius above preindustrial levels (United Nations, 2019). This historic agreement involved 196 parties, which settled on a long-term goal for adaptation18—to increase their ability to adapt to the adverse impacts of climate change and foster climate resilience and low GHG emissions, in a manner that does not threaten food production (United Nations, 2019). To achieve these objectives, each country committed to specific NDCs (United Nations, 2019). Chile’s unconditional target is a 30 percent reduction in CO2 emissions per gross domestic product (GDP) unit below 2007 levels by the year 2030. Its conditional target (conditional on international financial support in the form of grants) is a 35–45 percent reduction in CO2 emissions intensity per GDP unit below 2007 levels by 2030. Also, the Chilean government included mitigation options that consider, among others, measures related to black carbon mitigation in urban areas and within the energy sector (United Nations, 2015). Table 3-5: Chile’s NDCs and actions specific to the transport sector Unconditional Country Scope Conditional commitments commitments Chile Carbon Dioxide (CO2), Chile is committed to reduce Subject to the grant of international Methane (CH4), its CO2 emissions per GDP monetary fund: Chile is committed to reduce Nitrous Oxide (N2O), until by 30% below their 2007 its CO2 emission per GDP unit by 2030 until Hydrofluorocarbon (HFC) levels by 2030 it reaches a 35% to 45% reduction with and Perfluorocarbon (PFC) respect to the 2007 levels Source: Based on information from The Climate Action Tracker In this context, the Chilean government announced a plan to completely phase out coal by 2040 and aim toward carbon neutrality by 2050. For Chile to able to absorb as much CO2 as it generates, the focuses first on afforestation in the country, followed by e-mobility, the best treatment of waste, the enhancement of renewable energies, and demand for emission reductions in sectors such as mining (The Climate Action Tracker, 2019). As of 2019, considering the latest national policy (like the National Electromobility Strategy and the retirement of coal-fired power plants), estimates suggested that Chile would exceed its 2020 pledge, and meet its unconditional and conditional NDC Paris Agreement targets with the implementation of these policies (The Climate Action Tracker, 2019). Chile has positioned itself in the international arena as a country that seeks to support strong climate action (United Nations, 2015). In recent years, this has been confirmed by a portfolio of Nationally Appropriate Mitigation Actions (NAMAs), and the implementation of an unprecedented carbon tax, which raised $5 per tonne of CO2 produced by power plants. Other mitigation tools include the first tax on CO2 emissions from fixed sources, implemented in 2014. Specifically, a tax both on global contaminant emissions (CO2) and local contaminant emissions (sulfur oxide [SOx], NOx, PM) was introduced. In addition, a tax on new cars was imposed based on urban performance19 and NOx emissions. All this is encompassed under Law 20,780, enacted on December 28, 2014. 18 Adaptation is an “adjustment in natural or human systems in response to actual or expected climatic stimuli or their effects, which moder- ates harm or exploits beneficial opportunities” (IPCC, 2001). 19 Fuel economy (kilometer/liter). 30 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Sustainable mobility context National Electromobility Strategy In 2017, the transport sector accounted for 36 percent of total final energy consumption in Chile, second to industry (CNE and Ministry of Energy, 2019). In the same year, Chile published its e-mobility strategy. This initiative was the result of a shared public and private effort and seeks to contribute to the mitigation of greenhouse gases, improving both the mobility and quality of life of Chileans. The National Electromobility Strategy outlines the actions that Chile must take in the short and medium term to ensure that 40 percent of private vehicles and 100 percent of urban public transport buses will be electric by 2050. In particular, the action plan is divided into strategic axes that include development of policy and regulation, prioritizing public transport, and supporting the initial uptake of e-mobility (The Climate Action Tracker, 2019; Ministry of Energy, MTT, and MMA, 2017). The implementation of this strategy could lead to an emissions reduction of between 2.1 and 4.6 MtCO2e/year by 2030, which is equivalent to a reduction of between 2 percent and 4 percent with respect to Chile’s emissions in the year 2018 (Ministry of Energy, MTT, and MMA, 2017; The Climate Action Tracker, 2019). The new administration has sought to push forward these goals, declaring that it will work to ensure that 100 percent of public transport vehicles are electric by 2040 (Ministry of Energy, 2019) and 60 percent of private vehicles electric by 2050.20 Figure 3-13: E-mobility targets for 2050 150 10 times 100% 60% Public electric more electric vehicles of public transport of private vehicles charging stations with respect to 2017 is electric is electric for the end of 2019 (2,340 in total) 2020 2030 2040 2050 2019 2022 Source: Ministry of Energy, 2019 Pollution Prevention and Decontamination Plan for the Metropolitan Region of Santiago Worried about the level of local pollution in the Metropolitan Region, Santiago’s authorities defined an environmental plan and its goals: the Pollution Prevention and Decontamination Plan for the Metropolitan Region (PPDA by its Spanish initials). The general objective of the plan is to protect the health of citizens in the region, especially children, the elderly, and those suffering from respiratory diseases (MMA, 2017). The PPDA came into operation in November 2017 and features a series of measures to mitigate the main pollutants identified in Santiago. These include standards for emissions from bus engines (MMA, 2017). The PPDA has led to the following policies (World Bank, 2019): ▸ Greater emphasis on emissions controls through technological upgrades (including restrictions on old vehicles) ▸ The creation of low-emissions zones ▸ Incentives to purchase hybrid and electric vehicles 20 Estrategia Climática de Largo Plazo de Chile (Palma Behnke et al., 2019). 31 Sustainable mobility context Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report To best support energy efficiency standards, it is recommended that the Ministry of Energy, together with the MTT and MMA, promote the establishment of a suitable regulatory framework (MMA, 2017). The MMA’s National Air Quality Information System (SINCA) aims to provide timely and reliable information regarding air quality throughout the country, seeking to gradually improve knowledge, surveillance, and management of air quality. The system includes 13 monitoring stations (one of them private) in the Metropolitan Region. The stations gather information on PM2.5, PM10, sulfur dioxide (SO2), nitrogen dioxide (NO2), CO, and ozone (O3) emissions, most of them in real time. The information from the stations is used to establish, for example, critical periods of high environmental contamination. The Superintendence of the Environment is the institution that oversees compliance with air quality and emission standards. National Climate Change Plan 2017-2022 The National Climate Change Plan 2017–22 aims to support Chile in fulfilling its international commitments to the United Nations Framework Convention on Climate Change (UNFCCC). In addition, the plan has objectives of adaptation, mitigation, means of implementation, and climate change management at the regional and municipal levels. These goals are shown in table 3-6. Table 3-6: Objectives of adaptation, mitigation, means of implementation, and climate change management at regional and municipal levels Climate change management at Adaptation Mitigation Means of implementation the regional and municipality level Strengthen Chile's ability to Create enabling conditions Develop the enabling conditions Develop the institutional adapt to climate change by: for the implementation necessary for the implementation and operational bases and and monitoring of Chile’s of actions to mitigate and adapt the necessary capacities to ▸ Deepening knowledge of greenhouse gas (GHG) to climate change at the national advance the management climate change impacts and emissions reduction and subnational level, with a focus of climate change across the the country's vulnerability commitments, which on the following: nation and its subregions, across subregions. contribute to the sustainable incorporating all segments ▸ Institutional and legal ▸ Taking steps to mitigate development of the country framework, of society. negative effects while and to low-carbon-emissions promoting economic growth. ▸ Technology transfer, and social development, ensuring environmental ▸ Capacity building and technical assistance, sustainability, and conserving the natural and ▸ Financing cultural heritage. ▸ Negotiation international. Source: National Climate Change Plan, 2017-22 This plan outlines 30 lines of action, including in the transport sector. Here, the MTT is committed to concrete planning measures to improve mobility within cities. Recommendations include dedicated bus lanes, fleet renewal, and incentives for the integration of clean technologies in buses. The Energy Route 2018-22 The Energy Route seeks to define Chile’s energy priorities and is based on comprehensive dialogue with representatives of the public sector and civil society. 21It aims to be a tool for monitoring progress toward specific energy objectives across the coming years. In particular, this document contains 10 national commitments for the period 2018–22. The main thrust of this agenda is low-emissions, energy-efficient transport. Key commitments include: ▸ Increase the number of electric vehicles that circulate in the country by a factor of at least 10. ▸ Start the process of decarbonizing the energy mix by scheduling the withdrawal or reconversion of coal-fired power plants, and the introduction of specific e-mobility measures. ▸ Train 6,000 operators, technicians, and professionals in the management and sustainable use of energy. 21 Including of academy, nongovernmental organizations, environmental groups, neighborhood associations, unions, companies, and indige- nous communities. 32 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Sustainable mobility context Environmental impact of e-mobility There is a range of different methodologies, tools, and software used to estimate emissions related to road transport. The first group focuses on pollutants related to transport, analyzing their evolution over time or the impact of specific policies (e-buses, congestion fees, etc.). Other methodologies explicitly include cost as a variable in the analysis. In this second group, marginal abatement cost (MAC) analysis provides a framework within which to guide investment decisions, identifying the levels of abatement possible and at what level of investment. A key component of MAC analysis is the cost of each intervention, in terms of both capital and ongoing operational and maintenance costs. Several emissions models are based on the GREET (Greenhouse gases, Regulated Emissions, and Energy use in Transportation) model, a comprehensive life-cycle model created and updated by the Argonne National Laboratory under the U.S. Department of Energy (Swedish Electromobility Centre, 2019). MODEM is the name of the model used to estimate emissions related to transport systems in Santiago. (For more on MAC and GREET, see Appendix B.). MODEM: Emissions model for Santiago The emissions model used in Chile, MODEM, estimates atmospheric emissions from mobile sources. To estimate emissions, MODEM uses information on vehicle flows from transport modeling (ESTRAUS,22 in the case of Santiago), vehicle flow profiles, and emissions factors, which generally indicate unit mass emissions (e.g., grams per kilometer traveled per vehicle). MODEM includes methodologies for estimating emissions for different types of discharges: exhaust pipe emissions, brake and tire wear emissions, evaporative emissions, and resuspended dust emissions. It is programmed to estimate emissions for every link of the selected network for each vehicle type and technology category. To carry out these calculations, different emission factors are used for each type of vehicle and each contaminant (PM, persistent toxic substances [PTS], CO, NOX, hydrocarbon [HC], SOX, CO2, nitrous oxide [N2O], ammonia [NH3], and methane [CH4]), based on fuel consumption factors. Since the estimation of emissions is based on emission factors for each vehicle category and type of pollutant, it is necessary to update the characterization of vehicle flows to carry out this task. Inputs MODEM works directly with the inputs and outputs produced by the four-stage transport model ESTRAUS. The model works using a network that represents roads in terms of links, and intersections in terms of nodes (not all the roads of the city, but at least all those necessary to have a good representation of the situation). Thus, it uses geographic information (nodes and links), link features (length, free flow time, capacity, fixed flow for each type of vehicle, etc.), and results of the simulation for each link in the network (assigned flow, travel time, travel speed). Outputs The results that MODEM generates when the analysis is done by link level are emissions by: ▸ Link and vehicle category per year ▸ Municipality and vehicle category per year ▸ Vehicle category per year ▸ Municipality and technology category per year ▸ “Resuspended dust” by link for each pollutant considered Table 3-7 describes the different levels of aggregation available for MODEM results. 22 Supply-Demand equilibrium model for multimodal urban transport networks with multiple user classes. 33 Sustainable mobility context Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Table 3-7: MODEM results Aggregation level Description Geographic ▸ Results by link ▸ Results by municipality and Greater Santiago Temporary ▸ Results per hour and weekday ▸ Results per year Pollutant ▸ Four regulated gases (CO, HC, NOx, SO2) ▸ 4 unregulated gases (N2O, NH3, CH4, CO2) ▸ Particulate matter (PM2.5, PM10) Vehicle category ▸ 21 defined categories + additional: buses (6 types), trucks (3 types), passenger vehicles (6 types), commercial vehicles (4 types), motorcycles (2 types), and additional Activity variables ▸ Fuel consumption ▸ Traffic volume ▸ Vehicle flows ▸ Average speed Emission type ▸ Hot emissions ▸ Cold start emissions ▸ Evaporative emissions (hot soak, running losses, diurnal) Source: Fieldwork conducted for the present study in 2019. The most important element in the methodology for calculating emissions is the emissions factor. This indicates the volume of pollutants emitted per unit of distance traveled, generally expressed in grams/kilometer. There are different emissions factors for different vehicle categories, generally due to the technological differences associated with each one, such as the type of fuel used, the existence of emissions control devices, engine capacity, and so forth. The main hypothesis is that the emissions factor depends on the average travel speed of a vehicle, for which MODEM includes a definition of curves depending on the speed.23 The MTT set up a program to monitor bus emissions in the public transport system, and in October 2018 the first annual report on these emissions was prepared by the Secretary of Transport Planning (SECTRA), part of MTT. The report estimates the emissions of pollutants most harmful to the health and well-being of human beings (PM10, PM2.5, NOX, HC, and CO) as well as those most responsible for climate change (CO2). Its estimates were based on Transantiago’s operations in the second half of 2018, when the system had only three e-buses as part of its fleet (functioning as pilots). The DTPM report for 2018, meanwhile, compares estimates of atmospheric emissions in that year with figures for 2012. Table 3-8: Estimated atmospheric annual emissions of buses in Santiago | 2018 vs 2012 PM2.5 Bus x Km/ Year PM10 (Ton) NOX (Ton) CO (Ton) HC (Ton) CC (Ton) CO2 (Ton) (Ton) year 2012 96.7 84.9 4,518.4 1,201.6 227.0 143,470 447,287 432,849,146 2018 73.7 61.5 4,122.6 1,222.8 179.6 142,965 460,786 465,522,277 Var. 2018 vs -23.8% -27.6% -8.8% 1.8% -20.9% -0.4% 3.0% 7.5% 2012 Source: DTPM, 2018 This report models a couple of scenarios using MODEM to develop a preliminary estimate of how the percentage of electric vehicles in the fleet affects emissions. 23 https://www.cec.uchile.cl/~tranvivo/tranvia/tv8/modem.html. 34 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Sustainable mobility context Comparison of methodologies Table 3-9 summarizes the three models described including objectives, inputs, and outputs. Table 3-9: Comparison of emissions models Usage Advantages Disadvantages MAC This methodology allows economic ▸ The main advantage of this ▸ The curves are limited to a single evaluations to support decision methodology is that marginal point in time—they don’t show making in the context of climate abatement cost (MAC) curves variation over a time series. policy, such as: are not restricted to the analysis of CO2 reduction ($/tCO2). Other ▸ A baseline with no CO2 constraint ▸ Evaluating alternatives plans to units can be used, for example, must be defined in order to assess reduce carbon emissions in a cost- the MAC against a determined year to evaluate reduced fossil-fuel efficient way. in the future. consumption (dollars per barrel, ▸ Illustrating the costs associated $/bbl) and then compare this with ▸ This does not permit the with carbon abatement. electricity consumption (dollars representation of path per kilowatt hour, $/kWh). dependencies of the technological ▸ Comparing technologies and their structure. cost-effectiveness in reducing ▸ Gives the total cost necessary to carbon emissions. abate a defined amount of carbon ▸ The methodology behind the emissions. assumptions is not transparent. ▸ Allows the calculation of average ▸ There is no consideration of abatement costs. ancillary benefits, such as the reduction of other greenhouse Source:DTPM, 2018. gases (GHGs), such as CH4 and N2O, as well as air pollutants. GREET ▸ Develops indicators and a ▸ The model was developed in ▸ Results are affected by assumptions methodology for the evaluation of collaboration with the energy about energy efficiencies of fuel environmental sustainability. industry. production activities and emission factors of fuel combustion ▸ Evaluates the energy and emission ▸ Includes provisions for a wide range technologies. benefits of vehicle/fuel systems. of feedstocks, fuels, and vehicles. ▸ GREET is designed to conduct ▸ Extensive databases. ▸ Includes more than 100 fuel stochastic simulations. pathways and 85 vehicle/fuel ▸ Can address GHGs and the systems. ▸ Technological advancement over sustainability of vehicle/fuel time needs to be considered. systems. ▸ Collaboration and interaction are key to success. ▸ Simulates energy use and emissions across a vehicle’s life ▸ Evaluates trade-offs between the cycle, from material recovery to GHG intensity of materials and vehicle disposal. their contribution to efficiency. MODEM ▸ This software outputs the ▸ The software works directly with ▸ Its use is limited to cities where emissions of different pollutants, the outputs of strategic transport transport model networks are including those related to global models frequently used to analyze available. warming (PM, PTS, CO, NOX, HC, projects in Chile (ESTRAUS and SOX, CO2, N2O, NH3, and CH4) Vivaldi). ▸ It requires very detailed information: for example, coordinates of each from mobile sources for different Chilean cities. ▸ To estimate emissions, the link and information about fixed model uses formulas adapted for and assigned flow for each vehicle ▸ MODEM includes methodologies different technologies: Euro III, category. to estimate emissions of different Euro IV, Euro V, etc. types: exhaust pipes, brake and ▸ It does not consider the variable tire wear, evaporative emissions, ▸ Offers emissions results at a very of cost. If a cost-benefit analysis detailed level because it performs is required, external inputs and and resuspended dust. calculations for each modeled link calculations are necessary (the in the analyzed network and for social benefit of less pollution, for each vehicle category. example). Source: Fieldwork conducted for the present study in 2019 35 Sustainable mobility context Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Other potential impacts of e-mobility In addition to the beneficial effects that e-buses have on emissions, the introduction of these particular buses has increased overall standards by introducing technological upgrades such as Wi-Fi, air conditioning, and more comfortable seats. A survey of bus users undertaken for this report suggests that most are willing to wait longer for an e-bus than a regular (diesel) bus. The factors behind this preference include technological improvements, less noise, and the fact that the buses have no emissions. This latest point is important; previous studies undertaken by the DTPM indicate that the fact that e-buses do not pollute is valued by only young people (under 30 years old). In modeling terms, this extra willingness to wait could be represented through a different modal constant, higher for e-buses than regular buses. Alternatively, in some types of models, this preference is represented as attractiveness, which is basically a reduction in the cost function the user perceives (normally, travel time + waiting time + access time). Such factors will need to be input into an updated version of the Strategic Model of Santiago (ESTRAUS), used by public bodies to evaluate most of the projects or policies in the city. A modal shift from private vehicles to public transport would have the extra benefits of a reduction in the number of private vehicles in circulation and their associated emissions. In turn, it could increase the benefits of introducing e-buses. It is also important to consider the environmental impact of the production of electricity: introducing more electric vehicles does not have as dramatic an effect on curtailing emissions if electricity comes from fossil-fuel combustion. A generation source with less environmental impact is required in order to reduce GHGs. Another benefit to be considered in the evaluation of these initiatives is the reduction of noise pollution. A study developed recently by the MMA for a newspaper report indicates that an e-bus generates between 25 and 70 percent less noise than a bus with an internal combustion engine. The MMA is continuing its study of this issue, to better understand the impact on noise pollution an e-fleet could have in Santiago. E-mobility could also have some negative impact on the environment, if battery disposal is not carefully planned. Recycling batteries is essential to ensure a full zero-emissions life cycle. Measuring the current environmental impact of e-buses Agencia SE24 is a nongovernmental organization that promotes, reinforces, and consolidates the efficient and sustainable use of energy. It works to estimate the environmental benefits of various e-mobility projects, and grants certificates for the reduction of emissions. Figure 3-14 shows a certificate granted to Metbus and Enel X for a reduction in GHGs. As noted in the certificate, the first 100 BYD e-buses operated by Metbus, traveling a total of 3,658,388 km during nearly 10 months of operation, corresponded to a reduction in 2,564.1 tCO2eq. For diesel buses, this was estimated using total distance, diesel’s average street performance, horsepower, and diesel’s emissions factor. For e-buses, estimations used total distance, average street performance, and electricity’s emissions factor (averaged over the 10 months studied). 24 https://www.agenciase.org/ 36 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Sustainable mobility context Figure 3-14: Greenhouse gases reduction certificate—Agencia SE Certificado de Validación Reducción de Emisiones de Gases de Efecto Invernadero La Agencia de Sostenibilidad Energética valida que la empresa METBUS ha contribuido a la protección del medioambiente, mediante la disminución de gases de efecto invernadero emitidos al ambiente, entre los meses de diciembre del año 2018 y de septiembre del año 2019, gracias a la movilización de pasajeros a través de buses eléctricos, proporcionados por la empresa ENEL X Chile SpA. 100 3.658.388 Número de buses km totales eléctricos tCO2eq (*) Barriles de petróleo Número de casas Número de árboles lámparas incandescentes no consumidos (**) consumiendo electricidad plantados y captando cambiadas a LEDs. (**) durante un año (**) CO2 por 10 años (**) Emisiones globales evitadas 2.564,1 5.936 447 42.398 97.394 (*) Cálculos basados en metodología indicada en Anexo 1 (**) Fuente de información equivalencias: https://www.epa.gov/energy/greenhouse-gas-equivalencies-calculator ID documento: 00047 Correo de contacto: info@agenciaSE.org Source: Agencia SE, 2019 Modeling the emissions of various fleet renewal scenarios The emissions reduced by the adoption of Red standard buses (diesel Euro VI and e-buses) will be modeled and various scenarios will be contrasted below. The contaminants compared are the following: ▸ CO2 ▸ NOx ▸ PM2.5 ▸ CO ▸ PM10 ▸ HC Emissions for 2012 and 2018 were estimated using the MODEM model, as described in the DTPM report for 2018.25 The 2018 simulations do not consider e-buses or Euro VI buses. 25 Informe de Gestion 2018. 37 Sustainable mobility context Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Table 3-10: Projected changes in emissions, 2012–18 CO2 PM2.5 PM10 NOx CO HC Year Scenario (tonne) (tonne) (tonne) (tonne) (tonne) (tonne) 2012 - 447,287 84.9 96.7 4,518 1,202 227 2018 - 460,786 61.5 73.7 4,123 1,223 180 Source: Based on information from DTPM (2018). As part of this study, we have conducted MODEM simulations of three fleet renewal scenarios to estimate emissions, as shown in table 3-11. Table 3-11: Three fleet renewal scenarios Year Scenario Renewal of fleet project ▸ 409 diesel Euro VI (6% of the 2018 fleet) 2019 Current situation ▸ 411 e-buses (6% of the 2018 fleet) 2030 Without standard Red buses Without electric or diesel euro VI buses ▸ 50% of the fleet are diesel Euro VI buses 2030 Red standard projection ▸ 50% of the fleet are e-buses Source:Fieldwork conducted for the present study in 2019 The year 2030 models consider planned land use and transport projects. Some assumptions reflect vehicles’ hourly and monthly profiles in 2020. The results for the modeled years are shown in table 3-12. Table 3-12: Projected changes in emissions, 2012–30 CO2 PM2.5 PM10 NOx CO HC Year Scenario (tonne) (tonne) (tonne) (tonne) (tonne) (tonne) 2012 - 447,287 84.9 96.7 4,518 1,202 227 2018 No fleet renewal a 460,786 61.5 73.7 4,123 1,223 180 2019 Current situation of fleet renewal 459,374 59.4 71.9 3,922 1,179 171 2030 No fleet renewal projection 460,443 61.7 74.3 4,097 1,216 177 2030 Fleet renewal projection (50/50) 391,390 19.3 32.5 444 354 18 Source: Fieldwork conducted for the present study in 2019 Note: aThis scenario represents the real situation before the arrival of the 411 e-buses and 490 diesel Euro VI buses Figure 3-15 shows the results obtained for particulate matter. Figure 3-15 shows that there is a decrease in PM10 and PM2.5 emissions from 2012 to the 2018/19 scenarios, due to successive technological improvements in the Transantiago fleet. In addition, there is a slight reduction in the particulate material (measured in tonnes per year) emitted by the system between the 2019 scenario—with the new Red standard buses—in comparison with the scenario without these new buses. However, the main difference is observed when the different 2030 scenarios are compared. 38 Emission of PM 10 and PM 2.5 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Sustainable mobility context 120 Figure 3-15: Emissions of PM10 and PM2.5 100 80 Tonnes/year 60 40 20 0 2012 2019 2030 PM10 - No fleet renewal PM 2.5 - No fleet renewal PM10 - Fleet renewal scenarios PM 2.5 - Fleet renewal scenarios Source: World Bank, 2019 The model results show that the 2030 scenario with the Red standard (electric and Euro VI) buses achieves a 56 percent reduction in PM10 emissions compared to the 2030 scenario without them. The PM2.5 decrease is even more significant, going from 61.7 tonnes/year to 19.3 tonnes/year in the scenario with the Red standard, which means a reduction of almost 70 percent. The rest of the pollutants studied are plotted in figure 3-16. Figure 3-16: Emissions of CO2, NOX, HC, and CO Emission of NOx Emission of CO2 5,000 480,000 4,500 460,000 4,000 3,500 440,000 Tonnes/year Tonnes/year 3.000 420,000 2,500 400,000 2.000 1,500 380,000 1.000 360,000 500 0 340,000 2012 2019 2030 2012 2019 2030 NOx - No fleet renewal NOx - Fleet renewal scenarios CO2 - No fleet renewal CO2 - Fleet renewal scenarios Emission of HC Emission of CO 250 1,400 1,200 200 1,000 Tonnes/year Tonnes/year 150 800 600 100 400 50 200 0 0 2012 2019 2030 2012 2019 2030 HC - No fleet renewal HC - Fleet renewal scenarios CO - No fleet renewal CO - Fleet renewal scenarios Source: World Bank, 2019 39 Sustainable mobility context Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Figure 3-16 shows that the technological change significantly reduces CO2, NOx, HC, and CO emissions. When comparing the different 2030 scenarios, the most notable decreases are for the NOx and HC emissions, with a reduction of approximately 90 percent. CO2 shows a reduction of 15 percent. It is important to mention that these simulations are based on two important assumptions: 1 Chile’s electricity generation mix was assumed constant. 2 E-buses might have less capacity than the buses being replaced, so if a significant proportion of buses are replaced by electric ones, an increase in the number of buses could be necessary to cover the demand. For these calculations, no fleet volume adjustments have been considered. The first assumption results in a conservative estimate of the pollutants reduced. Today, Chile’s electricity generation mix features significant advances in decarbonization and increases in the use of nonconventional renewable energy. However, it was decided to use the same energy matrix as the year 2019 for the 2030 projections, which could underestimate the reduction of pollutants produced by e-buses. The second assumption results in an optimistic estimate of the pollutants reduced. Experience in Chile has shown that e-buses have less capacity than traditional buses. Therefore, a large-scale adoption of this technology should consider an upward adjustment of the fleet. Hence, the assumption that the bus fleet will be the same size in the two 2030 scenarios could overestimate the reduction of pollutants produced by e-buses. Despite the above, there is no certainty that this difference in capacity will not be settled over the years, as a result of better technology. Finally, the beneficial effects that fleet renewal can have on emissions depends on the buses’ technology in the base situation. If the existing fleet is on average “clean,” the extra benefit from introducing electric vehicles will be less significant than if the initial fleet is old, although the change can be relevant in very polluted cities, such as Santiago. 40 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Sustainable mobility context 41 E-mobility bussiness model Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report 42 04 E-mobility business model E-mobility bussiness model Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Timeline of the introduction of e-buses in Santiago The process of testing, promoting, and adopting e-buses in Chile has had multiple actors, stages, and actions. 2011 One of the first efforts to boost the development of e-mobility in Chile First electric fast charging point was undertaken by Chilectra26 an electricity distribution company. In 2011, constructed by Chilectra Chilectra opened the first Latin American fast-charging point at a Petrobras27 service station located in the eastern part of the city (Emol, 2011). The project was developed by Chilectra, in partnership with Marubeni28 and Petrobras. Chilectra was in charge of preparing the infrastructure and adjusting the electricity distribution network, while Marubeni delivered the supply equipment, which was imported from France and had a power output of 50 kilowatts (kW). Finally, Petrobras provided space at its service station for the installation of the charging facility and operated the service. 2013 In 2013, the first e-bus pilot study in Latin America began operating in First e-bus pilot in Latin America Santiago. It was promoted by Chilectra as part of the Smart-city Santiago started its operation in Santiago in a Plan and used a BYD29 bus on a route agreed with Universidad Mayor. The bus partnership with BYD and Chilectra route was around 18 km long, going from the Escuela Militar metro station to the university campus (Campus Huechuraba—Universidad Mayor), and then returning to the same metro station (Ahumada, 2013). The BYD K9 bus was 12 meters long and had an autonomous range of up to 250 km. By not having an internal combustion engine, it reduced CO2 emissions and generated diesel savings of more than 2,000 liters per month (Ahumada, 2013). One of the most significant lessons of this pilot study, according to the then innovation manager of Chilectra, was the need to adapt the buses to the characteristics and standards of the streets of the city of Santiago and the system´s existing services, which are detailed further in this chapter. UITP30 and C403 1 analyzed measurements related to this type of bus. The C40 study, entitled “Low Carbon Technologies Can Transform Latin America’s Bus Fleets,” was presented in April 2013. The C40 team measured emissions and evaluated the economic and technological performance of hybrid and electric buses in four cities (Bogotá, Río de Janeiro, São Paulo, and Santiago) (C40 Cities, 2013). 26 Chilectra was owned by the Italian company Enel. It was renamed Enel 29 BYD is a Chinese manufacturer of automobiles, buses, battery-powered bicy- Distribución Chile S.A. in 2016 as part of the strategic renewal of Enel in Chile. cles, forklifts, rechargeable batteries, and trucks. 27 Petrobras is a Brazilian corporation in the petroleum industry. 30 UITP is the International Association of Public Transport. 28 Marubeni is a representative of automotive brands in Chile. In 2011, Marubeni 31 C40 is a network of large cities committed to addressing climate change. was a Nissan distributor. Today, Marubeni represents Citroën and Volkswagen. 44 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report E-mobility business model The measurements were carried out under normal traffic conditions32 in Santiago, Chile, and had the support of the bus operator Subus, one of Transantiago’s bus operating companies. The results showed a 73 percent reduction in the energy consumption of e-buses compared with traditional diesel buses. The document concluded that e-buses would be economically competitive in the long term, mainly because their operating costs are lower than those of traditional diesel buses, with key benefits for the financial and regulatory system (C40 Cities, 2013). 2014 In 2014, Chilectra worked together with the Mario Molina Research and Development of studies related to the Development Center to prepare a technical study named “Opportunities for implementation of e-mobility in the the Development of Electric Mobility in the City of Santiago: Proposal for public transport system Public Transportation” (Centro Mario Molina, 2014). The report included an evaluation of the implementation costs of various electrical technologies, and compared these to diesel technology. Trolleybuses and buses with batteries were considered to be electrical technologies. From the “electrical scenario,” the benefits in terms of a reduction in the total fuel and energy consumption of Santiago’s public transport system were estimated, together with the reduction of local pollutant emissions. The report also included an analysis of the feasibility of integrating e-mobility for the Transantiago´s services (Centro Mario Molina, 2014). The analysis aimed to promote the transformation of the Transantiago fleet to include e-buses, considering that the contracts of Business Units 6 and 7 were due to terminate in 2015. At that time, it was expected that the renewal of the fleet would occur in 2018 in relation to a new set of operating contracts (Centro Mario Molina, 2014). This study concluded that by 2022, 35 percent of Santiago’s public transport fleet—around 2,300 buses—could be transformed into e-buses (battery buses or trolleybuses), which would result in a 22 percent decrease in the GHG emissions of the public transport system (Centro Mario Molina, 2014). 2016 In 2016, Chilectra, together with the Municipality of Santiago, promoted a new Second BYD e-bus pilot started e-bus pilot study, which offered a free service through the historic city center. operating in the downtown of Santiago This initiative was supported by BYD, the Ministry of Environment, and the financed by Enel (previously Chilectra) MTT. The chosen bus model was again the BYD K9 bus, which included free Wi-Fi and cell phone chargers at some seats. During the bus operation period, energy cost savings of 70 percent were achieved compared to a diesel buses (Municipalidad de Santiago, 2016). In parallel with the pilot project in the Municipality of Santiago, Chilectra (which was renamed Enel Distribución in October 2016) continued studying the feasibility of a bus fleet with electricity as its energy source. This effort had the objective of incorporating 2,300 e-buses into the tendering process that was planned for the year 2018 (Centro Mario Molina, 2014). Enel delivered a technical report to the authorities connected to Santiago’s public transport system. The report contained proposals covering economic, financial, technological, operational, and regulatory aspects of the plan, with the aim of introducing e-buses as part of Transantiago. 32 Tests were carried out under normal traffic conditions at maximum loading capacity using simulated weights and considered criteria such as normal operating conditions for public transport services, topography, and maximum coverage of the main urban area. 45 E-mobility bussiness model Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Mid 2017 In May 2017, the minister of transportation and telecommunications Metbus started operating the announced that two e-buses would start operating as part of the Metbus fleet first 2 e-buses operating in the 516 in the second half of the year. Implemented in November of that year, this Transantiago service by Metbus, in a was the first e-bus pilot scheme to include a regular Transantiago service. The partnership with BYD and Enel route chosen was the 516, which runs from Maipú (in the west of the city) to Peñalolén (in the east of the city), a distance of around 30 km that included a 10 percent slope when passing through the Avenida Grecia corridor. According to interviews with the operator company, the objective was to test this bus on a difficult route (long and sloping) to find evidence that this technology would also work on other bus routes in Santiago. This milestone was achieved through an agreement between the private companies Enel, Metbus, and BYD, and the MTT. The objective of this pilot scheme was to test the autonomy, maintenance, charging processes, and availability of buses, among other technical considerations. The role of Enel was to provide Metbus with the financing for the buses, the charging infrastructure (four charging points, two in Maipú and two in Peñalolén), and the energy to operate them—all through a leasing scheme. BYD supplied the two buses, and in addition, agreed to take care of maintenance and ensure the availability of the buses every day. The buses were the 12-meter-long BYD K9 models, which had a range of 250 km, a full charge time of three to four hours, with Mode 3 charging at 80 kW of AC33 power and international Type 2 connectors, Wi-Fi, air conditioning, padded seats, and USB chargers. Figure 4-1: Yutong ZK 6128 model used in Santiago Source: MTT, 2019 Late 2017 In December 2017, a new pilot was launched by a consortium formed by Buses Vule started operating a new Engie,34 Yutong,35 and Buses Vule,36 this time with a Yutong ZK 6128 bus on the e-bus on the 315e Transantiago route, in 315e route. partnership with Engie and Yutong This third e-bus serving a regular Transantiago route (following the two BYD buses operated by Metbus) was 12 meters long with Wi-Fi, USB ports, air conditioning, and an autonomous range of roughly 320 km (which could vary 33 Alternating current. 35 Yutong is a Chinese manufacturer of commercial vehicles, especially e-buses. In 34 Engie is a French multinational company in the field of energy and is present 2016, it was the largest bus manufacturer in the world by sales volume. in more than 70 countries. In Chile, Engie participates in electricity generation 36 Buses Vule is a Chilean public transport company that operates Transantiago and transmission. services (Business Unit 3). 46 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report E-mobility business model due to the electricity consumed by air conditioning in different seasons). Based on Mode 4 charging at 75–150 kW of DC37 power and Chinese GB connectors (Guobiao standard), the service went from the northern part of Santiago to the historical center, covering a circuit of 23 km. The agreement between Engie, Buses Vule, and Yutong was similar to the one between Enel, Metbus, and BYD. Engie was responsible for financing the Yutong bus, and providing the charging infrastructure, electricity, and other associated services. Again, all these elements were supplied under a financial leasing scheme to Buses Vule, which operated the service. In this case, unlike with Metbus and BYD, Buses Vule was in charge of the maintenance, while Yutong only provided only the bus and the spare electronic parts, as well as guarantee schemes. 2018 In parallel with these initiatives, in 2017, the tendering process for the Cancellation of previous tender process, operation of the public transport system in Santiago was put into place. This ending of Alsacia’s contract and process required negotiations between bus manufacturers, energy companies, introduction of 100 new BYD e-buses for and bus operators, as the tender process required that each business unit have the operation of Metbus services a minimum of 15 e-buses. In March 2018, the tendering process was canceled. One contract (Alsacia’s) was not renewed. Nevertheless, the progress already achieved in the negotiations facilitated the potential implementation of an e-bus fleet. This, together with the successful operational performance results of the pilot schemes, drove the different stakeholders to increase the scale of their plans with a greater number of e-buses. Soon the strategic alliance between Enel and Metbus was consolidated and the model was replicated through the purchase of 100 new electric BYD buses, which arrived in Chile in November 2018, and began their operation on December 15, 2018. These buses started operating along routes 507c, 516, and 519 throughout the Grecia corridor. This process was incentivized by the MTT, which, through a “fleet expansion payment” (Pago por aumento de Flota),38 supported the new investment. Figure 4-2: The first 100 e-buses operated by Metbus Source: World Bank, 2019 The investment made by Enel exceeded $30 million and included the construction of two depots for electric charging, one in Peñalolén (with 63 charging points) and another in Maipú (with 37 charging points). 37 Direct current. 38 An existing mechanism in the bidding contracts, which will be defined in detail in the section titled “Key Elements of the Public Transport System Contracts.” 47 E-mobility bussiness model Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report The Peñalolén bus depot has solar panels that generate energy used for bus charging and depot operation. Charge management software decides the periods during which the buses are charged, so as to avoid the peak periods of electricity demand and thus decrease energy costs. Early 2019 Months later, in January 2019, the authorities announced the addition of 100 STP and Buses Vule operate 100 new new e-buses to the system, this time manufactured by Yutong. This was to Yutong e-buses, financed by Engie cover the gap in services associated with the end of Alsacia’s contract. The operation of these e-buses was assigned to Buses Vule and STP, with 75 and 25 buses respectively. The mechanism that allowed this acquisition is similar to that already described for the pilot scheme with the Yutong bus. The 75 buses operated by Buses Vule were assigned to the routes I09 and I09e going from Rinconada de Maipú to Santa Rosa. The buses arrived in January 2019, but only started operating in April as there was insufficient installed power. This fleet operated from the e-depot in Rinconada, constructed by Engie Energía Chile, with a capacity of 6 MW39 the biggest depot of its kind in Latin America. Figure 4-3: E-bus routes N LAS CONDES PUDAHUEL MACUL MAIPÚ CERRILLOS PADRE HURTADO Electric services 213e PUENTE ALTO I09 506 507 510 516 0 2 4 6 8 519 Kilometers Sources: Fieldwork conducted for the present study in 2019. 39 Installed capacity, not necessarily the power actually used. 48 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report E-mobility business model 2019 The latest e-fleet to join the system arrived in October 2019 (MTT, 2019). This 183 new e-buses added to the system fleet of 183 new buses was the result of an agreement between Enel, Metbus, in a partnership between Metbus, Enel and BYD, and operates on the Avenida Grecia corridor, which became the and BYD first 100 percent e-bus corridor in Latin America. The financing, acquisition, operation, and maintenance of these buses followed the same scheme previously used by these three firms. The scheme included the construction of the charging infrastructure in three new depots. This was financed directly by the bus operator, and not through leasing as before. Figure 4-4: Metbus e-depot in Peñalolén Source: World Bank, 2019 During this period, studies, pilot schemes, and agreements between different actors were developed, resulting in significant progress. So, over a period of 10 years from the start of the system as we know it, the e-bus fleet operating in Santiago grew to 386 e-buses as of October 2019, with 25 extra e-buses expected during 2020. This last partnership between RedBus and the bus manufacturer King Long will result in the system reaching 411 e-buses by 2020. Santiago’s e-mobility business bus services (business units) corresponding to the set of routes won in the respective bidding process. Red has an model electronic payment system that uses a smart card (bip!), and revenues are collected and managed by the regulator. Key elements of the public transport system contracts The original length of the concessions’ contracts was 10 years, with the first operations in 2007. This has To understand the context in which the e-buses have been important in the context of the implementation been introduced in Santiago, it is relevant to consider of e-mobility in Santiago, as the concessions of many the fundamentals of the public transport system. Red business units came to an end during the implementation (previously known as Transantiago) works on a concession period. Nevertheless, the contracts include clauses to contract between the state and each bus operator extend the concession periods, which some operators have company, to regulate the operation of a package of bus applied. Table 4-1 presents the end-of-contract dates for services. Like most public transport systems around the each operator company, including the extension (where world, Red receives a significant subsidy from the state applicable). How these contracts’ expiration offers an (around 40 percent of the system’s cost, according to opportunity for other operators to include e-buses in their Informe de Gestión 2018) in order to cover student fares fleet will be explored later in this report. and other gaps between the system’s costs and users’ payments (including, for example, fare evasion losses). Currently, there are six bus operator companies40 —Metbus, Buses Vule, STP, RedBus, Subus, and Express— each of them assigned to the operation of a group of 40 Previously seven, but one of the companies’ contracts ended in 2019 (Alsacia). 49 E-mobility bussiness model Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Table 4-1: End of the contract period and the extension period for each years of operation; once this has been reached, there is an bus operator company imminent need to renew the fleet. Bus operator End of the End of the A contract set up between the operators and the state companies contract period extension period ensures financial stability over time, working as a demand- supply equilibrium. This is achieved through an updating Metbus October 2018 February 2020 mechanism in which the payment the operators receive Express June 2019 June 2020 from the system is adjusted if any of the concession’s conditions that affect the financial equilibrium of the Subus August 2020 — contract change significantly. This characteristic of the STP May 2018 May 2021 contract specifies the situations when the operator could negotiate an increase (or decrease) in its payment. RedBus May 2018 May 2021 Particularly, this contract characteristic can be applied to Buses Vule November 2021 — the introduction of the new fleet as follows: Source: Derived from DTPM ▸ If the new buses correspond to a fleet increase (that is, more than a 3 percent increase over the previous Existing remuneration scheme of private operators operative fleet) needed to cover an increase in the The remuneration scheme for bus operators is established operational kilometers of the business unit (for by the following equation: example, due to new routes to operate), the state will cover the difference between the cost of the new monthly payment=PPT*transactions+PK*kilometers- technology and the old buses, through an update of the discounts monthly payment to the bus operator company. ▸ If the new fleet is acquired because of the renewal Where: of the existing bus fleet but does not modify the PPT=payment per transported passenger operational kilometers of the business unit, the state will not make any investment and the payment to the PK=payment per kilometer company will remain the same. Since the 2012 contract reform, approximately 70 percent This is an important element to have in mind, as the first of bus operator revenues are from the initial payment per significant fleet of e-buses (200 buses) was introduced transported passenger (or ticket validations), while the to the operators’ fleets as an increase in operational other 30 percent is obtained from the payment associated kilometers. This means that, for those initial buses, it with the kilometers traveled. An operator may have some was the state who assumed the increase in capital costs of its payment withheld due to noncompliance with associated with the new technology, and not the private operational standards. operators. At the same time, the operators projected lower This is an important modification from previous contracts, operational costs with this technology compared with by which the percentages were almost the opposite their previous diesel buses. Despite this being a significant (previously, an average of 70 percent of revenues were incentive for the private companies, this scenario obtained from the operated kilometers and 30 percent presented itself as an opportunity for both parties as it from monthly ticket validations). This change aims to coincided with the end of Alsacia’s contract, which meant support the transport system in sustainably meeting a huge amount of money spent by the state could now demand by giving some of the responsibility for controlling be directed to cover the extra cost of the renewal with an fare evasion to the bus operators themselves. e-fleet. The details of these costs and negotiations will be discussed later in the report. Even though there is no direct incentive coming from the payment structure, other elements of the new contract Apart from this payment updating mechanism, there are conditions created an enabling environment for the mainly two elements of the current contracts that have introduction of e-buses. acted as incentives for the promotion of e-buses and the introduction of e-mobility in the public transport system There are two main reasons for a private operator company in Santiago. It is important to mention that these elements to buy more buses for its fleet. The first is a change in its were not designed specifically for this process, but were operational plan, whether because of an increase in the part of the contracts beforehand. These are the following: length of routes or a reduction in speeds. The second is when the current fleet’s life cycle is at its end. The life cycle ▸ The operators’ quote for fleet provision is paid directly of a bus fleet is typically at least 1,000,000 km and/or 12 by the state to the company that provided the buses (the investor), as the operator transfers the monthly 41 A mixed company that oversees the financial aspects of the public transport debt to the financial entity (AFT)41 in charge of system, including the collection, management, and distribution of income collecting earnings and managing operators’ payments. between operators. Metro S.A. is currently in charge of its administration and logistics. The AFT subtracts from the payment to the operator 50 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report E-mobility business model the amount corresponding to the leasing contract Table 4-2: Roles and responsibilities of the actors it has with the energy company and pays that sum directly to the energy company. This key characteristic Type Actor Role and responsibilities allowed both Enel and Engie to reduce the risk of their Financing of bus fleet; e-depot investment. Energy construction; charging Enel / Engie Company infrastructure installing; ▸ In addition, the operators and the providers signed energy provider a provision contract, approved by the state, which specifies that no matter what company is operating Investor NEoT Capital Financing of the bus fleet the e-buses, the state guarantees the buses will Fleet provision and adequacy remain within the system at least until the debt is of the bus; charging paid. In this contract, the state agrees to the financial Bus management; preventive, conditions and guarantees continuity of the service. BYD Manufacturer corrective and predictive Thus, the energy companies (or any other investor) maintenance of the e-bus have the assurance that they will be paid as the debt electronics will be transferred to the next operator. This is another Bus Yutong/ Fleet provision and adequacy element of the PPP that reduces the risk of the Manufacturer Kinglonga of the bus investment and ensures the continuity of the business, beyond the current private bus company in charge of Bus operator Metbus Operation the operation. Also, this characteristic worked as an Buses Vule/ Operation; charging incentive to introduce e-buses, as it allowed the buses Bus operator STP/Redbus management; maintenance to be funded in a larger time frame than that left for each operator as part of the system. This was translated Funding of new bus fleet (increase on operational into affordable monthly quotes (the current provision State MTT kilometers); service planning; contracts have a 10–12 year extension). transport regulation This way, the current contracts acted as sufficient Energy land capacity studies; incentives for the introduction of e-buses in the public Ministry of authorizations for electricity transport system of Santiago without the need to change State Energy/SEC- grid modifications; regulation any of their conditions. Other factors that helped the CNE of the compliance of the process to be successful include its timing (at the end e-depots standards of operational contracts and the life cycle of several bus Source: Fieldwork conducted for the present study in 2019. fleets), the negotiations among stakeholders that took part Note: aYutong’s representative in Chile is Gildemeister, and King Long’s is Vivipra. in the process, the short-term promise of a future bidding process, and the purposeful alignment of all actors to responsibilities that each company and the state have in move toward e-mobility. the implementation of the first e-buses in Santiago. Description of the PPP for e-buses The general PPP considers an investor who buys the bus fleet and holds a financial leasing contract with a bus implementation operator. In most of the cases, the energy companies Enel The business model used for the implementation of and Engie played that role, as international financially e-buses in Santiago consists of a public-private partnership strong companies. Even though financing buses is not (PPP) between the state and the private companies the core business of energy companies, they saw this involved. As with any PPP, every actor has different investment as an opportunity to introduce the e-buses motivations and responsibilities that prompt its initial in the market and generate the requirement of charging involvement and further participation in the process. infrastructure and energy. This was the model applied to finance the bus fleet of Metbus, Buses Vule and STP, The first, and key, actor, as most of the interviewees meanwhile RedBus has its own financial solution with an mentioned, is the bus operator company. As described international investor (NEoT Capital). in the timeline, Metbus was the first company to include e-buses in its fleet (285), operating the first e-corridor This leasing contract is based on the monthly payment of in Latin America. It was followed by Buses Vule (76) an amount corresponding to the fleet provision quote, the and STP (25), and finally by RedBus (25). All the PPPs in price of the charging infrastructure, and the sale of energy, which these companies participate are different in terms all provided by the energy company. of the responsibilities and roles each actor has within the partnership. Table 4-2 summarizes the different monthly leasing payment = fleet provision+charging infrastructure+energy42 42 For the last three Metbus e-depots, the charging infrastructure was not part of the equation, but it was paid at the beginning of the leasing contract. 51 E-mobility bussiness model Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report As explained in the previous section, the contracts between the state and the bus operator companies ensure financial stability over time, so when the operator adds buses to its fleet due to an increase in operations (new services or additional kilometers), the state will compensate that extra cost if it represents more than a 3 percent fleet increase. According to the DTPM, in this case the difference between this new technology and a diesel bus corresponds to $1,500 monthly (including all aspects of the leasing, like the e-buses and the charging infrastructure costs). If the acquisition of buses corresponds to renewal of the old fleet, but no operational changes occur, the cost will be entirely assumed by the operators. The first 200 e-buses were added to the system using this updating mechanism, where the state covers the difference in the cost of this new technology by increasing the monthly payment to the operator. This process was guided as a negotiation between the state and the operators, in which Metbus, STP, and Buses Vule would assume the operation of the services previously operated by Alsacia, whose contract ended, and for which they all needed new buses (as Alsacia’s old diesel buses had already completed their lifespan). This meant an increase in their operating kilometers of more than 3 percent added to the fleet, which made the state raise the amount of their monthly payment and assume the capital expenditure (CAPEX) difference between both technologies. In this case, the decrease in the operating expenditure (OPEX) was a benefit for the operator while the increase in CAPEX was covered by the state. These costs savings for the private companies were the result of introducing e-buses with lower OPEX under old contracts whose payment conditions were based on OPEX for diesel technology only. Although it would seem like a very advantageous situation for the private companies, as they would have new buses without assuming any of the extra CAPEX costs and also lower OPEX costs, there was uncertainty regarding how the different processes associated with this new technology would affect their operations. Thus, the negotiation process also considered projected costs for the operators associated with new personnel (both depot and office based), restructuring teams, organizational changes, and trainings, among others. Nevertheless, the operators interviewed for this report mentioned that their estimates, after almost two years of operation of the first e-buses, show that buying and operating the e-fleet by themselves with no economic contribution from the system (without any state subsidy for fleet renewal) could be as economical as a diesel fleet. This is because the decrease in OPEX would compensate for the increase in CAPEX within a period of 10 years. This CAPEX/OPEX equilibrium shows that when designing systems with an entirely electric fleet, the cost should not be higher than for a diesel fleet if the system is designed for the appropriate amount of time (according to the operators’ estimates, the business would be viable within 10 to 14 years of payment). With an operation of 6,000 km/month, Metbus estimates a reduction in OPEX costs equivalent to $1,800 per month per bus. Likewise, the difference in CAPEX (bus and charging infrastructure) between an electric and a diesel bus is around $1,500 per month if paid within a 10-year contract, showing a reduction in total costs per month per bus, plus the reduction in maintenance costs. In addition, at the end of the leasing contract, if the operator is still in the system, it will be the owner of buses, which will still have 30 percent of residual value, as the lifetime of the buses is estimated at around 14 years. With this information, some operators have started (or are planning) to renew their old fleet at their own expense. Examples of this are the 183 new Metbus buses introduced during October 2019, and the 25 RedBus buses that will arrive in Santiago during 2020. Table 4-3 summarizes the e-bus implementation stages of the bus operator companies that have introduced this technology. 52 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report E-mobility business model Table 4-3: An overview of the introduction of e-buses as of 2019 Total fleeta Company Energy Company Manufacturer Pilots New fleet Fleet renewal (2019) Metbus Enel BYD 2 100 183 1,155 Buses Vule Engie Yutong 1 75 1,456 STP Engie Yutong 25 607 RedBus Enel (only energy) King Long 2543 792 Total e-buses - - 3 200 208 411 Source: Based on information from DTPM (2018) and updates after interviews. Note: aIncludes operational and reserve fleet. Maintenance costs are another important element in the total cost of ownership (TCO) of e-buses. Metbus estimates that the maintenance cost is reduced from Chilean pesos (Ch$) 190/km for a diesel bus to Ch$63/km for an e-bus—a savings of 67 percent. However, not all PPPs shared the roles and responsibilities of maintenance in the same way. Yutong and King Long, for example, limit their tasks to provisioning the fleet, ensuring the suitability of the buses, and providing spare parts. Instead, the after-sale services agreement between Metbus and BYD held the fleet manufacturer responsible for the electric maintenance of e-buses and the buses’ charging process, in addition to the management of spare parts. This will be further discussed in the following section “Case Studies: Enel and Engie”. Regarding the evolution of the price of the e-buses, the first BYD buses implemented as pilots in Santiago cost around $450,000, more than twice the diesel Euro VI cost. Nevertheless, when negotiating the incorporation of a bigger bus fleet, with the understanding that this represented the first introduction of e-buses into the Chilean market, the bus manufacturers offered a much lower price, around $300,000.44 This made the business significantly more competitive with the diesel Euro VI buses than before. Table 4-4: Comparison between diesel and electric bus Item Diesel (12 m) Electric (12 m) Capital expenditure (CAPEX, cost $190,000 – $200,000 $290,000 – $300,000 of the bus) Performance 2 km/Lt 0.9 – 1.0 km/kWh OPEX $0.42/km $0.10/km Maintenance cost $0.27/km $0.08/km Source: Based on interviews conducted for this report. Note: Exchange rate of Ch$712 to the U.S. dollar (October 14, 2019). Another important part of the e-bus business model is the fee rate associated with the financial leasing contract. For Transantiago the loan rate was historically 7.8 percent, a figure that Enel used as a basis for offering the same rate on the loan of the first 100 buses. After that, for the incorporation of the next 100 buses (for Buses Vule and STP), Engie offered a lower rate of 7.3 percent, which Enel then incorporated into its next loan for the 183 buses.45 It is expected that for the future incorporation of new e-fleets, the loan rates will decrease significantly. They are expected to be around 6 percent in the next negotiation process, as the scale of the investment will be higher (more than 300 new buses) and also because of the involvement of new actors, such as investment banks (both local and international). 43 Expected during 2020. 44 All prices presented do not include VAT. 45 Information provided by the energy companies during interviews conducted for this report. 53 E-mobility bussiness model Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Figure 4-5: Organizational diagram of actors’ interrelations in the PPP System (State) Concession contract Fleet payment quote Bus Operator Company Ma av ail inte ab na ilit nc yo ea f th nd Financial Energy, eet and eb us Leasing charging infrastructure $ Energy Company Bus Manufacturer (Investment) Purchase of the eet Source: : Fieldwork conducted for the present study in 2019 The evolution of the public transport system into a greener fleet has been cost-effective for the system because of the timing and the opportunities of when it was implemented. The ending of Alsacia’s contract, which was highly expensive for the system, was used as an opportunity to introduce 690 new buses, financed with savings generated by Alsacia’s replacement. According to the DPTM, this resulted in annual savings of nearly $1 million for the system. This was one of the drivers, among others, of the government’s support of the adoption of e-buses in Santiago’s transport system. The government played a supporting role from the beginning: initially by authorizing the introduction of the first 200 buses, and after that by facilitating the process and helping to reduce approval times for the operation of the vehicles and the construction of infrastructure. As mentioned previously, the system was going through a brand transformation led by the government, from Transantiago to Red, and the opportunity to upgrade the fleet to a better and cleaner technology supported that approach, as well as being the first step toward NDC targets and other national environmental commitments. State technical teams played an important role in planning and regulation. In summary, table 4-5 presents the different actors’ motivations that enabled the fast adoption of e-buses in Santiago. 54 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report E-mobility business model Table 4-5: Motivations of the actors within the PPP Actors Role Motivations Enel Boost their core business of charging Energy companies infrastructure installing and energy selling Engie BYD Introduce e-bus technology in the Latin American Yutong Bus Manufacturersa market King Long Metbus Buses Vule Achieve lower operating expenditure (OPEX) cost; Bus Operators offer better level of service; Private Companies STP increase transactions RedBus Improve quality service of the system; develop change of brand (Red); Ministry of Transport and National Authorities reduce fare evasionb; Telecommunications achieve nationally determined contribution (NDC) targets Source: Fieldwork conducted for the present study in 2019. Note: aChilean representatives of Yutong and King Long may differ slightly on their motivations in terms of the profitability periods (long or short term). bSome operators have mentioned that e-buses have reduced fare evasion, since users appreciate the improvement in services. Case Studies: Enel and Engie ▸ Providing energy for the e-depots In this section, illustrative cases for the different private ▸ Supporting the process of change from diesel to electricity initiatives, Enel X and Engie, will be developed. Details are provided on the different actors involved in this ▸ Contributing to the discussion on new bidding rules process, including their roles and responsibilities, the Among these, some were not exclusive to the energy conditions for fleet operation, the different technologies companies. For example, bus manufacturers and the and performance levels of the buses, and financial Ministry of Transportation also played important roles considerations associated with each partnership. in supporting the implementation of pilots and the Stakeholders coordination of participants. As previously discussed, new actors were included in the In the third PPP—between Enel X, RedBus, and King new PPPs. These new actors, different for each of the Long—e-buses were introduced later in the process, so the concessions, performed key roles to make the business implementation of pilots did not have the same impact as model successful. these in previous successful experiences. In this new PPP, a new actor, NeoT Capital, appeared as an investor in the bus The tasks performed by the energy companies were fleet. With this, Enel X ceased to support the acquisition essential. For the first two experiences of the introduction of e-buses financially, dedicating all its efforts to its actual of e-buses in Transantiago, Enel X and Engie adopted many core business. roles, some exclusively and some shared with other actors. The following list presents seven tasks where energy After the pilots came the planning and modification of companies performed a crucial role: electric infrastructure. The average increases in grid capacity for project implementation typically did not ▸ Supporting the implementation of pilots exceed 1.5 MW. In the case of the Buses Vule’s e-depot, ▸ Coordinating the participation of the different actors the request was for 6 MW, much higher than the usual ▸ Making the initial investment in the bus fleets needed for electric infrastructure projects. As expected, the electricity grid was not prepared for an increase of ▸ E-depot construction and charging infrastructure this magnitude, and required exceptional planning and installation coordination among different actors to get everything ▸ Power management for the charging process ready on time. 55 E-mobility bussiness model Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report First, the Enel Distribución utility company was in charge of making the electric grid adjustments, since it were the only actor that had the ability to do so (as an energy distributor in Santiago). The Ministry of Energy also participated, facilitating the different stages linked to increasing capacity, and speeding up the necessary studies and approval processes. A secondary role was also played by the Ministry of Public Works (Ministerio de Obras Públicas, MOP) to increase power for the electric infrastructure of, in this case, Buses Vule’s e-depot. The adaptations that had to be made to the distribution grid included building new feeders, which passed through the road infrastructure that is currently the MOP’s responsibility. Furthermore, at this stage a new public actor was included: the Superintendence of Electricity and Fuel (SEC), which was put in charge of the regulations and technical specifications for the construction of e-depots. It also plays a relevant role in terms of the approval for the connection of the terminals to the electric grid and their setup. Each PPP partners with different bus manufacturers for the provision of e-buses. As previously stated, Metbus with Enel X acquired BYD e-buses for the operation of the pilots and the following implementation of e-buses; meanwhile STP and Vule, together with Engie, did the same process with Yutong e-buses. Finally, the most recent PPP between RedBus and Enel X acquired King Long e-buses, all Chinese bus companies. In terms of maintenance, the case of the Enel-BYD-Metbus partnership, recognized as the first example in Latin America where a significant number of e-buses were acquired and deployed, works with an after-sales service agreement between Metbus and BYD that makes the fleet manufacturer responsible for electronic maintenance of the e-buses, in addition to the management of spare parts (as in most after-sales contracts). Meanwhile, the maintenance of the bus body is still Metbus’s responsibility. Notably, in this case BYD also oversees preventive, corrective, and predictive maintenance, and suffers a reduction in its monthly lease payments if the buses are not charged and available to be used when needed. Under this scheme the operator loses control over maintenance (which has historically been part of its responsibility) and faces higher costs but less risk of penalties for not having the fleet available. This maintenance contract between Metbus and BYD was not initially offered by the manufacturing company. As an exercise in minimizing the risk of operating this new technology, Metbus based its requirement on a contract that BYD had with another bus company in a different country, and asked for the same conditions. This means that BYD’s after-sales services, now offered as its standard, are the result of negotiations during its first-time experience with e-buses in Chile. In the case of the Engie-Yutong-Vule partnership, as well as for STP, the bus operators oversee maintenance issues, so Yutong has no responsibility other than providing the spare parts. At least for Buses Vule, this is no hurdle for operations, as it has made clear that it wants to oversee maintenance, in order to have full control over the availability of the fleet and to minimize maintenance costs. The MTT played a key role during the process of planning and regulating the entire transport system, making it a crucial supporting stakeholder for the implementation and adoption of e-buses. Its main tasks had to do with coordination, establishing the technical planning requirements for the services, and negotiating financial adjustments with the bus operators, among others. Therefore, the negotiation processes for the introduction of the first 200 e-buses to the system were based on an increase in the operational kilometers for Metbus, Vule, and STP. This meant that the state, through the MTT, assumed the increase in capital costs related to the new buses by increasing the monthly payment to the operators, using one of the contracts’ existing adjustment mechanisms. This is different than what happened during the second phase of the introduction of e-buses (183 from Metbus and 25 from RedBus), since these replaced old buses that had reached the end of their lifespan (either by exceeding 12 years of service or 1,000,000 km of operation). Thus, since these fleets required renovation without modifying the operating conditions of the business unit (no additional kilometers), the state did not have to make any payment adjustment—the monthly quote to the companies remained unchanged. Table 4-6 shows a series of responsibilities and roles, and the new actors that carried them out for each analyzed case study: Enel X–Metbus–BYD association; Engie–Buses Vule and STP–Yutong; and for the latest partnership Enel X–RedBus–King Long–NeoT Capital. 56 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report E-mobility business model Table 4-6: Responsibilities, roles, and actors within the PPPs Enel X - Metbus - BYD Engie- Vule/STP - Yutong Enel X - RedBus -King Long Responsibilities and roles Actors Actors Actors Support the first implementation Energy companies and bus manufacturers - of pilots Initial condition of actors Energy companies (Enel X and Energie) Enel X RedBus Financing of e-bus fleet Enel X Engie NeoT Capital E-depot construction and charging Enel X Engie Enel X infrastructure installation Energy provision Enel X Engie Enel X Support the process of change from Enel X Engie Enel X diesel to electricity Ensure adequacy of electric Enel Distribución networks and power increases Fleet provision and suitability of BYD Yutong King Long buses Provision of spare parts BYD Yutong King Long Preventive, corrective, and BYD Vule STP RedBus predictive maintenance Charging management BYD Vule STP RedBus Operation of buses and depots Metbus Vule STP RedBus Financing the capital expenditure MTT (first 100) / Metbus (183) MTT RedBus (CAPEX) of the new fleet Service planning and regulation Ministry of Transport and Telecommunications (MTT) Energy land capacity studies and Ministry of Energy and Superintendence of Electricity and Fuel (SEC) electric grid modification approvals Regulation of compliance with Superintendence of Electricity and Fuel (SEC) e-depots standards Source: Fieldwork conducted for the present study in 2019 and 2020. Considering the above, the actors involved in the process investment fund would allow the current business model were varied and the roles performed were diverse, to evolve in other cities, boost the business in places allowing the business model to be successful, and proving where it has already started, and may even lower the rates that there is not only one recipe to follow. One of the associated with current financial leasing contracts. significant aspects of the evolution of this business model New actors and PPPs are expected to emerge during 2020, is the intervention of new actors willing to finance the particularly for the projected arrival of 365 e-buses that acquisition of e-buses for a fair price similar to that of the will operate in the Alameda corridor. These new actors earlier diesel buses, thus overcoming the first barrier that will introduce new models and changes in their previously appears when implementing this new technology in public assumed responsibilities, as described in the examples transport systems. Initially, the energy companies provided analyzed. This will be further discussed in the report, when financing through leasing contracts, but the participation presenting the next short-term steps to be taken by the of investors like NeoT Capital changed the scenario. Today, system. there are new actors investing in the future. Furthermore, Enel X, together with two other partners (after their Financial considerations experiences in Santiago), have recently decided to form Before the adoption of e-buses, the fleet investors were a special purpose vehicle (SPV) to finance the acquisition usually linked to bus brands. For example, the German of e-buses for public transport systems in America. This bank KfW46 supported the acquisition of the Mercedes 46 The KfW, formerly KfW Bankengruppe (banking group), is a German state-owned development bank. 57 E-mobility bussiness model Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Benz diesel buses operating in Santiago’s streets. With the consumption of energy. However, this contract follows introduction of electric vehicles in the public transport the same rules as most contracts that energy companies system, this was no longer the case, as the same actors already have with unregulated clients (with energy would not finance a business in which they saw new risks. provision of over 5.000 kW). The actors involved in this process had to therefore start a Electricity tariffs differ depending on the customer base, search for new financiers. which is typically made up of residential, commercial, Enel X and Engie, two energy companies that wanted and industrial connections. E-depots are industrial to sell their electric infrastructure and energy services connections with different rates depending on the time of to the system, discovered that the national banks were day. They consider the peak demand for electric power for not willing to be part of this new business or assume the a consumer, among other factors. For the operators this associated risks. Therefore, they made the decision to was a big change, since they had never been faced with an directly finance the purchase of e-buses, and encourage energy provision contract involving this amount of power e-mobility by assuming this new responsibility. and these types of conditions. They realized that there are periods of the day, called peaks, during which the cost of Enel X generated three different contracts with Metbus. electricity is higher, when they can be charged between 20 The first for the acquisition of the fleet, the second for percent and 25 percent more to charge their buses. This the construction of infrastructure, and the third for the was a significant learning process for the operators, and provision of energy. Engie’s negotiation with STP and Vule the energy companies were a key support. came after and followed the same structure, also including these three contracts but with their own conditions. Technology and performance The first contract, a financial leasing for the acquisition of Performance and autonomy indicators are relevant in the e-buses, was structured in both cases with similar rates deciding which technology, brand, or model of buses to as the previous fleet purchases in Santiago, which were adopt. These factors will impact the different processes between 7 and 8 percent. The objective of both energy related to private operator companies’ responsibilities, companies was not to get a high profit from this contract, ranging from the operational tasks inside the depots to but to make the business model viable, transferring these the impact on bus operations in the streets. Therefore, it financial costs to the operator through the fleet provision is important to have accurate, comparable, and reliable contract. Meanwhile Enel X’s contract with Metbus to information, both for the companies and for the state to finance 100 e-buses represented an amount of $30 to $35 execute their regulatory responsibilities well. million. Engie had to elaborate two contracts, one for the The Centre for Vehicle Control and Certification (3CV), that 75 Buses Vule e-buses and another one for the 25 STP operates under the MTT, created a technical laboratory e-buses, which together added up to $35 million. some years ago to certify the characteristics of different The loan rate of these leasing contracts implicitly types of vehicles operating in Chile, as there is no relevant considered the new costs associated with this new vehicle manufacturing in the country. At first, the business that the energy companies were about to work conducted was related to study factor emissions assume. This may indicate that international development and technologies, but was soon extended to include banks or other institutions whose purpose is to finance certification processes for buses. These initial processes these investments could offer a significantly lower rate. did not include many analyses of emissions and energy Or even more, that new loans assumed by these now efficiency, because they did not have the appropriate experienced companies could offer better prices. technology to do so. The second financial arrangement is represented in the When the system started to include Euro V and VI bus infrastructure provision contract. As previously stated, this operations, there was no available method to test engine contract was already part of the core business of Enel X efficiency. This represented a big challenge for the team in and Engie, since they provided services related to energy charge, who took advantage of previous local knowledge and energy infrastructure. In this way, even though there on emissions measurement and started working on a were various learnings associated with the process, as with methodology to incorporate a component of energy planning grid changes with short deadlines, new technical efficiency within the buses’ certification process. specifications for the chargers and other elements of Thus, 3CV took this opportunity to plan a new bidding the depots, the heavy work of installation, and the tasks process for the public transport system and to design a associated with the maintenance of the new e-depots, procedure for diesel vehicles that was soon to be adapted the services offered for providing the infrastructure for e-buses, changing the concept of consumption for were equivalent to those of other infrastructure projects energy efficiency. previously carried out by the companies. Nowadays, the factors considered during the certification The last contract between the energy companies and the process of e-buses include safety, dimensions, type of operators is a power supply contract. This one is different engine, and energy efficiency. This process is based on from the other two, as its payment is associated with the testing different vehicles in a specific cycle that aims to 58 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report E-mobility business model represent the average situation and conditions that the buses may face when operating in the streets of Santiago. For defining the test cycle, the information available on the operation of Transantiago buses was key. With these data, the characteristics under which Santiago’s public transport buses operate were studied, to define a test cycle that specified speed, acceleration, deceleration, passenger load, and slope. These measurements are today standardized for the introduction of any new bus within the public transport system, and are regulated by a state protocol to obtain the energy consumption of the buses.47 It is important to highlight the advantage of performance tests for different types of vehicles with varied characteristics in a controlled laboratory that aims to represent actual street conditions. Since the same test cycle is used for all buses, it allows for a fair comparison of performance, and isolates any other possible impact associated with road conditions or environmental issues. Following this methodology, the test results that were obtained for different types and brands of e-buses (some of them now operating in Santiago’s streets) are shown in table 4-7. Table 4-7: Test results obtained by the Centre for Vehicles Control and Certification (3CV) Bus Engine Batteries Weight Passengers Consumption Autonomy Power capacity Type Brand Model Type test (kg) capacity (kWh/km) (km) (kW) (kWh) B2 BYD K9 FE Electric 300 276.5 15,495 81 1.57 176.1 B2 Yutong ZK6128BEVG Electric 215 324.4 16,250 87 1.48 219.7 XMQ 6127G B2 King Long Electric 280 374.7 17,345 90 1.74 215.0 PLUS B2 Foton eBus U12 QC Electric 350 151.5 14,790 90 1.67 90.9 B2 Zhongtong LCK6122EVG Electric 350 351.2 16,330 88 1.58 222.3 A1 BYD K7 Electric 180 156.6 10,802 45 1.13 138.6 A1 Foton EBus U8,5 QC Electric 130 129.0 10,592 47 1.24 104.0 Source: Official document obtained from MTT public data. Information for internal combustion engine buses can also be found on the MTT webpage: https://www.mtt.gob.cl/ archivos/5597. The models that are today operating or considered for further inclusion within Transantiago’s operations have been highlighted in bold (first three). Table 4-7 thus shows that, for testing under the same conditions and for the same type of buses, there are significant differences between each e-bus brand. The BYD K9 e-bus engine has greater power than the other two e-buses, which could be an advantage when it comes to operating on roads with pronounced slopes with a greater number of passengers (aside from the fact that it is the lightest model among the three analyzed e-buses). It is followed closely by King Long’s XMQ bus, whose engine has 280 kW of power. On the other hand, when analyzing the performance of batteries, the King Long XMQ bus offered a capacity of almost 375 kilowatt hours (kWh), considerably higher than the other two models, followed by the Yutong ZK6 bus with about 325 kWh and the BYD K9 bus with 277 kWh. In terms of passenger capacity, the King Long XMQ e-bus offers a capacity of 90 passengers—10 percent more than the BYD K9, which has the least space for passengers, not only between these three e-buses but compared with all the B2 models studied. The average energy consumption is an essential element when selecting a bus technology. Table 4.7 shows that the Yutong e-bus is the most efficient bus, with less than 1.5 kWh per kilometer (kWh/km) traveled, followed by BYD with 1.57 kWh/km and finally King Long with 1.74 kWh/km. These differences may significantly affect the business when it comes to the final calculation of consumption, especially in medium to large transport systems with a high number of operating kilometers. 47 Available online: https://www.mtt.gob.cl/archivos/5597. 59 E-mobility bussiness model Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Finally, the level of autonomy of a bus is obtained from the battery’s capacity and the average consumption. The Yutong ZK6 is the e-bus with the greatest autonomy—even though it does not present the highest battery capacity, it may reach almost 220 km of autonomy due its low consumption. In second place, we find King Long’s XMQ bus with 215 km, and the BYD K9 bus comes last with 176 km during one cycle. These differences directly affect the operation of buses in the streets. Other key elements that are not measured by this process and should also be included in the analysis will be presented in the next chapter. Operating conditions of the fleet The operating conditions for each e-bus service vary significantly depending on the routes they operate. Issues such as the length of the route, the slope, and the road infrastructure conditions make the operational requirements differ significantly. In table 4-8, information about the different routes is presented, in terms of their start and end points, as well as the length of each route. Table 4-8: E-bus routes E-buses Length Operator Starting point Ending point services (each direction) STP 213e Puente Alto Santiago Centro 26.6 km Vule I09 Maipú Santiago Centro 19.0 km 506 Peñalolén Maipú 36.6 km 507 Peñalolén Pudahuel 31.2 km Metbus 510 Peñalolén Maipú 30.0 km 516 Peñalolén Maipú 28.7 km 519 Peñalolén Santiago Centro 15.8 km RedBusa C06 Las Condes Huechuraba 18.5 km Source: Fieldwork conducted for the present study in 2019 and 2020. Note: aTo be implemented during 2020. The 213e service operated by STP operates from Puente Alto, in the southeast part of the city, to downtown Santiago. It is a route in high demand during the morning peak hours for people who live in the south and central sectors of Santiago, mostly because a major part of the city’s work and commercial activities are concentrated in Santiago Centro. As can be observed in detail in figure 4-6, the slope within this route varies with an average inclination of -1.2 percent, reaching its lowest at -4.5 percent. In addition, its maximum elevation is 700 meters above sea level (in some points of Puente Alto), with the route ending at an elevation of 550 meters above sea level when arriving downtown. This route makes use of more than 20 km of segregated road infrastructure for the exclusive operation of public transport. The corridor extension goes from the Concha y Toro Corridor in Puente Alto, passes by the Vicuña Mackenna corridor, and then arrives downtown. For its part, the Buses Vule I09 service runs 19 km starting in Maipú, going from the west of the city to Santiago Centro. The altitude does not vary more than 150 meters through the route, and it has an average inclination of 1.6 percent. The I09 service operates nearly 5 km in the Pajaritos–Gladys Marín corridor between Américo Vespucio (Maipú) and Manuel Rivas Vicuña (Santiago Centro). 60 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report E-mobility business model Figure 4-6: 213e route SANTIAGO N CENTRO LAS CONDES PUDAHUEL MACUL MAIPÚ CERRILLOS PADRE HURTADO Electric services 213e PUENTE ALTO Graph: Min. Av. Max. Slope: 554. 628. 703m Range totals: Distance: 26.6 km Elev Gain/Loss: 144m -215m Max Slope: 4.5% -3.9% Av. Slope: 1.1% -1.2% 703 m 655 m 650 m 600 m 544 m -1.1% 0m 5 km 10 km 15 km 20 km 26.6 km Sources: Source: Fieldwork conducted for the present study in 2019 and 2020 with Google Earth. Figure 4-7: 109 route N SANTIAGO Electric services CENTRO LAS CONDES 109 PUDAHUEL MACUL MAIPÚ CERRILLOS Graph: Min. Av. Max. Slope: 452. 502. 580m Range totals: Distance: 19 km Elev Gain/Loss: 224m -103m Max Slope: 13.9% -6.0% Av. Slope: 1.6% -1.3% 580 m 550 m 500 m 455 m 452 m 0.0% 0m 2.5 km 5 km 7.5 km 10 km 12.5 km 15 km 19 km Sources: Fieldwork conducted for the present study in 2019 and 2020 with Google Earth. 61 E-mobility bussiness model Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report For its part, Metbus operates five electrical bus services, which share a large part of their routes with the same starting point in the Peñalolén e-depot. These services go from the east of Santiago, toward the center and the west of the city, depending on the ending point of each service. Along the route, they constantly descend from a height of almost 850 meters to nearly 500 meters in the center of Santiago. The average slope of the route is almost -3.1 percent, reaching its lowest inclination point at -13.8 percent. This unique characteristic of the Metbus e-buses routes must be considered in their batteries’ charging strategies, as driving along these slopes through the length of their journeys affects the regeneration process of the batteries significantly. In addition, these services operate for a large part in the Grecia corridor, a route of more than 15 km that connects the upper sector of Peñalolén with Avenida Matta, in Ñuñoa. Just like the Santa Rosa corridor where the STP buses circulate, this kind of segregated infrastructure allows for minimum interference by other vehicles during bus operations. Figure 4 8: 506, 507, 510, 516, and 519 routes SANTIAGO N CENTRO LAS CONDES PUDAHUEL MACUL MAIPÚ CERRILLOS Electric services 506 507 510 516 519 Graph: Min. Av. Max. Slope: 551. 617. 831m Range totals: Distance: 15.9 km Elev. Gain/Loss: 82.7m -360m Max. Slope: 9.9% -13.8% Av. Slope: 1.4% -3.1% 831 m 830 m 750 m 675 m 600 m 551 m 2.4% 0m 2.5 km 5 km 7.5 km 10 km 12.5 km 15.9 km Source: Fieldwork conducted for the present study in 2019 and 2020 with Google Earth. Finally, during 2020 the RedBus service C06 will operate with King Long’s e-buses. This will be one of the shortest electrical services in the system, with less than 19 km of extension. Furthermore, this is the first of eight services that will operate in mixed traffic with no exclusive infrastructure for its operations (such as bus corridors or bus-only lanes). As regards the slope of this route, the service begins in Las Condes, in the east part of Santiago, which has an altitude of 755 meters, and starts its descent until it arrives at Huechuraba, the ending point of the service in the northeast of Santiago. During its journey, the service faces an average inclination of -4.8 percent, with the lowest at -44 percent when it descends the San Cristóbal hill (an area known as “La Pirámide”). This high elevation point can be observed clearly in figure 4-9 and represents the highest slope that an e-bus operating in Transantiago has had to face (followed by Metbus services operating in Av. Grecia). 62 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report E-mobility business model Figure 4 9: C06 route N Electric services HUECHURABA C06 LAS CONDES SANTIAGO LAS Graph: Min. Av. Max. Slope: 514. 646. 756m CONDES CENTRO Range totals: Distance: 18.5 km Elev. Gain/Loss: 351m -588m Max. Slope: 28.5% -44.4% Av. Slope: 4.6% -4.8% 756 m 755 m 675 m 600 m 514 m -9.1% 0m 2.5 km 5 km 7.5 km 10 km 12.5 km 15 km 18.5 km Sources: Source: Fieldwork conducted for the present study in 2019 and 2020 with Google Earth. Enablers for the adoption of e-buses As a synopsis, this section will discuss the main enablers that allowed the adoption of e-buses in the city of Santiago, Chile. Pilots and bus certifications The pilots conducted in Santiago’s streets were key to understanding and embracing this new technology as a real opportunity. They allowed for the buses to adapt to the characteristics and standards of the streets of Santiago and the existing services where they would operate. They also offered important insights into the implementation of a strong certification process for the buses, which was the responsibility of the Ministry of Transport through the 3CV agency, which developed a methodology for testing different characteristics of e-buses that were not tested for diesel buses. End of contracts and cancelled bidding process The fact that most concession contracts between the state and operators were near their end provided an opportunity for the transfer of some bus services from one company to another (increasing the second company’s operating kilometers), and for the renewal of the existing fleet after more than 10 years of operation. These conditions enabled the beginning of negotiations for introducing e-buses. Also, the cancelled bidding process at the beginning of 2018, which established a minimum of 15 clean buses for each business unit, prepared the context for negotiations between bus manufacturers, energy companies (as financiers), and bus operators, allowing for a focus on the implementation of the current e-bus fleet beyond any bidding processes. Government priority: Flexibility in electric analyses and depot construction times Santiago’s public transport system—Transantiago—had been characterized by several problems since its launch (Muñoz and Gschwender, 2008; Hidalgo and Graftieaux, 2007). When the government sought to reform the system, one of the first measures taken by the MTT was to change the system’s name from Transantiago to Red, while also making deep changes to the system’s business model and raising the standards of the bus fleet. As a consequence, a fleet of 490 Euro VI diesel buses and more than 400 e-buses recently joined the system, resulting in almost 1,000 buses meeting the new Red standard in 2019. 63 E-mobility bussiness model Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Santiago would not have hundreds of e-buses in its streets if their introduction had not been one of the government’s priorities. The actions of both the government and the DTPM have been crucial as catalysts and enablers for the adoption of e-buses and the implementation of e-mobility in the public transport system. Chinese market development The development of the e-bus market has been driven almost exclusively by Chinese manufacturing. Since the Chinese government’s decision to adopt e-buses to combat pollution in their cities and foreign energy dependence, the growth of this technology in China’s bus market has been remarkable. According to Bloomberg New Energy Finance, in 2017, 99 percent of the world’s 385,000 e-buses were operating in China, all manufactured locally. At the end of that same year, the city of Shenzhen made its 16,000 buses electric, reducing particulate matter emissions. In this way, Chinese manufacturers began their expansion into other markets. Yutong and BYD entered the Chilean bus market with more than 100 e-buses each. For its part, in 2020, King Long will be launching 25 more e-buses. Other Chinese manufacturers, like Foton, have shown interest in the business model scheme and the new bidding process. The entrance of these various actors has forced manufacturers to improve their offers in Chile (in prices and additional after-sales services), making e-buses even more competitive compared to traditional diesel buses. Chile’s Free Trade agreements As previously discussed, the Chilean state’s policy on international trade is to generate open markets. This has been achieved through a series of free trade agreements (one of them with China) that allows the free transit of products with no import custom duties. This has facilitated the entry of e-buses at no additional cost, supporting public transit with new technologies. However, this type of policy is not uniform in Latin America. Unlike Chile, other countries in the region, like Argentina, Brazil, or Mexico, have imposed fees on imported buses to protect local manufacturing. This has been a constraint to accessing new bus technologies in these countries. Electrical companies as investors One of the key factors in the adoption of e-buses has been the role played by Enel and Engie. As both firms have a consolidated business that allows them to take financial responsibility without great risk, they offered to invest through the purchase of e-buses. Despite it being outside their core business area, Enel X and Engie have delivered fleets for operation through a financial leasing contract with each operator. The selling of associated services (such as the construction of e-depots, e-bus charging management, and the associated energy) has brought them revenues, generating a new business space for them. Neither traditional Chilean nor international banks were open to financing this type of technology, highlighting the key role of Enel and Engie in the early introduction of e-buses in Chile. Low financial risk of the country A fundamental characteristic of Chile was its low financial risk, an element that was key for companies like Enel and Engie when making the decision to invest in this new business. As previously discussed, Chile’s political, economic, and financial stability rating at that time was A, and it had favorable financial risk ratings in Fitch’s, Moody’s, and S&P rankings. These evaluations demonstrated Chile’s strong ability to uphold financial agreements, offering a favorable business environment, which lowered uncertainty costs. Contract characteristics Another attribute that facilitated the participation of Enel and Engie was the assurance offered by the state on payments. The lease payment is given directly to the financier (in this case Enel or Engie), through a payment release tool signed by the operators. This allowed electric companies to reduce the risk of nonpayment due to any difficulties the bus operator company might have. Another feature that encouraged electricity companies to enter this business was the certainty of business continuity for at least 10 years. The state of Chile signed provision contracts that assured 64 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report E-mobility business model the financiers that, regardless of the future of the bus operators, the fleet would stay in the system and debts would be paid completely. This, in addition to the country’s low financial risk, gave Enel and Engie the opportunity to do business with low risk. Key elements for e-buses implementation The business models observed in Santiago feature several key elements (discussed below) that might be considered in any successful e-fleet implementation. E-buses The implementation of an e-fleet introduces new challenges. The capabilities and performance of e-buses available in the market differ among providers, in terms of the technologies used and the performance of the buses on the street. Battery capability and the distance that can be travelled between charges are the key elements of e-bus performance. Battery capabilities can differ among bus manufacturers, which can help an operator decide whether to choose one bus type over a competitor. The degree to which batteries can be charged through braking is also a key element of bus performance. Some buses allow recharging only during deep braking, while others allow recharging of the battery every time the brake is applied, depending on how the bus’s control modules are designed. Also, the chemical composition of the batteries may influence the degree of energy lost during operation. To optimize recharging, charging management software charges the batteries to 97 percent of their capacity, so that the bus starts its recharging process from the time it starts. However, the batteries do need to be charged to their limit on occasion, to balance the battery cells. E-buses might also need custom modifications, or specifications for operation in a particular city. In the case of Santiago, the specifications had to be changed during the manufacturing of the requested fleet. Road characteristics might influence decisions on speed and acceleration limits,48 the vehicle body material (steel or aluminum), the brake system, or the welding and anchoring, among others. Another relevant issue to consider is the range of the bus in a real operational situation. Bus manufacturers undertake simulations in their test facilities that put buses in stress situations in order to measure the maximum range of the battery and other performance indicators. Even though the input from these simulations is relevant, pilots are key for testing the actual battery range in the “real world.” Bus operators in Chile have highlighted the importance of the first e-bus pilots for estimating performance indicators in real situations, to obtain real-life figures for business analysis, particularly in terms of autonomy and efficiency. In cities where there are many hills along the bus routes, it is important to design the services considering not only the capability of the bus to climb the hill, but also the maximum number of people that the bus can carry without compromising performance. This may also vary within brands of e-buses depending on the bus design. In these cases, it is relevant to consider tests and measurements of the design. Spare parts are another relevant issue to consider. First, the bus manufacturer should ensure the timely availability of spare parts to operate the bus fleet effectively. Also, the manufacturing characteristics of the bus might include different levels of flexibility among manufacturers, mainly in terms of the possibility of using alternative spare parts, which can be a significant issue when estimating corrective maintenance expenses. This leads on to the level of guarantees each manufacturer offers for its vehicles. This will depend on the contract the bus operator company has with the brand, in terms of the responsibilities specified for each part. Generally, the guarantees can be separated into different categories: ▸ Products with alternative spare parts, like the seats and tires of the bus. Most of the time, no guarantee is offered in these cases. 48 Buses Vule requested a 52 km speed limit, and a 5 km speed limit in reverse 65 E-mobility bussiness model Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report ▸ Products that can be certified by the brand in charge of the construction of the bus component, or technology that is owned by the brand, like control modules and electric engines. These are often included in the guarantees offered by the manufacturer. As an example, in the case of the Yutong and King Long vehicles, CATL49 is the Chinese company specializing in battery manufacture, whereas BYD supplies its own batteries (Bloomberg New Energy Finance, 2018). Most of the battery guarantees are offered for a period of 7–8 years or nearly 600,000 km (due to battery lifetime expectations). Some manufacturers offer a 10-year guarantee (or 800,000 km) based on the belief that technology will get better or cheaper during this time. Figure 4-10: Lithium-ion battery price—volume-weighted average real 2019 ($/kWh) $1,183 $917 $721 $663 $588 $381 $293 13% $219 $180 $156 $135 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: Bloomberg New Energy Finance, 2020 Over the last 10 years the price of batteries has reduced considerably, by 88 percent between 2010 and 2020, and is expected to fall even further over the coming years, reaching an estimated price below $100/kWh by 2024 (Bloomberg New Energy Finance, 2020). A battery’s lifetime of 7 years assumes a reduction of power from 324 kW to 226 kW (over the period of the guarantee), according to one of the manufacturers interviewed. The body of the bus is guaranteed for an estimated 14–15 years (or 1 million kilometers) and the engine for 5 years, and the manufacturer guarantees the chassis of the bus for 2–3 years. One issue that was highlighted by most of the interviewees is the lack of any real solution for the disposal of batteries. Even though there is literature about recycling or the secondary use of the batteries, to date there are no real examples and the issue has not been included in any of the analysis done by either the government or the companies involved. Second-life storage projects may use e-bus batteries in stationary storage applications, with a lower estimated cost than the price of new batteries of around $49/kWh (Bloomberg New Energy Finance, 2018). Because of all the above factors, there are different timings associated with each stage of the process. Manufacturing the buses correctly, compliance with regulations, the on-time delivery of the buses, and the availability to start operating are some of the issues to be considered when planning the implementation of an e-bus fleet. In the case of Santiago, the stakeholders interviewed highlight that the implementation and approval times were shortened in order to have everything ready on time. Various interviewees mentioned that the government’s initiative was key for keeping to the schedule. E-depots At the end of 2019, Santiago had seven depots with electric charging facilities (e-depots). The first two were constructed by Enel in the existing Metbus depots to receive the first 100 e-buses. After that, STP and Buses Vule prepared their depots for the next 100 e-buses. The needed charging infrastructure was constructed by Engie as part of its agreement. The list of current e-depots is 49 Contemporary Amperex Technology Co. Limited (CATL). 66 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report E-mobility business model shown in table 4-9. Table 4-9: E-depots in Santiago Number Charger Connector Company Location of Power of the chargers (kW) charger Metbus Maipú 35 80 2 Type2 AC Metbus Peñalolén 61 80 2 Type2 AC Buses Vule Maipú 37 150 2 DC GB/T Puente STP 13 150 2 DC GB/T Alto Figure 4-11: Map of e-depots CERRO NAVIA QUINTA PROVIDENCIA N NORMAL PUDAHUEL LO PRADO LA REINA SANTIAGO NUNOA ESTACION CENTRAL PEDRO MACUL AGUIRRE SAN PEÑALOLEN CERDA SAN JOAQUIN MAIPU CERRILLOS MIGUEL LO ESPEJO LA CISTERNA LA GRANJA LA FLORIDA SAN RAMON SAN JOSE DE MAIPO PADRE HURTADO EL BOSQUE LA PINTANA PUENTE ALTO PENAFLOR E- depots SAN BERNARDO METBUS CALERA DE TANGO STP 0 2 4 6 8 10 Buses Vule Kilometers Source: Research conducted for the present study in 2019 Source: Interviews conducted for the present study in 2019 For the arrival of 183 additional e-buses, Metbus has started the construction of three more e-depots. Also, one of the Metbus depots has become completely electrical (with no diesel infrastructure) and uses solar panels for the generation of energy to charge the e-buses. Some relevant issues need to be considered during the construction of charging infrastructure in depots. Even though there is enough electricity generation in Chile to power all the e-depots necessary for the replacement of the entire bus fleet with electric technology, it is important to plan when to expand this electricity consumption. The period for the planned energy consumption should be considered carefully as the system could collapse if it exceeds the set limits for a short period or used an unplanned amount of energy (there may be bottlenecks in terms of peak power [MW] in certain parts of the distribution grid such as substations and transformers). In the case of Santiago, the increase in energy requirements did not reach that limit, but did exceed the margin planned, so this issue was relevant when interviewing the state energy regulators. 67 E-mobility bussiness model Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Another highlight of Santiago’s experience with e-buses number of e-buses operating. However, when it added is the management of charging. The cost of electricity is more e-buses to its operations, it did not have to build not the same throughout the day: there are hours when more infrastructure, making this a one-time investment. demand increases (or supply decreases) and the prices The time that it takes to charge the e-buses will depend rise. Therefore, it is essential to know what time of day on the type of charging infrastructure used. Overnight to charge to achieve savings that are beneficial for the charging at the depot using a traditional plug-in slow system. Charge management software can thus make charger of 15–22 kW can charge an e-bus in around 10 relevant contributions to the system, because it can plan hours. Chargers installed in Santiago range from 80 to when and when not to charge, restricting the charging 150 kW, as shown in table 4-9. during no-charging periods. Smart charging also balances demand, so that ten Table 4-10: Traditional plug-in charging speed and times buses could be charged using only as much power as Charging speed Time five buses, by switching charging between buses very Slow charging (15-22 kW) 10 hours quickly. This means that the estimate of the number of e-depots required to equip the entire bus fleet with Fast (22-50 kW) and Rapid (50-120 kW) charging 2-6 hours electric technology should consider when the buses will Source: Bloomberg New Energy Finance, 2018 be charged. For example, there may not be local grid capacity to charge all buses at the same time, but smart The technology of the bus, whether it has an AC or charging would help to manage the charging of all buses DC connection, will determine the technology of the with the power available in the grid. charging infrastructure. This opens a debate on whether In addition, the energy capacity of the land where the interoperability is a relevant issue to be considered in the e-depot will be built must be considered. The energy planning and design process. As Santiago works with a required for an electrical depot exceeds the usual concession model where companies charge and operate requirements of any other type of construction. Studies their buses in their own depots, there should not be any of the potential of each existing depot to include energy- problem if the Metbus and STP/Vule e-buses use different charging infrastructure are the first step. This, in turn, technologies for their chargers (DC vs AC, both Chinese depends on projections for the growth of e-mobility. technology), but when using any other concession model, interoperability is a relevant subject that should be This process of analysis and authorization can take considered. several months, even years, and can be costly. Decisive action from the authority, or changes in the regulatory Another key issue for the proper functioning of e-depots aspects of the processes, could help to speed up approval is the periodic maintenance of the charging infrastructure and study times. Inadequate planning often makes it to protect it from electrical, electronic, and computational necessary to request additional energy capacity from the issues. Maintenance should be performed in a planned relevant entity, usually the energy distribution company. manner, as it is for the e-depots in Santiago, where it is carried out by the energy companies (e.g., Engie performs The Superintendence of Electricity and Fuel (SEC) maintenance of its chargers every six months). set regulations for the consumption of energy and for distinguishing between domestic and industrial Fast charging (with pantographs) has not been considered consumption of electricity. These two control for the operation of e-buses in Santiago, because of mechanisms impose special requirements for the the high infrastructure cost. Besides, the current e-bus construction of charging infrastructure in a depot. In services do not need to be charged along their routes Santiago, the first e-depot was built by Enel, which because their current range is enough to cover their became aware of these requirements only after starting daily operations, so the system was designed to use slow the planning and construction of the chargers. Since it overnight charging. had to include new elements in the original design of the New renewable energy technologies such as solar panels charging infrastructure, construction costs rose. The case are being considered for inclusion in new e-depots, with of Engie is different, as it requested assistance from the disused (second-life) bus batteries providing energy regulatory entity before starting to design the e-depot, storage for solar-generated electricity. This ensures a which allowed it to develop high-quality facilities more complete renewable energy cycle, with green technologies easily. being used for both the generation and storage of energy. The relationship between how much power capacity Energy companies may generate clean energy certificates to install in the depot and the power requirements and for operators that guarantee the use of renewable energies number of chargers needed is another relevant subject for the provision of electricity in their e-depots. However, that should be addressed in the design and engineering there is no clear way to trace this in the energy generation of charging infrastructure in depots. For example, when process. Enel installed the chargers in the first Metbus depots, the number of chargers was more than required for the Another innovation in the charging process is the idea 68 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report E-mobility business model of returning the unused energy from the buses back to The replacement of the existing fleet with e-buses brings the system on completion of their daily operations. This challenges during the modification of the operational could generate a new business for the bus operators as plans of each service involved. E-buses have less capacity they could sell energy back to the electricity distribution for passengers than do the equivalent 12-meter diesel companies (in Santiago’s case, Enel). buses, so, to maintain the capacity of the service, its frequency needs to be increased. Also, to meet the same Planning and operation demand requirements, the service would need more buses The planning related to the adoption of e-buses is a key than before. element to ensure proper operation of the buses on the Problems arise when the original frequency/capacity of streets. the service is so high that it is not possible to add enough The selection of the service where the e-fleet will operate e-buses to supply that demand. This may also happen is the first step in the planning process. The following when a service considers replacing articulated buses were highlighted by several interviewees as relevant with 12-meter e-buses, which is particularly relevant in elements of that step: Santiago as many routes need to be covered by buses with high capacity. Nevertheless, this can be managed with the ▸ Number of passengers associated with the operation inclusion of short services to redistribute the supply in (validations per day), as an indicator of the relevance sections of greater demand. the service has within the system. The gradual inclusion of e-buses means that a new ▸ Operating kilometers per day, in order to guarantee system coexists with the old one. This reality brings the battery’s autonomy is enough to cover the full new challenges regarding fleet management due to the operation of the service. inclusion of new elements and the different requirements ▸ Location and feasibility of the depot associated with e-buses have versus diesel ones. The need for electric the service. charging and different limits on autonomy, among others, are the reasons why e-buses must be associated with a ▸ Public visibility of the service. specific service (or depot). This decreases the flexibility to ▸ Degree of vandalism (services with low vandalism levels reassign buses to services in need of immediate operation were prioritized). and may increase the need for backup fleets of each technology type. Table 4-11 lists e-bus design specifications related to their battery its performance in Santiago. In terms of road infrastructure, Santiago has reserved segregated lanes or closed corridors for e-bus services Table 4-11: Battery’s design and performance specifications to minimize their interference with other vehicles and to Item Range ease operations. Another important aspect of the routes is the slope of the road, as climbing a hill may imply Autonomies 250-400 km energy losses that affect autonomy and might limit the operations. Batteries Size 290-350 kWh 5-10 years / the equivalent in number Human resources Batteries guarantees or cycles Human resources are among the key requirements for Average consumption 0,85 – 0,95 km/kW efficient operation of a fleet of e-buses, as the training of workers on this new technology will be essential to achieve Source: Interviews conducted for this study and Bloomberg New Energy Finance savings in operation and maintenance. (2018). Note: Bands presented were constructed with the performances of different e-buses One of the processes to be learned is the charging of operating in Santiago (Yutong and BYD), and with different route characteristics. batteries. Charging in the wrong way can damage the battery, which would lead to problems in bus availability Another relevant issue to consider is how and when and high repair costs. In addition, the optimum charge to charge. Charging management, particularly smart level will vary depending on the operation, the location charging, is important not only to estimate the necessary of the e-depot, the type of charge, and other factors, power of the depot, but also to guarantee the availability which must be fully understood by the operator and the of buses for operations. As explained before, the first personnel in charge. The driver must also be trained in restriction is not to charge during hours when prices capabilities such as how to manage the recovery of energy are high due to increase in demand. The kilowatts of the during braking, use of the on-board computer, and internal chargers will determine how fast the buses can be charged, operation of the bus. and provide relevant input to estimate the number of chargers needed and to organize the overnight charging of The technical teams in charge of defining the operation the buses. must also be prepared for the transition to e-buses. The issues to be considered by the regulatory entity will 69 E-mobility bussiness model Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report change, as there will be specifications related to charging times, maintenance, and bus capacity. In addition, restrictions regarding the installation of depots near residential areas could change, due to lower levels of noise and pollution. The regulator will need to understand these changes and consider them when planning the operation. The training of maintenance workers is also a key aspect to be considered. E-buses, compared to diesel buses, have engines that are simpler in some ways, although they contain more computational elements. These issues imply a different type of maintenance than that required by internal combustion engines. Furthermore, the charging infrastructure also needs to be maintained and repaired. Educational institutions must adapt when facing these new challenges and will need to start teaching these new technical skills. That has already been happening in Chile, where educational centers (such as Duoc UC )50 have begun to prepare future professionals for the maintenance of e-buses. Constant communication between the relevant government departments and educational institutions will be essential so that classes and courses can be developed and adapted to the meet the new challenges of electrical mobility. Next steps Short-term projections for e-mobility in Santiago As mentioned in chapter 5, RedBus will be operating 25 new e-buses by the end of 2020. These buses correspond to partnerships of RedBus with different companies that offer independent solutions for fleet provision, charging provision, and electric infrastructure for the depot. An interesting feature of this business model is that RedBus has its own solution for financing the different elements (fleet, charging, and electric infrastructure provision) with NeoT Capital, an investor specialized in renewable energy and e-mobility services. This arrangement gave it the flexibility to choose different solutions for each technical element, without many of the restrictions that might have been included had the provision of finance been linked to a specific set of technological options. For example, it expects to make a bid for the purchase of energy after the construction of the depot, as it paid Enel only for installing the electric infrastructure, in contrast with past experiences in Santiago in which deals were made for the electric infrastructure, chargers, and energy all together. RedBus’ technical solution for fleet provision is King Long’s e-buses. It chose this Chinese company because of its history in providing diesel buses to other cities around the world. Based on the international experience that RedBus has through Transdev’s worldwide operations, it declared that King Long offers a high standard of vehicles. For charging, RedBus partnered with ABB, a company that offers Internet-based electric-vehicle- charging infrastructure. This European technology for chargers involves a DC connection with flexibility to shift from 50 to 150 kW of power, emulating fast charging when needed. Unlike the previous DC charger, which has a lifetime of approximately 5 years and is used by Buses Vule within its depots, these ABB chargers may last up to 10 years. Nevertheless, they cost almost twice the price of the previously installed Buses Vule and STP chargers. As for maintenance, RedBus decided to train its own personnel with technical assistance from the manufacturer of the bus and the charging technology provider. When interviewed, the RedBus representative highlighted the importance of drivers for the correct operation of e-buses, which justifies training them appropriately. Training will be provided by King Long and ABB. Another project that has been confirmed and is due at the end of the Express company’s contract with the government is the Alameda project. The state has negotiated with the existing bus operators to transfer to them the operating kilometers of Express, increasing their business with the operation of new bus technologies such as diesel Euro VI and electric buses. 50 Chilean professional institute. 51 The Chilean company of Transdev, a French-based international bus operator. 70 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report E-mobility business model For this project, it is expected that 50 diesel Euro VI and lubricants, this new area was considered part of the and 150 extra e-buses will be operated by Metbus, while process of adapting the business to the client’s needs. STP would be increasing its fleet with 215 extra e-buses, Nevertheless, COPEC did this by building a SPV with all starting their operation in April 2020. With this, the international partners for the financing of the fleet, as it public transport system of Santiago would include almost could reduce its risk significantly if it took on a smaller 800 e-buses. part of the investment. This would also translate into The business models will be different for each PPP. more competitive loan rates, as credit would be offered Enel has been clear on its position of not financing new by an actor that had already participated in this kind of e-buses; it will only participate in an SPV,52 as its core business, and the rate would not include the uncertainty business is providing energy and infrastructure, not of new investors. buses. It is expected that new actors will be included in The leasing includes the depot as charging infrastructure this second stage of the implementation of e-fleets, such and represents between 5 and 10 percent of the total as local and international banks for investment in buses cost of the business. However, COPEC’s business focus and/or infrastructure CAPEX. is on selling energy, software for charging management, One actor that has already been confirmed is COPEC.53 and maintenance of the charging infrastructure. Other Even though the company has been historically linked possible services, such as the integration of a fleet to sales and distribution within the petroleum industry, management system to the management of the charging, during the past three years it has been conducting a are still under evaluation. process of expansion to include e-mobility services It is important to mention that the construction of this within its business. This idea, initially thought of as a new e-depot represents a big challenge, not only because long-term process, grew stronger with time until the it will be the first constructed and installed by COPEC, company decided to expand and adapt its business to but also because it is expected to be the biggest in Latam. these new emerging technologies. This led to a new While Vule’s e-depot was constructed with a power working area inside the company focused on e-mobility, capacity of 6 MW for 75 buses, this new e-depot would that started with applied research and networking with have a capacity of 9 MW to charge 215 e-buses, with the the stakeholders involved in the business. Two main proportion of chargers and buses being 1 is to 4. However, elements supported this process: the high visibility of this would introduce significant challenges in the charging the company’s services at the national level and a strong management of the buses. focus on client needs. Its new approach to mobility is being addressed with different applications: service stations, residential solutions, public chargers, and industrial solutions (such as vehicle fleets). E-mobility context in other cities in This new area within COPEC presents differences not only Chile in terms of the scope but also in terms of the flexibility Besides Santiago, the government has focused efforts on in methodologies used for the evaluation of projects to bringing e-mobility to other cities in Chile. Authorities have adapt to e-mobility’s fast-changing market. Because of announced that Temuco and Concepción will be the next these special working characteristics, after approximately cities to include e-buses in their public transport fleets. one year, the company decided to move this team, at that time working inside the Development Division, to create Concepción (which groups several municipalities) is the a new subsidiary company: an independent company second-largest city in Chile, with approximately 1 million adapted to these new business requirements with inhabitants. For its part, Temuco city (also known as Gran more flexibility but still associated with the sales force, Temuco) is the sixth-largest urban agglomeration in the operational facilities, and client relations of COPEC. country, with more than 300,000 inhabitants. The main challenge for COPEC is to compete with Both cities are situated in the southern part of the country companies that generate energy as part of their business, and are expected to add e-buses to their fleets during as COPEC has to resell packages of energy previously the year 2020. Information on the magnitude, routes, purchased, which may translate into higher costs of and characteristics of the services is scarce; however, it energy. Nevertheless, this can be compensated in many is planned that 25 e-buses will be arriving in Concepción. other ways as part of the financial solution offered. There is less information on Temuco, but intentions are to electrify a service that circulates through the city center. During interviews held with company representatives, Additionally, there are other cities under study, such as the fact that the client was well known from before was Antofagasta, where less progress has been made. cited as a major advantage. In the case of Transantiago, since COPEC was already involved in the provision of fuel The financing of the fleet is expected to be covered through regional funds obtained by the law called “Ley 52 A subsidiary of different companies created to isolate financial risk. Espejo.” This law gives the regions of the country, apart 53 National marketer and distributor of fuels and lubricants. from the Metropolitan Region, the equivalent amount of 71 E-mobility bussiness model Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report money spent for Red Metropolitana de Movilidad. With would add more complexity for users planning their trips. this, the state’s subsidy for Santiago’s public transport The inclusion of new actors in the current transport system is twice the cost of the system for the state, as half business model, such as the regional government and of it goes to the other regions. EFE, may also be challenging. If a greater number of actors Each regional government owns part of the amount are involved in the process of implementation, it may obtained through the Ley Espejo, and depends on complicate the coordination and agreements between a regional council to approve the spending of those stakeholders. Besides, the fact that they do not have funds. The provision of energy, charging infrastructure, experience in the fleet renewal businesses may slow the maintenance of the buses and the depot, as well as process down or increase the risk of failure—elements training for bus drivers, are all expected to be covered by that must be considered when expanding Santiago’s these funds, with the council’s approval. experience with e-mobility. The implementation of priority infrastructure for e-buses, high-standard bus stops, and inspection cameras, among other components, are expected to be financed by both Bidding process the central and regional governments. After the cancellation of the bidding process in March A particularity of this model is that the initial services that 2018, the current government set out the objective will be implemented in Concepción and Temuco might of generating a new tender in 2019 that would allow use the stations of Ferrocarriles del Estado (EFE, a public contracts to be shorter and more flexible. The government rail service company) as depots and their electrical power defined objectives, such as separating bus operations from for the charging of the e-buses. This would enable faster fleet provision in different tender processes in order to implementation as there is no need to add any extra power facilitate operational continuity. With this new structure, to the grid but only the charging infrastructure. the state makes it possible to switch an operating company without the impact of losing the bus fleet, as could happen These electric services will operate with smart cards in the integral scheme. associated with an electronic payment system, which denotes a big change in comparison with the current cash However, notwithstanding the efforts of the authorities, payment directly to the bus driver. the basis for this new bidding process has only recently been approved (by the end of May 2020), and only for fleet Among the main problems faced by the government in provision (the first phase of the process). raising the standard of buses in other cities in Chile is the atomization of operators. In contrast to what happens in Thus, the state will have two types of contracts with Santiago, in the rest of the country it is usual to have public independent companies. The first is a bus operation transport systems operated by various small firms, with contract, which aims to provide urban bus transport in the their associated small fleets, in a context of low regulation city of Santiago. This contract will be based on kilometers by the authorities. This atomization of the system makes operated, number of passengers, and the quality of service it difficult to coordinate with the actors to agree on offered. The service quality indicators will be linked conditions for the provision of e-fleets and reduces the to aspects such as the fulfillment of the schedule and guarantees for the government that the buses will be compliance with standards related to frequency, quality of operated properly. user service, stops, and bus conditions, among others. Another barrier to e-mobility in other cities in Chile is the The second type of contract is a fleet provision contract. risk aversion of the current bus operators. Historically, This will aim to supply the system with buses and their the operators have opposed a series of transformations respective guarantees. In addition, the fleet provider must of the public transport system, arguing that they may be certify the maintenance of the buses. A monthly fee to drastically affected. This has not been different in the case the provider is intended to pay for the investment and of introducing e-buses, mainly due to the high investment the provision of buses to the system. The fleet supplier is costs. If it is not possible to involve bus operators from the expected to be a SPV, so that the balances of this firm can beginning by showing them the benefits of this measure, be linked only to fleet provision and not to other activities their risk aversion can be a barrier to the successful carried out by the parent company, such as energy supply. implementation of this policy. The contract will be extended for 10 years for diesel buses and 14 years for a fleet of electric vehicles, including a The coexistence of two systems (diesel buses and e-buses) battery replacement during the contract period. is another challenge to the implementation of this new technology. This implies a complex task for citizens as they Fleet maintenance has been defined as the responsibility will have to adapt to different standards, characteristics, of the operator, so that it internally manages any trade- and information when using the public transport system. off between operation and maintenance. The operator In addition, some of the new e-buses will have to be paid directly carries out the maintenance of the buses, since it with a smart card unlike the rest of the services, which can hire another firm to do this work. Given this, it would be possible to replicate the current relationship between 72 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report E-mobility business model Metbus and BYD, in which the bus manufacturer performs the maintenance process and the operator only provides the service, but the bus manufacturer does not have the obligation of being part of that process. Therefore, the bus operator is required to conduct an independent periodic certification process through a third party, that needs to be approved by the bus manufacturer. This provides an extra level of security so that the fleet provider is informed of the condition of the buses regardless of the operating company that is selected or is operating the buses. This would allow for one of the main objectives of the authority, that is, to shorten the duration of operating contracts to 5 years, or 7 years if the fleet proposed has a share of e-buses greater than 50 percent. This contract will be extendable to 10 or 14 years (associated with the fleet’s technology proportion) depending on the quality of the service, thus generating incentives for the operators. If not extended, the buses will be part of the concession and passed to the next bus operator. Finally, the bus operator is expected to sign a contract with a private company that provides fuel or energy. In the case of a fleet of e-buses, the bus operator seeks to establish a relationship with an energy company, which will give it energy and charging infrastructure. Figure 4-12 schematizes the relationships that the new bidding process expects to generate. Figure 4-12: Organizational diagram of actors’ interrelations in the new bidding process for an e-bus fleet System (State) Concession contract Fleet provision contract Bus Operator Company SPV Energy and Purchase of the M charging eet and provision ai nt infrastructure of spare parts en an ce Energy Company Bus Manufacturer Source: Fieldwork conducted for the present study in 2019. Note: SPV = special purpose vehicle. With the above, the different models used to finance, acquire, operate, and maintain e-buses in Santiago may continue to be employed, but this scheme has characteristics that will change the incentives and motivations of the actors, now that there is a direct contract with the bus provider and new conditions for the bus operators. Following is an analysis of the different issues associated with the new system, in terms of the promotion of new technologies, maintenance risk allocation, an allowance for greater competition, and greater operational flexibility. 73 E-mobility bussiness model Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report How does this structure promote new technologies? According to the DTPM, the new structure considered in the bid aims to give every applicant the same treatment; that is, it does not give preference to one type of technology versus the other, or the old system operators versus the new ones. In particular, in the case of e-mobility, more than incentives, there are some factors that seek to level the playing field for the different technologies to compete under the same conditions. The first of these is to offer a longer-term contract for a supplier of an e-fleet than a diesel fleet. In particular, the state promises the e-fleet provider that its buses will be in the system for 14 years, instead of 10 years as is the case for diesel vehicles. As much as this may be seen a natural incentive for the introduction of e-buses over any diesel technology, this extension has more to do with extending the years of the concession of e-buses, as their higher CAPEX would make them less attractive than diesel buses. This is aligned with the design of the bid for the operation of buses, as private companies that choose to provide public transport services with a fleet composed of more than 50 percent e-buses would automatically be granted a concession contract of seven rather than five years. On the other hand, and in alignment with national decontamination targets, the MTT decided to add extra points in the technical evaluation for nonpolluting technologies. This means that the operator receives proportional points for the percentage of its fleet that does not emit local pollutants. The last element related to the inclusion of new technologies is the evaluation of energy efficiency. When comparing different buses with the same technology, there will be some that will require more energy (measured in kcal) than others for the same distance. Thus, adopting brands of e-buses that are more efficient produces energy savings for the system. E-bus providers will therefore obtain extra points if their buses, compared with that of their competitors using the same technology, are more efficient (measured through the consumption of energy per kilometer). It is important to consider how the two tender processes will relate to each other. First, the evaluation of the bus provision tender will take place. For that, the state will seek to find bus providers of different groups of fleets, depending on size and technology (among other characteristics). From this evaluation providers will be selected for each group of buses, and the operators will have to choose which group of buses they will use for their operations. This means that if an operator uses a specific bus type for its service, it will have the chance to evaluate and choose between the different providers that were selected in that fleet type during the first bid, which can be electric, diesel, gas, or any other technology. This list will be provided by the state to the operators, to help them design their offers. The second bidding process, for the operation of the buses, will incorporate the evaluation of both CAPEX and OPEX. This the only way to compare the different technologies fairly, since an e-bus’s OPEX is much lower than that of a diesel one, while its CAPEX is higher. Thus, the incentives of both the bids are aligned. How well does the structure assign risks associated with maintenance? The structure of this new system works on the premise of allocating the risks to the party that can best handle them. In that sense, maintenance is part of the operator’s responsibilities, as it has more control over the operation and the daily need for buses. This way, any failure will be responsibility of the operator, unless proven otherwise, and it will only be the responsibility of the fleet provider when the failure is related to guarantees. Nevertheless, there is a control mechanism associated with the certification process that will be conducted by a third party and signed by the fleet provider. This way, the bus supplier, who owns the buses and was promised a concession for 10–14 years, is constantly updated on the situation of the buses. The idea of having this certification process is to keep the fleet provider updated and somehow committed to the maintenance process, as it will be signing the certification each time. The operator and the supplier will sign a document that formalizes their relationship. There are only two ways in which a bus can be declared unavailable and get discharged (with no more payment quotes associated). The first is when it has not operated for three consecutive months because of guarantee issues, which is the responsibility of the supplier. The second is when it is declared a total loss. For any other case other than guarantee issues, if the bus did not operate for a day, then the 74 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report E-mobility business model responsibility of not operating falls on the operator. Consequently, if the operator does not replace that bus with its reserve fleet, it will not be penalized because of the missing bus, but will be fined as applicable for its noncompliance with quality indicators. In terms of guarantees, there is a certain amount of time that the fleet supplier has for covering failures related to guarantee coverage. For example, if there is a spare part that must be replaced, the fleet supplier has a defined period of time to accomplish this before being fined. The fleet supplier is also in charge of overhaul maintenance of diesel buses and the changing of batteries in e-buses. This last point represents a clear risk for the fleet supplier. Nevertheless, it should provide a charging strategy (approved by the bus manufacturer) to the bus operator company, that must follow it or the wear of the battery will be the operator’s responsibility. How well does the structure allow for increasing competition? The major change this process introduces to the system is the separation of the two bids: one for the provision of the fleet and the other for the operation of buses. This modification lowers the entry barriers for new operators, as a big investment for purchasing buses is no longer a requirement. Thus, it may increase the number of tender applicants for the operation of buses, as they will be no longer be buying and managing the assets. On the other hand, the technical evaluation of bus operator companies is based on their operating experience during the previous years, with those that have had experience in urban public transport systems receiving additional points. There would be no minimum requirements for applying (which could increase the number of competitors), but only a request to demonstrate experience, the lack of which can at the end disqualify a firm during further evaluation. In terms of fleet provision, the fact that the fleet quote is assured and paid directly by the state lowers the risk for companies significantly. This should act as an incentive for applicants, since it has been tested through the years. Nevertheless, the bidding structure makes it hard for bus providers to use economies of scale, as they are asked to apply to groups of buses and not an entire fleet. Even if selected, nothing guarantees that their buses will be on the streets, as the bus operator is the one that chooses the fleet to be used. Thus, the business presents uncertainties for future providers that may translate into higher prices (because of higher loan rates) or fewer competitors. There are some elements that affect competition within the system, meaning operations in the streets. First, having shorter contracts may have a positive effect on operators’ performance, as they have more incentives to generate good results to apply for extensions in a shorter period. Also, compliance with the operational plan is an important supply indicator and plays a relevant role in the discounts associated with operations, so it should be expected that the companies will put in their best efforts to achieve them. The escalation of penalties associated with noncompliance is also another important element of these contracts. A bus operator company may be penalized because of noncompliance with quality indicators that, if recurring, may be traduced into fines or, even worse, removal from services or levying of incremental fines that may lead to the expiration of the concession. All of these also affect possible contract extensions. These contract characteristics may act as a boost for competition if they encourage better compliance, but they can also affect the decision of companies to bid or not as they will be faced with a higher-risk contract compared with the previous ones. How well does the structure allow for increasing operational flexibility? Operational flexibility is key for conceiving a system that adapts to different situations. Today, more than ever, we need dynamic transport systems that respond to constantly changing travel patterns. The introduction of e-buses presents challenges when it comes to operations as they not only have to coexist with diesel buses that use different infrastructure, but they also have different operational requirements, such as trained drivers and access to special charging infrastructure. The bidding process has established a requirement for standardized DC European chargers, to allow flexibility to change routes or services. For example, if a bus has to cover a different route than expected, this decision aims to ensure operational continuity. This requires the standardization of the entire charging process, including the communication protocol with the bus. Importantly, the contract gives authority to the bus companies to increase the flexibility of their operations as long as they meet the operational plan requirements. In this sense, it is the operator’s 75 E-mobility bussiness model Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report decision to reassign buses to different services, if this plan allows it to offer the level of service established in the plan (level of supply every half hour). Other elements, meanwhile, must be addressed. For example, it is a common practice for drivers to be reassigned to different services and depots during the day. However, this will not be that simple now as not all depots have the charging infrastructure needed for the different types of buses that may be on the streets. Also, buses reassigned to services that use different depots may not find available charging systems. These are challenges to address in the medium term in order to allow greater operational flexibility. Advantages and disadvantages of 3 fleet provision business models In table 4-12, three business model schemes for the acquisition, operation, and maintenance of a fleet of buses are analyzed with respect to their advantages and disadvantages. Table 4-12: Business model comparison Business model 1 Business model 2 Business model 3 Integral Scheme Two components - 1 Two componets - 2 Concessionaire carries out fleet provision, One agent oversees fleet provision and the One agent oversees fleet provision operation of buses, fleet administration, other fleet and depot operations. Operator and the other fleet and depot maintenance activities, and operations at is in charge of the maintenance. operations. Fleet provider is in charge of depots. maintenance. Source: Fieldwork conducted for the present study in 2019. In the following section, these business models will be analyzed with a theoretical approach, highlighting their advantages, disadvantages, and associated risks. Importantly, these models may be adapted to bidding processes that address some of their risks and disadvantages. Business model 1 In the integral scheme a concessionaire carries out the activities of fleet provision and operation, as well as the operation of the depots. These activities also include fleet Integral scheme administration and maintenance activities. This case is similar to the original scheme of Transantiago. Advantages Disadvantages ▸ Facilitates the contractual management (administration ▸ Creates an obligation for the concessionaire to carry of the concession) for the management entity, as it must out three dissimilar activities: (i) acquisition of buses, (ii) supervise a smaller number of agents in the system. operation; and (iii) maintenance, which implies that it might ▸ Achieves efficiencies in the management of costs and not be able to concentrate on and specialize in its main task, expenses, since the operator’s incentives are aligned. which is to operate. ▸ Concessionaires and the government have related experience ▸ Creates high financial exigencies for the concessionaire, since in this scheme. it must have capital to finance the buses, acquire spare parts, and take charge of the operation. ▸ Allows the operators to take advantage of economies of scale. ▸ Compromises the continuity of the service in extraordinary ▸ Eliminates interface risks between large activities: cases, because the fleet cannot be disposed of quickly. acquisition, operation, and maintenance. ▸ Grants a dominant position to the operators of the system, ▸ Has a proven funding scheme known to financiers and as they are the owners of the fleet and are responsible for the operators. operation of the vehicles. ▸ Results in less flexibility on the part of the authority in the administration of contracts and, therefore, in the supply of the service. ▸ Restricts the technological modernization of the fleet to the extent that it is subject to the terms of the concession. 76 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report E-mobility business model Business model 2 The operator is in charge of maintenance: One agent is responsible for fleet provision, and the second for fleet and depot operation and maintenance. This case is similar to the Two components next Red bidding, when the operator chooses to do maintenance on its own. Advantages Disadvantages ▸ Allows specialized agents that can guarantee the proper ▸ Increases the contractual management duties of the implementation of activities. management entity by having it supervise a greater number ▸ Generates a high degree of flexibility for future expansions of agents in the system. to the system and ensures the renovation of buses due to ▸ Reduces operational efficiencies if the operator does not obsolescence, changes in technologies, environmental participate in the fleet selection (not the case of the Red requirements, etc. bidding process). ▸ Gives flexibility to the system (depending on contract conditions) ▸ Creates little interest among operators to ensure adequate by allowing the fleet to be reallocated between operators when maintenance of the fleet. conditions or the service needs change. ▸ Creates conflicts between the supplier and the fleet operator ▸ Facilitates the technological renewal of the fleet. in the event of bus failures and during warranty management. ▸ Allows operational contracts to focus exclusively on the provision and quality of service. ▸ Allows the implementation of shorter operating concessions, or concessions different from the lifetime of the bus. ▸ Facilitates the financing schemes of the fleet available in the market, because the owner of the fleet has the financial soundness necessary to make larger investments in vehicles needed by the system; also facilitates investment in fleets that require higher capital costs and lower operating costs, such as e-buses. ▸ Opens the possibility of implementing fleet reassignment schemes, which may mean a better level of regulation to meet the needs of the service in a timely manner. In this way, the power of the concessionaires over the system can be limited, which provides greater flexibility in the administration of contracts and therefore in the operation of the service, allowing effective measures to cancel the concession for failures or noncompliance with the obligations of fleet operation. Business model 3 The fleet provider is in charge of maintenance; as with business model 2, it has two agents. However, the first agent is responsible for the provision and maintenance of the Two components fleet and the maintenance of depots, while the second is responsible only for operation of the buses. This case is similar to the next Red bidding process, when the operator chooses to externalize the maintenance. Advantages Disadvantages ▸ Apart from the above, maintenance by the supplier ensures that ▸ Fleet maintenance can be more expensive because the the fleet is in good condition. supplier can use original spare parts more intensively. ▸ Conflicts over the management of the manufacturer’s ▸ The probability of conflicts between the operator and the warranties are minimized. fleet provider increases, since fleet maintenance is part of the activities considered in the planning and programming of the operation, making it difficult to clearly assign responsibilities and impose sanctions or penalties if necessary. ▸ It is difficult to schedule operation and maintenance because the same agent is not responsible for them. This results in a possible impairment of the quality of service provided to the user by the operator’s inability to plan and ensure the availability of the fleet. Risk analysis of the separation of provision and operation There may be higher costs to the system, mainly for the following reasons. First, the coexistence of different agents in fractioned schemes generates an increase in the 77 E-mobility bussiness model Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report administrative burden of the management entity and may lead to an increase in the technical fares. Second, in order to avoid conflicts and dilution of responsibilities among the agents involved in any of the new business models, the management entity must invest in greater contractual management and control mechanisms that promote the development of activities/responsibilities under each concession, without major friction among the agents involved. Third, the inclusion of a new actor in the provision of the service (fleet supplier) generates a new administrative burden as the new business models involve two different actors, each with its own independent management and administrative area. Fourth, the agent that supplies the fleet is different from the one that performs the maintenance. This means that the latter loses its bargaining power in the acquisition of spare parts, unless the costs of common spare parts are projected for the lifetime of the buses (e.g., indexed with references such as exchange rates). Also, there will be rising maintenance costs in business model 3 because the fleet supplier may prefer to use original spare parts. Table 4-13 summarizes the main administrative costs of each business model. Table 4-13: Analysis of three different business models Business model 1 Business model 2 Business model 3 Agent Integral Fleet supplier Operator Fleet supplier Operator General management X X X X X Operations management X - X - X Maintenance management X - X X - Coordination between - - - - X operation and maintenance Human resources management X X X X Administration and finance X X X X X management Source: Steer, 2019 It is possible that in an eventual competitive process for the acquisition and/or availability of the fleet for the system, the financiers and suppliers could reach agreements to offer higher interest rates than expected, in order to favor each other. This is known as collusion risk. To avoid this risk, at the structuring stage of the process a very detailed cost analysis (market study) should be carried out with many companies in order to establish the maximum amounts acceptable to the government in the acquisition of the fleet. After the division of the business lines, there is a risk associated with possible conflicts between the new agents (the supplier and the operator). This risk is known as interface risk. These conflicts may arise from a possible dilution of responsibilities between the agents, and lack of clarity in the assignment of contractual risks and reaction mechanisms in the event of the occurrence of certain events that affect the new agents in the system. In addition, the functioning of one contract or agent will depend on that of the others. Therefore, the proper functioning of the separation of lines of business depends on an appropriate legal definition of the responsibilities of each agent, especially in the case of the fleet supplier with the agent responsible for maintaining the fleet. In the first instance, there is a risk that the operating concessionaires provide service of low quality or are willing to abandon the operation of the system because they did not have to make a significant investment to enter the business. This risk can be mitigated with the establishment of performance incentives and recovery of the fleet to service levels according to their age. The most important and visible interface risk is the assignment of fleet maintenance to one of the two agents. The distribution of functions can generate limbos in the responsibilities assigned to 78 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report E-mobility business model each of the contracts, which could affect the correct maintenance of the fleet and the lifetime of the vehicles, among other aspects. In this case, the responsibility for maintenance becomes more complex; when the operator does not own the fleet and only provides working capital, if it recovers it in the first few years and if the incentives are not clear, in the following years it would not mind guaranteeing the useful life of the fleet. This makes it difficult to establish responsibilities for poor fleet performance. It is important to mention that in the integral scheme, as the operator is not responsible for the maintenance of the fleet, it may not follow the manufacturer’s protocols and this may affect aspects such as the vehicle warranty provided by the manufacturer. This risk can be mitigated by a maintenance program agreed to by both actors, with the revenue of the agents being impacted in case of noncompliance. In assigning maintenance responsibility to the agent providing the fleet, a risk is generated in the operation of the system for two main reasons: ▸ If this responsibility is not assigned to the operator, it is difficult for it to carry out its main activity. ▸ The coordination of fleet maintenance scheduling and the need to have it in operation becomes complex. It is essential to generate performance indicators that have the dual function of generating incentives and deductions for the operator to stimulate better service provision. If the maintenance of the fleet is not the responsibility of the operator, it can claim that the poor performance in providing the service is due to poor maintenance management by the fleet supplier. Another interface risks is the loss of coordination between operators in the system (e.g., in services that are “shared” between operators such as the use of yards as parking and for maintenance activities, among others). The interface risks described above can result in an increase in the cost of insurance and guarantees to be contracted by each of the agents. 79 E-mobility bussiness model Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report 80 05 Service improvement using new technologies Service improvement using new technologies Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report In this chapter, we will consider how technology is leveraged in the field of public transport to improve service and standards. New technologies with the renewal Users’ perceptions of fleets In order to determine the valuation and evaluation of e-buses operating in Red, a user experience survey was A fleet renewal process brings with it the opportunity to conducted, following the methodology described in introduce new technological aspects that improve the Appendix A. quality of service. In this way, the adoption of e-buses and new technologies for diesel buses such as Euro VI Sample characteristics in Santiago has raised overall standards, including by integrating air conditioning, Wi-Fi, USB chargers, padded In the sample, 488 complete surveys were obtained, seats, and low-floor entrances in the new buses. exceeding the sampling size calculated (384 surveys) with a 5 percent margin of error. The characterization of this In the context of Chile’s capital, air conditioning helps sample and the result of the valuation of the e-bus are alleviate high temperatures in summer. In addition, this presented below. technology becomes more necessary inside a bus, where temperatures tend to be higher than outside. For their Trip characteristics part, Wi-Fi, USB chargers, and padded seats make the Regarding the activity carried out by respondents at the trip more friendly and comfortable, improving the user time of receiving the flyer, 96 percent of people surveyed experience. These aspects are even more significant in were in the process of making a trip (waiting to get on or off large cities, where the duration of travel increases and a bus). Among these 96 percent respondents, 84 percent riding a bus can be tedious and annoying. Finally, a low- were using an e-bus versus 16 percent who were riding on floor entrance contributes to generating a universal public a traditional diesel bus. When the reason for the trip was transport system for all citizens. analyzed, it was highlighted that the trips are mainly for In addition, the e-bus telemetry and operation information study (48 percent) or work (34 percent), followed distantly may provide relevant data regarding the monitoring of by paperwork, health, or/and shopping (7 percent). buses. It is possible to study in detail the conditions in This is consistent with the frequency of the trip, since 74 the path of each bus of the system, evaluating speed percent of respondents who were making a trip do so at reductions at specific points of the route or other least once a day, as presented in figure 5-1. difficulties that e-buses present, such as range of batteries, maintenance elements, and differences in energy Figure 5-1: Trip frequency consumption across routes, allowing for the possibility of Occasionally 5% continuous improvement. How this information is used will depend on the protocols and openness of systems that Once a month 0% allow optimization, as well as the existence of contractual compliance and asymmetries of information between the More than state and service providers. once a month 4% These are not the only technological features available Once a week 1% on the bus market. Pedestrian proximity sensors, out- swinging type doors, security cameras, software to display More than variable system information inside the bus and at stops, once a week 15% and a passenger counter, are among other improvements that should be evaluated for each public transport system. Once a day 31% More than 43% once a day 0% 10% 20% 30% 40% 50% Source: Fieldwork conducted for the present study in 2019. 82 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Service improvement using new technologies User characteristics Regarding the personal characteristics of the respondents, gender and age range data are presented in tables 5-1 and 5-2. Table 5-1: Respondents gender Table 5-2: Respondent´s age range Gender Frequency Percentage Age range Frequency Percentage Male 237 49% Under 18 15 3% Female 242 50% 18 to 24 227 47% Other 3 1% 25 to 39 159 33% Prefer not to answer 6 1% 40 to 59 years 75 15% Total 488 100% 60 and over 12 2% Source: Fieldwork conducted for the present study in 2019 Total 488 100% Source: Fieldwork conducted for the present study in 2019 Valuation of e-bus attributes The survey included four questions aimed at understanding users’ perception of e-buses in the Santiago transport system. The first question invited the respondents to select the 5 most valuable attributes from a list of 13. Figure 5-2: Ranking of 5 best e-bus attributes (among a list of 13 attributes) En relación a los buses eléctricos en general, ordene los 5 aspectos que usted más valora (siendo el 1 el más valorado) Características Más valorado Cantidad de asientos Comodidad de los asientos Sensación de suavidad en la marcha del bus Piso bajo Genera menos contmainación ambiental Emite poco ruido Aire acondicionado Espacio interior Elementos para afirmarse Luminosidad del bus Ausencia de torniquete de pago Wifi Puerto USB Menos valorado Siguiente Source: Fieldwork conducted for the 0% present study in 2019. 100% 83 Service improvement using new technologies Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report The factor most commonly mentioned was: “It generates less environmental pollution.” This quality was highlighted among the first five best e-bus attributes by 83 percent of respondents. The next most commonly selected factors were “air conditioning” (72 percent), “feeling of smoothness in the running of the bus” (67 percent), and “emits little noise” (59 percent). Figure 5-3 illustrates the comprehensive feedback. Figure 5-3: E-bus attributes most valued by users It generates less environmental pollution 83% Air conditioning 72% Feeling of smoothness in the running of the bus 67% Emits little noise 59% Seating comfort 42% Absence of payment tourniquet 38% Interior space 33% Elements to a rm 22% Bus brightness 21% USB port 19% Number of seats 18% Wi 14% Low Flow 12% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: Fieldwork conducted for the present study in 2019 The second question was an evaluation: a rating scale of the characteristics of the e-bus from 1 to 7. For this, six aspects are considered: comfort, safety, design, interior spaces, access, and environmental sustainability. Figure 5-4: Evaluation of aspects of the e-bus Evalúe con nota del 1 al 7 los siguientes aspectos del bus eléctrico, considerando 1 como la calificación más baja y 7 la más alta 1 2 3 4 5 6 7 Comodidad Seguridad Diseño Espacios interiores Accesos Sustentabilidad ambiental (contamina menos) Siguiente 0% 100% Source: Fieldwork conducted for the present study in 2019 84 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Service improvement using new technologies The highest evaluated characteristic is environmental sustainability, obtaining an average grade of 6.7. Comfort and design are evaluated at the same level with an average rating of 6.2. Interior spaces and accesses receive the lowest scores at 5.9. Figure 5-5 presents the findings. Figure 5-5: Average rating of the general characteristics of an e-bus 6.8 6.7 6.6 6.4 Average rating 6.2 6.2 6.2 6.0 6.0 5.9 5.9 5.8 5.6 5.2 Comfort Security Design Interior Access Environmental spaces sustainability Source: Fieldwork conducted for the present study in 2019 The third question was a global assessment of the different types of buses used within the Santiago public transport system, based on a rating scale from 1 to 7. The types of buses evaluated were e-bus (Red), diesel bus (Red, Euro VI), and diesel bus (Transantiago). The e-buses received an average total of 6.4, the nonelectric Red buses a 4.3 grade, and the Transantiago buses a 3.4 grade, as shown in figure 5-6. Figure 5-6: Average rating of the different types of buses in Santiago’s transport system 7.0 6.4 6.0 5.0 4.3 4.0 3.4 3.0 2.0 1.0 0 Electric RED Bus Diesel RED Bus Transantiago Bus Source: Fieldwork conducted for the present study in 2019 85 Service improvement using new technologies Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Finally, the fourth question determines the responders’ level of agreement with six statements related to the use of the e-bus. The question and result are presented in figures 5-7 and 5-8. Figure 5-7: Level of agreement with statements about e-bus Indique su grado de acuerdo con las siguientes afirmaciones Muy en En Muy de desacuerdo desacuerdo De acuerdo acuerdo El uso de bus eléctrico ha mejorado mi comodidad en el viaje Estoy de acuerdo con el uso de buses eléctricos pues es una tecnología limpia (contamina menos) Todos los buses de transporte público debiesen ser eléctricos Me da lo mismo que el bus sea eléctrico o no, siempre que tenga el mismo equipamiento (asiento, usb, wifi, aire acondicionado, etc) Prefiero que pasen buses eléctricos a que pasen más buses por hora (menor tiempo de espera) Prefiero que pasen buses eléctricos a que buses circulen más rápido (menor tiempo de viaje) Siguiente 0% 100% Source: Fieldwork conducted for the present study in 2019 Figure 5-8: Analysis of level of agreement with statements about e-bus I prefer electric buses rather than buses that pass faster (less travel time) I prefer electric buses rather than more buses passing per hour (shorter wait time) I don't care if the bus is electric or not, as long as it has the same equipment (seat, usb, wi , air conditioning, etc) All public transport buses should be electric I agree with the use of electric buses because it is a clean technology The use of electric bus has improved my travel comfort 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Strongly Disagree Disagree Agree Strongly Agree Source: Fieldwork conducted for the present study in 2019 Figure 5.8 shows that respondents mostly agree with the use of e-buses within the public transport system. Many said that this new technology has improved their comfort level and that they support the use of e-buses because of the clean technology. As far as the comparison between best equipment versus electrical technology, 85 percent of the respondents said that the bus being electric is more important than the comfort level. Finally, it is observed that 50 percent of users agreed to investing in this technology while maintaining the same number of buses versus an increase in the fleet with any other technology. 86 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Service improvement using new technologies Exercise: willingness to wait for an This exercise aims to determine users’ willingness to wait to use an e-bus. This willingness to wait was measured in terms e-bus of the additional waiting time that the user would sacrifice A small exercise of choice between two trip alternatives in order to use an e-bus. was included in the survey. Both alternatives consider a trip The design considered three different cards of which the with the same characteristics (wait and travel time, fare, respondent could choose between waiting two minutes for occupancy level, etc.) except for the type of bus (electric a Transantiago’s diesel bus (this waiting time was fixed) or versus nonelectric). waiting three, five, or seven minutes for an e-bus. Figures 5-9, 5-10, and 5-11 represent the three cards. In case the user did not agree to wait for an e-bus, the survey did not show the following cards. Figure 5-9: A 2-minute versus 3-minute wait Si tuviera estas dos opciones para realizar su viaje. ¿Cuál escogería? Situación 1 Bus Transantiago Bus RED No eléctrico Bus eléctrico Tiempo de espera del bus: 2 minutos Tiempo de espera del bus: 3 minutos selección selección Siguiente 0% 100% Source: Fieldwork conducted for the present study in 2019 Figure 5-10: A 2-minute versus 5-minute wait Figure 5-11: A 2-minute versus 7-minute wait Si tuviera estas dos opciones para realizar su viaje. ¿Cuál escogería? Si tuviera estas dos opciones para realizar su viaje. ¿Cuál escogería? Situación 2 Situación 3 Bus Transantiago Bus RED Bus Transantiago Bus RED No eléctrico Bus eléctrico No eléctrico Bus eléctrico Tiempo de espera del bus: 2 minutos Tiempo de espera del bus: 5 minutos Tiempo de espera del bus: 2 minutos Tiempo de espera del bus: 7 minutos selección selección selección selección Siguiente Siguiente 0% 100% 0% 100% Source: Fieldwork conducted for the present study in 2019 Source: Fieldwork conducted for the present study in 2019 87 Service improvement using new technologies Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Table 5-3 represents the results of this exercise. In the case of card 1, which was shown to all respondents, 89 percent of users were willing to wait one more minute to board an e-bus. Eighty-nine percent of people were shown the second situation. With card 2, it was calculated that 74 percent of respondents were willing to wait five minutes (versus two minutes for the diesel bus) to use an e-bus. Finally, the results of card 3 demonstrate that 58 percent of those who saw this card were willing to wait an extra five minutes for an e-bus. Table 5-3: Result for each card Transantiago’s Card Extra waiting time Red’s e-bus Sample diesel bus 1 Extra 1 minute 52 (11%) 436 (89%) 488 (100%) 2 Extra 3 minute 112 (26%) 324 (74%) 436 (100%) 3 Extra 5 minute 136 (42%) 188 (58%) 324 (100%) Source: Fieldwork conducted for the present study in 2019. Figure 5-12 shows results with respect to the total sample (488 respondents). Here it is seen that 89 percent of respondents are willing to wait an extra one minute, 66 percent an extra three minutes, and 39 percent would wait an extra five minutes to use an e-bus. Figure 5-12: Willingness to wait to use an e-bus 39% 66% 89% 61% 34% 11% Extra 1 minute Extra 3 minutes Extra 5 minutes Transantiago’s diesel bus Red’s e-bus Source: Fieldwork conducted for the present study in 2019 Additionally, with the responses of the three cards, a multinomial logit model was calibrated, as shown in table 5-4. Table 5-4: Model of choice between e-bus and diesel bus Parameter Coefficient Test t [95% Conf. Interval] Waiting time -0.634 -15.5 -0.715 -0.554 E-bus constant 2.668 17.23 2.365 2.972 Source: Fieldwork conducted for the present study in 2019. 88 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Service improvement using new technologies The model resulted in a statistical significance with 95 percent confidence and correct signs of the parameters of the equation (see column “coefficient” in table 5-4). This implies a negative impact on the utility of the person when waiting time increases and a positive e-bus constant representing a good evaluation of the e-bus compared with the old standard. The modal constant of the e-bus can be expressed in terms of wait times, determined as the ratio between the constant parameter and the timeout parameter. The results demonstrated a 4.2-minute wait as the constant. Open-ended comments As a final component of the survey, respondents could provide open-ended comments if they wished to do so—391 comments were received. In general, the comments were positive and focused on aspects such as the use of clean technology, emission of less noise, comfort of the bus, and air conditioning. II think e-buses are the best we have had in public transport, they do not pollute and are comfortable, regardless of the waiting time. I prefer them.” Some aspects that could be improved are related to the lack of fresh the air in the interior of the bus, the lack of a back door to get off the bus, and outside visibility when riding in the back of the bus. When sitting in the last row it is not possible to see the bus route through the windows, so it is difficult to know when to leave the bus.” The absence of rear doors generates traffic jam in the internal circulations of the bus, making it difficult to leave it when the bus is full.” Sometimes the humidity of the air is too strong due the air conditioner. From time to time it is too high or too low, which isn’t nice. Also, when the bus is full, I feel suffocated because there are no windows to open and the air conditioner only works at the back of the bus. But I love the USB charger! It is the best in the world! They look alike the buses from Australia. These buses could be like the Danish buses that have space for bikes.” Respondents also had comments related to the operation of the buses. Regarding electric buses, I would like them to be faster or have a higher frequency.” The fleet of e-buses could be increased to accelerate the process of progressive increase in their frequency, so that as soon as possible old buses with lower than the Euro V technologies are taken out of the system.” 89 Service improvement using new technologies Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report 90 06 Lessons learned and recommendations Lessons learned and recommendations Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report In this section, we present the main lessons from Santiago’s experience with e-buses, and discuss how to use this knowledge for the planning, implementation, and management of e-buses in other cities. Figure 6-1: Lessons learned and recommendations Planning Implementation Management $ Financing and funding: Testing data and Monitoring bus collaborative simulations in real-life performance partnerships situations indicators State support and determination for Training e-bus drivers Maintenance lowering the risks of and personnel in management the business and charge of electrical reducing process times infrastructure use Smart charging Timing of the stages within the process Technical adjustments Continuous for demand-supply learning process Contract and nancial models that enable this business model Source: Steer, 2019 Planning or leasing rates. With this type of a financial model, a significant financial contribution from the government ▸ The core element of planning the implementation of is not necessary, but it must be involved in policy e-buses is the building of a cooperative partnership making and regulation. between private companies and the public sector. ▸ The government’s efforts in easing the transition to Private companies include bus operators, bus e-mobility is a key facilitator of the other stakeholders’ manufacturers, and financiers. The financing, actions. Government support can occur through which in this case is for bus acquisition and electric various means. The generation of policies (such as infrastructure, could come from traditional sources environmental agreements, the e-mobility strategy, such as banks, but also other companies with an and decarbonization initiatives in the case of Chile) incentive to invest in this business, and with sufficient encourages a series of actions than can have a direct knowledge of the related risks and competitive loans 92 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Lessons learned and recommendations impact on e-mobility. The state should also play the Implementation role of a facilitator by giving guarantees for leasing contracts, and ideally reducing the nonpayment risk ▸ Pilots are an essential element to consider when perceived by the financier. The government should also implementing e-bus fleets. Testing the actual accelerate some processes in order to shorten approval battery range and the capabilities of a bus under real periods for quicker implementation of this initiative. conditions in the city is key to estimating performance indicators such as autonomy and efficiency. In addition, ▸ The timing of the construction of the electric initiating the adoption of e-buses using pilots allows infrastructure have been explicitly mentioned in the for the testing of the different brands of buses in order report as critical to the implementation of an e-fleet. to check manufacturing data and simulations. To The efficient timing seen in Chile was made possible maximize the benefit of these pilots, the authority must by the support of the different actors involved in the ensure that the results and learning are made public. process. As experience shows, successful planning involves designing a map of electric capacity by zone/ ▸ Training is a priority. Training e-bus drivers, depot location, and estimating electricity requirements maintenance technicians, and personnel in charge and requisite dates for authorization, construction, and of electrical infrastructure use is essential for the installation. adequate operation of buses, since many performance indicators rely on their work. Here, the role of academia ▸ When estimating the number of chargers required is relevant in transforming current courses and careers within e-depots, it is necessary to consider when to adapt to the future challenges of e-mobility, and in the buses will be charged (with the use of charging preparing future professionals for the associated tasks. management technologies). This, in turn, requires due diligence from electricity companies and regulating authorities. Also, the planning phase includes the preparation of charging devices and their adaptation to the arriving fleet. In this sense, the standardization of Management chargers is desirable as a next step. ▸ The management and monitoring of e-buses’ ▸ Additionally, planning should consider the selection operation is mainly the responsibility of the of bus routes suitable for e-buses, in terms of slope bus operator but depends on the contractual and length, followed by the possible adjustments of agreements between the different actors, especially buses for operating on that route. Thus, it would be regarding maintenance of the fleet and the electric relevant to measure, with a certification process, how infrastructure, in addition to charging management the buses will adapt to local characteristics for the issues. future operation of the fleet. In Chile, the 3CV state ▸ The performance of the bus should be monitored agency, which operates under the MTT, constructed its from the first moment of operation. Real autonomies, own certification process for the inclusion of e-buses average consumption, battery wear, among others, are in the streets of Santiago after being tested in terms of important elements to have in mind when evaluating performance, range, and consumption under average the implementation of e-buses in the streets. operational conditions in the city. Understanding performance is key for bus operators, ▸ Technical adjustments of the operational plan for especially due to the monetary benefit associated demand and supply should be considered within with low operational costs. the planning stage. Replacing the existing buses ▸ Maintenance is an important issue to guarantee with e-buses has an impact on frequencies and fleet the availability of the e-fleet, and thus the proper volume (and therefore on the costs of the system). It operation of e-buses. Also, the management and is important to take into consideration that e-buses, control of the maintenance processes are relevant at least those introduced so far in Chile, have less for the operator because the cost of maintenance of passenger capacity per vehicle than the regular buses e-buses is less than that of diesel buses, giving the (with internal combustion engines). For nonarticulated operators a comparative advantage that needs to be buses, the relation in terms of capacity is not 1:1, so well monitored. to achieve the same level of supply, more buses are necessary, increasing the service fleet. In parallel, ▸ Likewise, the management of charging processes, frequencies for this new bus capacity need to be commonly known as smart charging, is relevant adjusted. If articulated buses, which are very common to ensure the availability of buses for operations. in Santiago, are replaced by nonarticulated e-buses Charging management also balances demand if because of the high cost of the electric technology the charging process is well planned, allowing the of articulated e-buses, the operational modifications charging of more bus batteries than feasible with the become even more important, and may restrain fleet power of the plant. This issue still remains a challenge renewal when frequencies are already too high. for the future implementation of e-mobility in Chile. 93 Lessons learned and recommendations Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Despite the sufficient process of charging management within the existing e-depots, there is emerging technology in the field of smart charging that could be applied in both existing and projected new e-depots of Santiago’s public transport system. ▸ The adoption of e-buses is a novelty in most cities in the world. The planning, implementation, and managing of e-fleets present new challenges to be addressed by both the companies involved and the regulator. Thus, the growing adoption of e-buses in different cities of Latin America and the world offers a continuous learning process as transport systems adapt to include this new, cleaner, and maybe even cheaper technology. These findings are relevant inputs for structuring public transport systems, particularly those in the process of the renewal of bus fleets. Future tendering processes with technological improvements, in Chile and abroad, may use aspects of the Chilean experience with e-mobility in their required analyses, to help with the design, planning, and implementation of public transport systems, as well as the reduction of associated risks. Sustainable transport systems are the future of mobility worldwide. E-mobility has presented itself as an affordable and effective alternative to replace old business models and move toward cleaner and more efficient technologies. 94 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Lessons learned and recommendations 95 References Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report 96 07 References References Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report ADB (Asian Development Bank). 2018. Sustainable CNE (National Energy Commission) and Ministry of Transport Solutions: Low Carbon Buses in the People’s Energy. 2019. Anuario Estadístico de Energía 2018. https:// Republic of China. Manila: ADB. https://www.adb.org/ www.cne.cl/wp-content/uploads/2019/04/Anuario- publications/sustainable-transport-solutions-peoples- CNE-2018.pdf. republic-china. 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San Juan, P. 2019. “Fitch mantiene clasificación de riesgo para Chile y afirma que reformas podrían ofrecer una perspectiva positiva.” LT (La Tercera) PULSO, February 22, 2019. https://www.latercera.com/pulso/noticia/fitch- mantiene-clasificacion-riesgo-chile-asigna-perspectiva- estable/540008/. 99 References Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report 100 Appendix A Appendix A Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Data gathering The initial task was the collection of relevant data to better understand e-mobility in Santiago. For this activity, existing and available public data sources were identified and analyzed. Interviews with key stakeholders provided further local insight and relevant information on existing initiatives, providing information on the progress and issues that had been addressed politically at the local level. Once all data were collected, they were analyzed and used as key information in developing the present report. A user perception survey was also part of the data collection task, conducted with the main objective of understanding passengers’ preferences regarding e-buses. Desk research The literature review was comprehensive (see the references section of this report); the following studies were especially useful: ▸ Sustainable Transport Solutions: Low Carbon Buses in the People’s Republic of China (ADB, 2018) ▸ Electric Buses in Cities: Driving Towards Cleaner Air and Lower CO2 (Bloomberg New Energy Finance, 2018) ▸ “Low Carbon Technologies Can Transform Latin America’s Bus Fleets” (C40 Cities, 2013) ▸ “Oportunidades para el Desarrollo de la movilidad eléctrica en la ciudad de Santiago: Propuesta para el Transporte Público” (Centro Mario Molina, 2014) ▸ “Electric Buses in America: Lessons from Cities Pioneering Clean Transportation” (Frontier Group, 2019) ▸ Green Your Bus Ride: Clean Buses in Latin America (World Bank, 2019) ▸ “United Nations Framework Convention on Climate Change” (United Nations, 2019) Interviews To define the actors involved in the process of introducing e-buses to Santiago, one of the first steps was to map the relevant stakeholders who could influence decision-making, enable the adoption process, or provide support and knowledge. Figure A-1 summarizes the actors mapped, grouped by their role. Figure A-1: Actors involved in the introduction of e-buses $ $ $ $ $ (1) (2) (3) (4) (5) Government Technical Government Energy companies or Private sector bus Bus manufacturers Authorities Teams other investors operators Representatives from each group of stakeholders provided valuable insight into the process of adoption of e-buses. The interviews conducted for the present report are listed in table A-1. 102 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Appendix A Table A-1: Interviews conducted for the study Relevance to the study Technical capacity Role Regulation Type Stakeholder Name Position Financial Energy Policy 1 Fernando Saka Executive Director     Diego Puga Head of Finance and Management Control    Coordinator of the Bidding Process for Bus Metropolitan Public Ignacio Abud     Operations Transport Board (DTPM) Coordinator of the Bidding Process for Bus Santiago Larraín     Provision Nathalia Maira Head of Planning    Public sector Loreto Porras Users’ Experience Manager  2 Ministry of Mauricio Funes National Coordinator of Electromobility     Transport and Telecommunications (MTT) Manuel Valencia Head of Press  Ministry of Energy Armando Pérez Professional at Sustainable Energy Department    National Energy Jerson Reyes Head of Research Innovation Unit    Commission (CNE) Fabián Acuña B2B Enel X    Rodrigo Carrau Head of E-Mobility Chile    Enel X Jean Paul Head of E-Mobility South America    Zalaquett 3 Carlos Arias B2B Engie Chile    Engie Laurent Furedi Costumer Solutions Green Mobility    Private COPEC Francisco Larrondo Mobility Head at COPEC    sector NeoT Capital Víctor Cabanes Investment Director  Buses Vule Pablo Dosque Head of e-Bus Projects     4 Metbus Héctor Moya Director     RedBus (Transdev) Henri Rohard Head of Commercial Business     Yutong (Gildemeister) Cristian Pérez Head of Buses Division    5 BYD Chile Tamara Berríosa Country Manager    Superintendence of Julio Clavijo Head of Renewable Energies and Electromobility    - Other Electricity and Fuel (SEC) Gustavo Hunter Electromobility Professional    Source: Fieldwork conducted for the present study in 2019. Note: Role 1–5 are designated as 1 = government authorities; 2 = private sector bus operators; 3 = bus manufacturers; 4 = technical government teams; 5 = energy companies and investors. a Presentation at UITP. 103 Appendix A Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report User experience surveys To complement the information collected through literature reviews and interviews, a user experience survey was conducted to identify the preferences of passengers in the Santiago public transport system. Specifically, they were asked to evaluate the e-buses operating in the Grecia corridor. The survey had four categories of questions: (i) characterization of the trip, (ii) valuation of the attributes of the e-bus, (iii) willingness to wait for an e-bus versus a traditional diesel bus (with the same fare), and (iv) the unique characteristics of the individual respondents, in addition to an open- ended comment form. More details on the methodology used are given below. Figure A-2: Questionnaire’s structure Trip characteristics section Type of bus used Purpose of the trip Trip frequency Travel time Timing of the trip Frequency of use of e-buses Valuation of the attributes of the e-bus Ranking of 5 best e-bus attributes (among a list of 13 attributes) Evaluation (with a rating scale from 1 to 7) of aspects of the electric bus Evaluation (with a rating scale from 1 to 7) of the di erent types of buses Degree of agreement with statements regarding the electric bus Exercise of willingness to wait for an e-bus Choice of a trip on a nonelectric bus vs waiting extra time for an e-bus (with all other factors held constant) Characteristics of the individual and open-ended comment section Questions on the age and gender of the people surveyed Open-ended comment Source: Fieldwork conducted for the present study in 2019 User experience surveys’ methodology The objective of the user survey of the Santiago public transport system was to determine the valuation and evaluation of the Red e-buses. The survey was conducted online, and a specific website was created for the purpose. To encourage participation, 5,000 flyers were distributed in different areas of the Avenida Grecia bus corridor, in which electrical and diesel bus services operated simultaneously. In addition to displaying the website (www.buselectrico.cl), the flyers give instructions on how to access the questionnaire. 104 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Appendix A Figure A-3 shows the two sides of the flyer. Figure A-3: Flyer’s content PREMIO Responde hasta el 9 de octubre de 2019 Cuéntanos tu experiencia y participa en el sorteo* de: al viajar en un bus eléctrico Gift Card $100.000 Expresa tus preferencias de viaje en Contraseña única www.buselectrico.cl e ingresa tu contraseña única para responder la encuesta. *Consulta las condiciones del sorteo en www.buselectrico.cl Tu participación será de gran utilidad. Los únicos Ingresando a PARTICIPA datos personales requeridos son los mínimos www.buselectrico.cl Y GANA necesarios para la participación en el sorteo. Con el apoyo de Tus respuestas nos ayudarán a mejorar el sistema de transporte público de Santiago. Source: Fieldwork conducted for the present study in 2019 The flyers were distributed at four bus stops of the corridor, during morning rush hours (7:00–9:30) and off-peak hours (9:30–14:00), and in the direction of the city center. This work was carried out on October 3 and 4, 2019. Figure A-4 shows the delivery points. Figure A-4: Locations of flyer delivery points N Grecia- Metro Estadio Nacional Grecia-Macul Grecia-Metro Grecia Flyer delivery points location Grecia-Tobalaba Grecia Corridor Bus stops Source: Fieldwork conducted for the present study in 2019 105 References Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report 106 Appendix B Appendix B Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Alternative modeling techniques MAC: Marginal abatement cost model The marginal abatement cost (MAC) model is a tool mostly used in evaluating the costs and potential savings from different emission reduction technologies. This information can help governments decide on the level of ambition of their mitigation strategy and make informed domestic and international commitments. The choice of an optimal bus technology for a particular corridor or city depends on a variety of factors, including which pollutants are of the highest concern (e.g., greenhouse gases [GHGs] or health impacts of particulate matter [PM] and others), balanced by cost and feasibility considerations, which vary significantly from city to city. A MAC curve provides information on abatement costs and abatement potentials for a set of mitigation measures expected within a particular time period (or a specific year) in the future, and ranks them according to their cost, from the least to the most expensive. MAC graphs depict the economic costs of carbon dioxide (CO2) emission reduction measures relative to a baseline situation. The graphs show the cost of reducing one tonne of CO2 using a particular emission reduction measure as well as the magnitude of the potential CO2 savings. The inclusion of multiple emission reduction measures in one graph allows for comparison across CO2 reduction options. The World Bank develops and promotes a piece of software called MACTool (Vogt- Schilb, Hallegatte, and De Gouvello, 2014), which can produce achievable potential MAC curves. Three basic modeling approaches are used to build MAC curves: a bottom-up individual assessment of technologies/abatement measures, a bottom-up system modeling approach, and macroeconomic modeling. Figure B-1: A measure-explicit marginal abatement cost curve Y 5 c 4 3 2 X Abatement potential at T 1 A MtCO2/yr Source: Vogt-Schilb, Hallegatte, and de Gouvello, 2014. 108 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Appendix B The general appearance of the curve suggests that Figure B-2: Interpretation of marginal abatement cost histograms measure 3, if implemented, has a potential abatement A and a marginal cost c, and the flatter and wider the 90 graphical representation, the better the cost-effectiveness. Marginal abatement cost (USD / tonne CO2) This tool can also be used to define a set of measures 60 Less cost-efficient options to achieve the emission reduction target, that is, the Opt 4 “abatement demand” X should be met by implementing 30 measures 1 to 4, possibly using the marginal cost up to Cost of a tonne of CO2 saved by Opt 3 carbon price Y. 0 the option Cumulative CO2 saved Opt 2 (tonne) Inputs 600 1,200 1,800 2,400 3,000 -30 MACTool takes the key sociotechnical parameters of a Opt 1 set of large mitigation measures and macroeconomic More cost-efficient -60 options variables as inputs. It can be developed using spreadsheet software. The user must also specify at least one scenario -90 for the future macroeconomic variables of interest, such CO2 saved by the option as the price of fossil fuels and the future demand for electricity. Finally, the user must provide scenarios for the future penetration of (low-carbon) technologies in both Source: World Bank, 2019 the baseline case and at least one emission-reduction scenario. The World Bank used this methodology in the study called This tool can be used to conduct a cost-effectiveness “Green Your Bus Ride: Clean Buses in Latin America” to analysis of the MAC of reducing a tonne of CO2 evaluate different bus technologies. The MAC results for emissions when switching from diesel buses to clean Santiago showed that fast-charging battery e-buses (BEBs) bus technologies. The analysis considered the total cost are the most cost-effective, while the depot-charging BEBs of ownership (TCO) for each technology, as well as the pose moderate and low costs with externalities, offering externality costs of air pollution (nitrogen oxide [NOx] and high CO2 reduction potential. Compressed natural gas PM). (CNG) buses are the least economically viable technology due to high CNG fuel costs in Chile and low CO2 mitigation In this case, the main objective is to evaluate various potential. Hybrid (HBD) buses are not cost-effective in technologies and compare them to diesel buses (Euro V, Santiago ($149 per tonne of CO2 reduced). for example) in terms of both the cost-effectiveness of emission reduction ($ per tonne of CO2, $/tCO2) and the The cost-effectiveness results presented above do not potential CO2 savings (tCO2). MACs are calculated by taking represent definitive findings, but they provide initial input the difference in TCOs between clean buses and diesel for local decision-makers considering which clean bus buses and dividing it by the difference in CO2 emissions. It technologies may be the most powerful and cost-effective is important to note that the cost-effectiveness analysis for reducing CO2 emissions and reducing the harmful is dependent on a set of factors that vary over time impact of air pollution. (e.g., as technologies evolve) and are subject to local Figure B-3: Marginal abatement cost histogram for Santiago interpretation. Outputs 1,850 Less cost-efficient options Marginal abatement cost (USD / tonne CO2) 1,800 As outputs, MACTool computes the amount of GHGs 1,750 1,840 saved by each measure in the long run (in metric tonnes 1,700 of carbon dioxide [MtCO2]), and the cost of doing so (in $/ 1,650 1,665 tCO2). This information is illustrated with two figures: an 1,600 MAC w/o achievable potential MAC curve and an abatement wedge externalitites curve. 200 MAC with externalitites 150 The MAC histograms illustrate the cost and CO2 reduction 100 149 Cumulative potential of each clean bus technology as follows: 50 600 1,200 13 9 CO2 saved -74 (tonne) 0 ▸ The vertical height represents the cost to reduce one -50 -53 1,800 2,400 0 3,000 tonne of CO2 emissions, with negative values (below the -100 -57 line) indicating net cost savings. BEB fast BEB depot Hybrid CNG ▸ The horizontal width of each bar indicates the Source: World Bank, 2019 cumulative CO2 reduction potential from each bus technology over its lifetime. The MAC work derives from the analysis and modeling of all the relevant sectors in the assessment. When the MAC 109 Appendix B Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report data from all sectors are modeled in one chart, it creates a clear and simple picture that compares green measures by costs and benefits across sectors. The previous examples show that this tool can be used as a basis to make decisions about new policies aimed at reducing emissions or to evaluate existing ones, using the cost-effectiveness approach. It can be widely used for comparing technologies, for example, e-buses compared to diesel or other clean buses. However, there are several restrictions on its use—it is not suitable for market-based policy evaluation as it fails to capture the amount of interactions and the probabilities of the scenarios. Its curve only refers to static concepts that do not illustrate dynamic effects. One possible solution is to use ancillary bottom-up models, with the other information needed to calibrate assumptions based on market dynamics or technology details, such as a model for measuring the TCO of e-buses. In this way it is possible to define policies and measures, and their corresponding CO2 saving efficiency, maintaining a consistent structure. GREET: Greenhouse gases, Regulated Emissions, and Energy use in Transportation Model The GREET model is an analytical tool that simulates the energy use and emissions output of various vehicles and fuel combinations. Its approach takes into account the fact that in order to get a complete picture of the energy and environmental impact of a technology, it is important to consider the full life cycle from well to wheels for fuels and from raw material mining to vehicle disposal for automobiles. GREET has two platforms: GREET.net, software that provides the user with an easy-to-use toolbox to perform life-cycle analysis simulations; and the GREET Excel Model Platform, the traditional multidimensional spreadsheet model that includes two submodels: the Fuel Cycle Model (which contains data on fuel cycles and vehicle operations) and the Vehicle Cycle Model (which evaluates the energy and emission effects). Additionally, GREET has four available tools: ▸ Well to Wheels (WTW) Calculator ▸ Alternative Fuel Life-Cycle Environmental and Economic Transportation (AFLEET) tool ▸ Fleet Footprint Calculator ▸ Travel Carbon Calculator The first tool summarizes the WTW results of energy use, GHG emissions, water consumption, and air pollutants emissions for different vehicle technologies. The AFLEET tool estimates petroleum use, GHG emissions, air pollutant emissions, and cost of ownership of light- and heavy-duty vehicles. The Fleet Footprint Calculator allows a vehicle consumption factor to be calculated by type of fuel, where the types of existing vehicles are determined and the model gives the consumption of those vehicles for natural gas, diesel, biofuel, and so on. The limitations of the model are that the bus options do not include the full variety existing in different cities (for example, it does not include biarticulated buses like those used in TransMilenio in Colombia) and that they are calibrated for US behavior only. By using the Travel Carbon Calculator, it is possible to obtain the CO2 emission variations including all the activities that are needed to get the fuel from its source to the car. For example, crude oil drilling, pumping, refining, and shipping contribute to the carbon footprint of gasoline, as well as the tailpipe emissions. Inputs The inputs for the GREET model will depend on the results the user needs. They can include fleet size, vehicle miles traveled, and fuel economy. For example, the user could compare different fuels/ technologies for consideration of future purchases. 110 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Appendix B Table B-4: Example of inputs for GREET model 2. Number of Each Type of Vehicle in On-Road Fleet Liquefied Compressed Liquefied Gaseous Liquid Diesel Biodiesel Biodiesel Ethanol Petroleum Gasoline Diesel Natural Gas Natural Gas Electricity Hydrogen Hydrogen HEV (B20) (B100) (E85) Gas/Propane CNG LNG (G.H2) (L.H2) LPG School Bus 0 0 0 0 0 0 0 0 0 0 0 0 Transit Bus 0 0 0 0 0 0 0 0 0 0 0 0 Shuttle/Paratransit Bus 0 0 0 0 0 0 0 0 0 0 0 0 Waste Hauler 0 0 0 0 0 0 0 0 0 0 0 0 Street Sweeper 0 0 0 0 0 0 0 0 0 0 0 0 Delivery Step Van 0 0 0 0 0 0 0 0 0 0 0 0 Transport/Freight Truck 0 0 0 0 0 0 0 0 0 0 0 0 Medium/Heavy Duty 0 0 0 0 0 0 0 0 0 0 0 0 Pickup Truck Maintenance Utility 0 0 0 0 0 0 0 0 0 0 0 0 Vehicle Other 0 0 0 0 0 0 0 0 0 0 0 0 3. The Average Annual Vehicle Miles Traveled by Each Vehicle Type Liquefied Liquid Compressed Liquefied Gaseous Diesel Biodiesel Biodiesel Ethanol Petroleum Hydro- Gasoline Diesel Natural Gas Natural Gas Electricity Hydrogen HEV (B20) (B100) (E85) Gas/Propane gen CNG LNG (G.H2) LPG (L.H2) School Bus 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 Transit Bus 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 Shuttle/Paratransit Bus 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 Waste Hauler 23,400 23,400 23,400 23,400 23,400 23,400 23,400 23,400 23,400 23,400 23,400 23,400 Street Sweeper 12,600 12,600 12,600 12,600 12,600 12,600 12,600 12,600 12,600 12,600 12,600 12,600 Delivery Step Van 16,500 16,500 16,500 16,500 16,500 16,500 16,500 16,500 16,500 16,500 16,500 16,500 Transport/Freight Truck 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000 Medium/Heavy Duty 11,400 11,400 11,400 11,400 11,400 11,400 11,400 11,400 11,400 11,400 11,400 11,400 Pickup Truck Maintenance Utility 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 Vehicle Other 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 4. The Average Fuel Economy for Each Vehicle Type in the On-Road Fleet (miles per gasoline gallon equivalent) Liquefied Compressed Liquefied Gaseous Liquid Diesel Biodiesel Biodiesel Ethanol Petroleum Gasoline Diesel Natural Gas Natural Gas Electricity Hydrogen Hydrogen HEV (B20) (B100) (E85) Gas/Propane CNG LNG (G.H2) (L.H2) LPG School Bus 6.0 7.0 8.5 7.0 7.0 6.0 6.0 6.0 6.0 20.5 12.0 12.0 Transit Bus 2.5 3.0 3.8 3.0 3.0 2.5 2.5 2.5 2.5 8.5 5.0 5.0 Shuttle/Paratransit Bus 7. 8.0 10.0 8.0 8.0 7.0 7.0 7.0 7.0 24.0 14.0 14.0 Waste Hauler 2.0 2.5 3.0 2.5 2.5 2.0 2.0 2.0 2.0 7.0 4.0 4.0 Street Sweeper 3.0 4.0 5.0 4.0 4.0 3.0 3.0 3.0 3.0 10.0 6.0 6.0 Delivery Step Van 12.0 15.0 18.5 15.0 15.0 12.0 12.0 12.0 12.0 41.0 24.0 24.0 111 Appendix B Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report 4. The Average Fuel Economy for Each Vehicle Type in the On-Road Fleet (miles per gasoline gallon equivalent) Liquefied Compressed Liquefied Gaseous Liquid Diesel Biodiesel Biodiesel Ethanol Petroleum Gasoline Diesel Natural Gas Natural Gas Electricity Hydrogen Hydrogen HEV (B20) (B100) (E85) Gas/Propane CNG LNG (G.H2) (L.H2) LPG Transport/Freight Truck 5.0 6.0 7.5 6.0 6.0 5.0 5.0 5.0 5.0 17.0 10.0 10.0 Medium/Heavy Duty Pickup Truck 9.0 11.0 13.5 11.0 11.0 9.0 9.0 9.0 9.0 31.0 18.0 18.0 Maintenance Utility Vehicle 20.0 25.0 31.0 25.0 25.0 20.0 20.0 20.0 20.0 68.0 40.0 40.0 Other 2.5 3.0 3.8 3.0 3.0 2.5 2.5 2.5 2.5 8.5 5.0 5.0 Source: User Guide for GREET Fleet Footprint Calculator (2012). Outputs In terms of outputs for a given vehicle and fuel system, GREET separately calculates: ▸ Total energy consumption (from nonrenewable and renewable sources), fossil fuels (petroleum, fossil natural gas, and coal together), petroleum, coal, and natural gas; ▸ Emissions of carbon dioxide equivalent (CO2eq) GHGs—primarily CO2, methane (CH4), and nitrous oxide (N2O); and ▸ Emissions of six criteria pollutants: volatile organic compounds (VOCs), carbon monoxide (CO), NOx, PM10 and PM2.5, and sulfur oxide (SOx). GREET includes more than 100 fuel production pathways and more than 80 vehicle/fuel systems.55 55 https://greet.es.anl.gov. 112 Lessons from Chile’s Experience with E-mobility: The Integration of E-Buses in Santiago | Report Appendix B 113 Lessons from Chile´s Experience with E-Mobility: The Integration of E-Buses in Santiago