Electric School Buses and the Grid

Unlocking the power of school transportation to build resilience and a clean energy future
Released by: Environment Texas Research and Policy Center

School buses are the largest form of public transportation in the United States. Every day, 480,000 of them carry up to half of America’s children to school and back.

Currently, fewer than 1% of the nation’s school buses are powered by electricity, but with advances in electric bus technology, growing understanding of the benefits of electrification, and now a fresh influx of federal money through the Infrastructure Investment and Jobs Act, electric school buses are becoming an increasingly viable option for school districts. Electric school bus models are now available to meet every use case, and the number of districts that have committed to electric school bus adoption, or have drawn up plans to do so, is growing.

Transitioning to electric school buses would provide numerous benefits to communities and the environment, including improving children’s health and reducing air and noise pollution, as well as reducing the disproportionate burden that this pollution places on underserved communities. 

Electric school buses have the potential to bring even greater benefits if they are equipped with technology that allows them to deliver power to buildings and back to the grid.

Vehicle-to-grid (V2G) technology enables electric school buses to provide stability, capacity and emergency power to the grid when needed, and potentially to earn revenue for school districts for providing these and other services. Policy-makers, utilities, school districts and transport operators should work to unlock these benefits through creative public policies and partnerships. 

The unique characteristics of school buses make them ideally suited to serve as a source of energy storage and emergency power. Their use patterns allow them to be available as a source of large volumes of energy storage, especially at the times when the grid is most vulnerable. If every yellow school bus currently in operation across the United States were replaced with a V2G-capable electric bus of the same type, this would add over 60 gigawatt-hours (GWh) to the country’s capacity to store electricity.

V2G technology can deliver benefits for vehicle owners, utility ratepayers and communities.

Electric school buses with V2G technology can reduce greenhouse gas emissions from both the transportation and power generation sectors – the two sectors of the U.S. economy that contribute most to global warming.

  • Replacing all of the country’s diesel-powered school buses with electric models would in itself contribute to a sizable reduction in greenhouse emissions, avoiding roughly 8 million metric tons of emissions per year.

  • A 2016 study found that the use of V2G in electric school buses could eliminate an average of more than 1,000 metric tons of CO2-equivalent greenhouse gas emissions over the lifetime of the bus. The same study found that the use of V2G eliminates enough pollution to completely offset the air pollution damage caused by charging electric school buses from the grid.  

  • A Columbia University study calculated that a fleet of 1,550 electric school buses providing peak shaving services – managing overall energy demand to eliminate short-term consumption spikes – could reduce CO2 emissions by 5,500 tons over five years and produce a decrease in electricity-related local air pollution.

  • By enabling utilities to draw on distributed sources of energy, large-scale adoption of V2G technology could potentially also lessen the need for new physical power plants, bringing savings for utilities as well as environmental and health benefits – particularly for minority and low-income areas, since peaker power plants are often located in these areas.

The battery storage provided by electric buses could speed the transition to a renewable energy grid, since batteries can absorb renewable energy when it is available in abundance and release it during periods when it isn’t, such as at night (in the case of solar). 

  • A 2017 study calculated that if a significant share of the light-duty motor vehicles currently registered in the territory covered by the PJM Interconnection – the largest power grid operator in the U.S. – were electric and V2G-capable, this could increase renewable energy development by 51 GW. Similar benefits are anticipated with electric school buses.

  • A California study found that a mix of V1G (or ‘smart charging’ – unidirectional controlled charging where EVs or chargers modify their charging rate according to signals from the grid operator) and V2G-equipped EVs can enable “substantial” mitigation of “ramping” (sudden and potentially disruptive changes in power production – a particular issue with solar) equivalent to avoiding construction of 35 600-MW natural gas plants for that purpose. 

Energy stored in school bus batteries can also support a range of services to improve the functioning of the grid. These include:

  • Demand response/peak shaving: V2G allows a vehicle to discharge energy back to the grid as demand peaks, lessening the need for utilities to invest in or buy power from dirty and expensive “peaker” power plants that run on fossil fuels. 

  • A 2020 study found that a mix of V2G and G2V (grid-to-vehicle) can reduce the difference between minimum and maximum daily net load enough to lessen utility companies’ need for costly capacity expansion and help maintain electricity price stability. 

  • Energy arbitrage: By purchasing and storing energy when demand and cost are low and redistributing it when demand is high, energy arbitrage could enable owners of distributed storage provided by V2G EV fleets to bid on energy markets alongside operators of peaker plants, thus providing storage owners with a source of revenue. 

    • A 2019 study assessing the economic viability of inserting V2G systems into energy spot markets for the purpose of energy arbitrage found that, based on the markets in 2019 in Germany, revenues could range from €200 to €1,300 ($235 to $1500) per EV per year.

In addition to V2G capabilities, when equipped with the right technology, electric school buses can bring further benefits, for example providing backup power to support emergency management efforts and critical infrastructure during power outages. A fleet of V2G-enabled electric school buses could become an important temporary power source during outages – essentially becoming a fleet of mobile batteries that can be deployed at short notice to provide emergency power to homes, businesses, hospitals and shelters.

With the right incentives and effective collaboration between school districts and utilities, electric school buses can be a cost-efficient alternative to their diesel counterparts, producing major savings in lower operating costs from reduced spending on maintenance and fuel, while also providing greater predictability in costs due to the relative stability of electricity prices compared to fossil fuel prices. 

When these vehicles are equipped with V2G, the financial benefits can be higher still. Provided the right mechanisms are put in place, including appropriate rates and tariffs, V2G school buses can potentially benefit school districts by providing services to the grid for which school districts may be compensated in various ways by utilities and system operators.

  • Modelling of a V2G peak shaving program using a fleet of school buses in California found that the savings created outweighed the costs the program incurred, making it beneficial for both utilities and schools.

Replacing every yellow school bus currently in operation across the United States with a V2G-capable electric bus of the same type would create a total of 61.5 GWh of extra stored energy capacity – enough to power more than 200,000 average American homes for a week – and 6.28 gigawatts (GW) of instantaneous power, providing power output equivalent to over 1.2 million typical residential solar roof installations or 16 average coal power generators. 

Figure ES-1. Potential electricity storage capacity of school bus fleets by state if states’ existing fleets were replaced with electric buses.

Electric buses could also provide valuable backup power during emergencies:

  • The energy stored in a single Type D bus could power the equivalent of five operating rooms for more than eight hours, and a single operating room for 43 hours.

  • Electric school buses could also provide backup power in remote areas that need electricity during outages.

V2G technology is still in its infancy, and while it potentially opens up a range of opportunities for schools, utilities and communities, there are still a number of barriers that will need to be overcome before those opportunities can be fully accessed.

Realizing the full potential of V2G school buses will require collaboration between school districts, utilities, vendors and other entities, and revising public policies to ensure that investments in electric school buses and V2G make financial sense for school districts and utilities. 

To help make this happen, the federal government should:

  • Invest in electric school buses. The Infrastructure Investment and Jobs Act passed in November 2021 allocates $2.5 billion for new electric school bus purchases and a further $2.5 billion for alternative fuel buses – including electric ones. Maximizing the benefits V2G school buses are able to deliver will require large numbers of buses, which will necessitate further, sustained federal investment over the coming years, with funding particularly targeted at under-resourced school districts. 

  • Develop tools and educational materials to enable school districts to better understand the costs and benefits of electric buses and V2G and thus be able to include V2G benefits in any calculations of return on investment of electric school buses.

  • Provide funding for V2G pilot programs to enable a fuller understanding of the challenges of V2G and the costs and benefits it can bring to school districts, utilities and other stakeholders, as well as to develop best practices to enable all stakeholders to get the most out of this technology. Funding should be allocated to a diversity of districts, including those serving underserved populations.

  • Support research to develop and standardize hardware, software, regulations and practices needed for electric school buses to integrate with the grid and participate in energy markets, as well as to determine the value of V2G and the potential benefits it can produce. 

  • Increase funding for research on potential business models for public-private partnerships to help school districts with the upfront costs of electric school bus adoption, including identification of federal, state and local policies that may create barriers or incentives to such models, and develop resources to inform state and school district decision-making.

States should: 

  • Develop policies to unlock the various value streams V2G can provide. Such policies might include exempting bus owners from regulation as public utilities and experimenting with feed-in-tariff (FIT) programs and other forms of compensation that may provide a simple, appealing way of compensating school districts for the V2G services they provide.

  • Provide grant/voucher programs and subsidies for school districts to go electric. This will ensure school districts and the communities they serve will experience the cleaner air, reduced greenhouse gas emissions and other benefits of electric buses without additional financial burdens. The process of applying for funding should be streamlined to minimize administrative burdens on school districts and ensure that school districts do not have to cover upfront costs for application or the procurement of buses.

  • Prioritize funding for underserved communities. Communities that suffer the most from the environmental and public health impacts of diesel school buses are often those with the fewest resources available to invest in transitioning to electric ones. Under-resourced school districts, including majority-minority schools and those serving low-income communities and communities facing disproportionate air pollution, should be given priority in the allocation of funds so as to ensure that those with the most to gain from clean transportation have the resources necessary to cover vehicle purchases, infrastructure and operating costs, and the provision of job training programs to address the concerns of mechanics and maintenance staff.

  • Develop a roadmap to enable regulators to support the development of V2G and facilitate the creation of regulations and policies to minimize the risks for utilities and school districts. This would pave the way for standardization and interoperability of V2G infrastructure, encourage coordination between key stakeholders, and provide greater clarity on regulatory and policy frameworks so as to give utilities the necessary support for getting V2G initiatives approved and implemented.

Regulators and utilities should: 

  • Clarify the regulatory status of V2G operations and virtual power plants to allow them access to energy markets. State public utility commissions should develop a coherent regulatory framework for V2G and ensure that electric vehicles with bidirectional flow are not subject to the same laws and regulations as public utilities.

  • Provide funding for V2G pilot programs. Utilities should provide financial assistance to enable school districts to participate in V2G pilot programs. This should include assistance covering the upfront cost of buses, as well as charging infrastructure and technical and operational support, and incentives for early adoption, particularly to ensure that under-resourced districts have the opportunity to participate in well-supported V2G pilot programs.

  • Encourage the creation of financing programs whereby utilities front the initial investment for electric school buses and allow school districts to pay back on utility bills as they save on fuel and maintenance costs. Such programs can help school districts overcome the higher upfront costs of electric buses and deliver monetary savings immediately, opening the door to participation for a wider variety of school districts, including districts with fewer resources.

  • Restructure electricity rates so as to provide discounted off-peak charging, limit or eliminate demand charges for EV and electric school bus charging, and experiment with policies and practices that allow buses to be used for energy storage and employ vehicle-to-grid technology. Such policies might include premium tariff rates for V2G power similar to current feed-in-tariff programs for renewable energy. 

  • Work to establish dialogue and collaborative partnerships with school districts and public officials in planning and implementing a transition to electric bus fleets which is beneficial to all parties involved, for example including the development of rates for electricity specific to electric school buses.

School districts should:

  • Commit to a full transition to electric buses on a specific timeline. These commitments will help grow the market, drive technological innovation, and enable school districts to reap the benefits of economies of scale in infrastructure, operational experience, and electricity pricing.

  • Invest in as large a fleet as possible as soon as possible. Districts should also ensure the availability of additional electrical capacity and build the infrastructure to be able to add more chargers. The larger the fleet, the greater its ability to participate in EV-specific programs.

  • Establish solid collaborative partnerships with utilities from an early stage and open a dialogue about goals and interests from the outset. School districts should work with public officials and local utilities to enact a transportation rate for electricity and use rate modeling in the planning process for launching electric bus service.