CHAPTER 9
Funding and Implementation Approaches

Funding

One of the biggest challenges with resilience efforts, once an agency has dedicated resources to evaluating fleet resilience, is securing funding for implementing adaptation measures. Each adaptation measure has different costs associated with it, and some, such as many of those that mitigate the risk of power interruptions, can cost millions of dollars. Incorporating resilience planning into a ZE transition plan helps plan for funding needs as well. For example, AC Transit reviews its long-range funding predictions annually to incorporate changes in technology, new threats, and availability of solutions. Grants are a significant source of funding for resilience projects, and having a plan for adaptation measures prior to the release of a funding opportunity will streamline the agencyʼs funding search and application processes.

However, not all resilience measures will necessarily be implemented using grant funding. For example, the majority of the cost of Metro Transitʼs dual utility feeds was borne by the utility as an investment in the increased service it would be providing as Metro transitioned. Metro Transit was responsible for purchasing the hardware needed to automatically switch between the feeds, which was a small part of the overall utility feed upgrade.

Implementation

This section reviews some of the high-level project delivery methods for adaptation measures. Microgrids are a commonly raised adaptation measure for mitigating power outages, one of the biggest new threats to transit service with a ZEB fleet, and are a useful example for illustrating different financing methods that could be employed. There are multiple pathways to implementing a microgrid at a transit depot, depending on the transit agencyʼs available funding and level of required ownership/control of the assets. Pathways include Design, Bid, Build; Design Build or Progressive Design Build/Integrated Project Delivery; Design, Build, Operate, and Maintain; Turnkey/As-a-Service; and Coordination with Utilities.

Design, Bid, Build

In this traditional procurement method, the transit agency retains ownership of the system. An engineer is hired to design the microgrid at the depot and prepare drawings for permits. A separate general contractor then bids on the project to implement the design. After construction, the project is handed over to the agency, which may either self-operate or hire an operations and maintenance provider.

This method works well for simpler projects that do not involve complex integrations between multiple components or novel technologies requiring customization.

For microgrids, it can be challenging to have an independent engineer design a system that a general contractor is willing and able to build. Additionally, hiring another entity to operate and maintain the system can be challenging, leading to potential conflicts and inefficiencies.

Design Build or Progressive Design Build/Integrated Project Delivery

In this method, the transit agency retains ownership of the system while the contractor is responsible for both the design and construction of the microgrid. This reduces complexity and simplifies the integration of components as the same entity handles both aspects of the project. In this method, the contractor will design a microgrid that they are also capable of constructing to meet project goals. Major equipment can also be procured earlier in the design process, as the design does not need to be fully complete and passed on to another entity for procurement to occur. This can result in a substantial reduction in project timeline and reduce overhead costs in the project. Since the contractor has control over design and procurement, the agency will not have to manage as many components of the project, alleviating the burden on agencies without staff to support that level of project management.

Design, Build, Operate, and Maintain

In a Design, Build, Operate, and Maintain model, the system is owned by the transit agency. It is similar to Design-Build as described above, but adds operations and maintenance to the design builderʼs responsibilities. This was a procurement method that was commonly used for compressed natural gas fueling station projects for a hands-off approach to the complexities of CNG fueling and storage systems. For complex ZE projects like microgrids, this method can allow transit authorities to deploy their own capital while leveraging the expertise of the chosen contractor for a turnkey solution. For agencies looking to self-perform the operations and maintenance of the system, conversations should be had with the provider to understand what should be managed by the transit agency and what should be managed by the expert contractor.

Turnkey/As-a-Service

In this procurement method, ownership and responsibility for the microgrid system performance remain with the microgrid provider. The transit agency takes a more hands-off approach, removing the high upfront cost burden and long-term performance requirements that come with a highly complex and capital-intensive project. All operations and maintenance are handled by the service provider, and it is the responsibility of the service provider to maintain a reliable and resilient infrastructure for the fleet to utilize. For the agency, an “As-a-Service” offering can de-risk the ZE fleet operations and open up capital for other projects or vehicles. “As-a-Service” offerings amortize the cost of infrastructure over the life of the system, allowing an agency to see cost savings in the first year of operations instead of waiting years for the agency to recoup the investment of the project. The hands-off approach of an “As-a-Service” offering simplifies the transaction for the agency but does remove some of the agencyʼs ultimate control of the project. The service agreement should include performance and reliability guarantees to ensure that the system meets the fleetʼs needs.

Coordination with Utilities

Working closely with the local utility is crucial for a resilient transition to ZE; however, each utility has its own governance structure, and therefore, it is difficult to offer universally specific guidelines. TCRP Synthesis 175: Examination of Transit Agency Coordination with Electric

Utilities (Jerram 2024) provides a detailed review of different utility structures and how agencies have worked with them. A major lesson for all utility coordination is beginning communication early in the process due to the long lead times for upgrading infrastructure. As noted in TCRP Synthesis 175, the utility will eventually need the ZE fleet transition plan to be able to plan for the maximum demand and energy needs at the agencyʼs facilities (Jerram, 2024). The agency may even develop its transition plan in collaboration with the utility to take into account where and when the desired power can be provided. This approach is also useful for resilience planning: working with the utility on the agencyʼs goals for resilience will leverage the utilityʼs expertise on what it is able to provide, as well as where and when. See Jerram (2024) for further details on collaboration with utilities.