Half a million school buses could be an electric power plant feeding the grid

School bus nightlife is about to get more interesting.

Zum, which provides student transportation including electric buses to 4,000 schools nationwide, has partnered with the Oakland Unified School District to begin selling energy stored in EV batteries back to California’s power grid.

Oakland is the first school district in the US to go fully electric with its buses, 74 in total, and will now be the first to test the V2G (vehicle-to-grid) two-way charging concept. In fact, instead of one-way charging in the vehicle, school buses will be able to send their battery power back to the grid via Zum’s charging infrastructure.

Zum estimates that 2.1 gigawatt hours of energy could be sent from the batteries back to the California grid annually. The company’s goal is to add 10,000 two-way EV school buses in the U.S. with 300 gigawatt hours of energy available to the electric grid each year. San Francisco Unified and Los Angeles Unified, much larger districts than Oakland, are expected to follow suit, Zum said. It also works with school districts in California, Colorado, Connecticut, Illinois, Maryland, Massachusetts, Missouri, Nebraska, Pennsylvania, Tennessee, Texas, Washington, Utah and Virginia.

Zum ranked 31st on CNBC’s 2024 Disruptor 50 list.

There have been pilots around the country to test V2G school bus business models, but Zum says the time has come to move beyond the test phase.

“We at Zum strongly believe that it is time to move beyond pilots and implement sustainability solutions at scale. Converting the Oakland Unified school bus fleet to 100% electric with VPP [virtual power plant] capability is the right step in that direction,” Ritu Narayan, founder and CEO of Zum, said in a release.

In an interview with CNBC later Wednesday, Narayan referred to the school bus as the “biggest battery on wheels,” with a battery four to six times larger than Tesla’s.

According to Zum, the 27 million students who commute across the country to and from schools twice a day are the nation’s largest mass transit system. An estimated 500,000 school buses are mostly diesel, which contributes to emissions. Zum aims to be a net-zero transportation provider.

Pacific Gas & Electricwhich is based in Oakland, has partnered with Zum to activate its two-way charging station for EV buses in Oakland.

The concept is considered strong given the fact that school buses are not used during peak energy consumption hours, for example between 5:00 p.m. and 10:00 p.m. This allows the buses and their owners to perform energy arbitrage: charging for their main daily tasked with moving students when energy prices are lower and putting battery storage back on the grid when utilities will pay more for it per kilowatt-hour. As the owner of the buses used in Oakland, Zum will receive revenue from the network deal, but in other cases where school districts own the buses, they can generate revenue. In some cases, the revenue from the sale of electricity can be split.

Narayan told CNBC that the school bus is an “ideal asset for electrification” because of its battery and predictable local off-peak usage pattern.

Ram Ambatipudi, senior vice president of business development at EV Connect, which provides EV charging solutions, said the school bus model is one of the most promising in the field of using EV battery storage in a two-way nature. He said one of the biggest challenges is getting utilities to set a pre-determined rate schedule that will allow for arbitrage play in the electricity markets, generating a revenue opportunity for battery owners.

“There aren’t many established tariff schedules,” Ambathipudi said. In addition, a lot needs to be fixed to make the model work and is still being tested. “It was more of a pilot level because that interaction has to happen between the hardware of the vehicle charging station and the software management of the station and feeding back into the grid and paying out the economic benefit from the utility.” “These market developments are still to come,” he said.

EV school buses today are two to three times more expensive than traditional buses, and the V2G model of selling energy back to the grid is part of an economic plan to make transportation technology more cost-effective for owners over time—EV battery costs are also decrease while their efficiency increases.

The idea is similar in some ways to how owners of rooftop solar systems have been able to feed energy back into the grid in some markets, but in recent years there has been a pushback against these “net metering” relationships, particularly in California. However, there is one key difference with buses: the buses are not used during peak hours of the day so that the grid has more energy, and the buses can recharge during off-peak hours. Many rooftop solar owners sold power back to the grid when it was less needed.

And the economics of arbitrage make sense: bus owners charge the vehicles during the lowest-cost periods so they can allocate excess battery power to be sold back to the grid when it’s at its highest economic value.

There are many applications for taking the energy stored in EV batteries and using it as a power source, such as Ford offering its F-150 Lightning EV as a home backup power source when the grid is down and saying it has shown a surprising level of consumer appeal. But the school bus model may be most effective on the largest scale.

“The low-hanging fruit from what I’ve seen is the school bus model,” Ambathipudi said. It’s not just the cycle of dropping the kids off in the morning and then sitting idle in a depot for the middle part of the day, then cycling again in the afternoon and in the early evening again in a state of inactivity. During the summer months, the buses hardly run. “Buses can essentially be used as arbitrage devices for charging when energy is cheap and discharging when needed,” he said.