• Zum, which provides EV school buses and other student transport solutions to many districts across the country, will begin to feed power stored in EV bus batteries back to the California grid in a deal with Oakland and Pacific Gas & Electric.
• Across the U.S. there are an estimated 500,000 school buses which, if converted to EV like Oakland's school district, could become a significant source of energy for utility power grids.
• The fact that the buses, the nation's largest mass transit system, are not used during peak evening energy demand hours makes the business case compelling, though the concept is still in very early days.

The nightlife of school buses is about to get more interesting.

Zum, which provides student transportation including EV buses to 4,000 schools across the country, is partnering with the Oakland Unified School District to start selling power stored in EV batteries back to the California utility grid.

Oakland is the first school district in the U.S. to go fully electric with its buses, 74 in all, and will now be the first to test the concept of V2G (vehicle to grid) bidirectional charging. In effect, instead of the one-way charge into the vehicle, the school buses will be able to send their battery power back to the grid through Zum charging infrastructure.

Zum estimates that 2.1 gigawatt hours of energy can be sent from batteries back to the California grid annually. The company's goal is to add 10,000 bidirectional EV school buses across the U.S. with 300 gigawatt hours of energy available to power grids each year. San Francisco Unified and Los Angeles Unified, much larger districts than Oakland, are expected to follow, 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 No. 31 on the 2024 CNBC Disruptor 50 list. 

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

"We at Zum strongly believe it is time to move beyond pilots and deploy 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," said Ritu Narayan, founder and CEO of Zum, in a release.

In a CNBC interview later on Wednesday, Narayan referred to the school bus as "the largest battery on wheels," with four to six times the battery of a Tesla.

According to Zum, the 27 million students moved across the country to and from schools twice daily is the largest mass transit system in the country. The roughly 500,000 school buses are mostly diesel, contributing to emissions. Zum has the goal of being a net-zero transport provider.

Pacific Gas and Electric, which is based in Oakland, has partnered with Zum to enable its bidirectional charging station for EV buses in Oakland.

The concept is considered a strong one given the fact that school buses are not in use during peak energy demand hours, for example, between 5 p.m. and 10 p.m. This allows the buses, and their owners, to execute an energy arbitrage trade: charging up for their core daily task of moving students when energy prices are lower, and feeding battery storage back onto the grid when utilities will pay more for it per kilowatt/hour. As owner of the buses in use in Oakland, Zum will be the one to receive revenue from the grid deal, but in other cases where school districts own the buses, they can generate revenue. In some cases, the revenue from power sales could be split.

Narayan told CNBC that the school bus is an "ideal asset to be electrified" due to the battery and its predictable local pattern of use outside of peak hours.

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 area of using EV battery storage in a bidirectional nature. He said one of the biggest challenges is getting utilities to set a predetermined rate schedule that will allow for the arbitrage play across power markets, generating the revenue opportunity for the battery owners.

"There aren't a lot of established rate schedules," Ambatipudi said. In addition, a lot has to go right to make the model work and is still being tested. "It's been more of a pilot level because that interplay has to happen between the vehicle charging station hardware, and software management of the station, and the backfeeding into grid and having the economic benefit paid out by the utility. "Those market developments have yet to come," he said.

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

The idea is similar in some ways to how owners of rooftop solar systems have been able to feed power back onto the grid in some markets, but in recent years, there has been pushback against these "net metering" relationships, especially in California. With buses, though, there is one key difference: the buses are not in use during the most important times of the day for the grid to have more power, and the buses can recharge at off-peak demand hours. Many rooftop solar power owners were selling energy supply back onto the grid when it was less needed.

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

There are many applications to take stored power in EV batteries and use as a supply, such as Ford pitching its F-150 Lightning EV as a home backup power source for when the grid is down and saying that has shown a surprising level of consumer appeal. But the school bus model may be the most effective at the largest scale.

"The low-hanging fruit from what I've seen is the school bus model," Ambatipudi said. It's not just the cycle of dropping off kids during the morning and then remaining idle at a depot during the middle part of day, and then cycling again in the afternoon and early evening into idle state again. During summer months, the buses are largely idle. "Buses can be used as essentially arbitrage devices to charge when power is cheap and discharge when needed," he said.

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