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MDA has alternative fuel vehicle loan funds available

By BECKY GILLETTE

Currently the Mississippi Development Authority (MDA) has about $225,000 available in the Mississippi Alternative Fuel School Bus and Municipal Motor Vehicle Revolving Loan Program dedicated to help fund the purchase of new alternative fuel vehicles (AFVs) and/or the infrastructure necessary to run these vehicles.

The Mississippi Alternative Fuel School Bus and Municipal Motor Vehicle Revolving (AFV) Loan Program provides public school districts and municipalities with loans to cover 100 percent of the incremental cost of purchasing AFVs and related systems or of converting existing vehicles to accept alternative fuels. Technologies currently eligible under this program are propane gas, compressed natural gas (CNG) and liquefied natural gas (LNG).

Sumesh Arora, director of the Energy and Natural Resources Division for MDA, said the program also provides funding to retrofit or convert existing conventional vehicles to use alternative fuels. For the purchase of new original equipment manufacturer (OEM) AFVs, loan funds can be used to cover the difference between the cost of the AFV and the cost of a comparable conventional model after all other applicable manufacturer and cash equivalent incentives are applied.

“For the purchase of alternative fuel system equipment and facilities, AFV funds can be used to cover the cost of the new fuel system after all other applicable rebates and cash equivalent incentives are applied, plus construction and installation,” Arora said. “For the retrofit of existing fleet vehicles to use alternative fuels, AFV funds can be used to purchase the new fuel system and cover the cost of installation and labor after all other applicable rebates and cash equivalent incentives are applied. Vehicle retrofits are limited to EPA-compliant vehicle systems, and AFV loan funds are not available for non-fuel system upgrades such as transmissions and exhaust systems.”

Arora said before considering the use of alternative fuel vehicles, simple cost calculations should be performed to evaluate the financial feasibility of the conversion. Key parameters to consider are the current annual diesel consumption, annual fuel costs, annual fuel cost savings on an equivalent basis, the incremental cost of the new or retrofitted vehicles, new training and repair costs and the simple payback period. A more in-depth analysis should be considered if the preliminary simple calculations show a cost benefit over the life-cycle of the vehicles.

The loan term for vehicle purchases and retrofits is seven years, and the loan term for refueling infrastructure purchases is 15 years. AFV loans are issued at zero percent interest. However, guidelines for loan amount and loan terms are currently being revised

According to Rhea Courtney Bozic, an environmental scientist and clean and alternative fuel consultant since 2003, advantages of CNG include it does not contaminate or dilute the crank case oil, increasing the oil’s life, it has lower tailpipe emission than diesel, it disperses easily in air because it is lighter than air and there is no chance of spills. Also, 98 percent of natural gas is domestic and it has less price volatility than CNG or diesel.

Disadvantages for CNG is that it occupies more space than diesel or LPG. But Bozic said that can be mitigated in factory-built CNG vehicles by integrating the tanks into the vehicle body design. Fueling infrastructure can be expensive and the vehicle cost differential is higher than for LPG.

Bozic said the advantages of propane include being non-toxic and non-corrosive, having lower tailpipe emissions than diesel, requiring less space than CNG for storage and the fueling infrastructure is less expensive than for CNG. Cons listed include lower energy density than gasoline or diesel and hence the equivalent fuel consumption is more.

“LPG provides less upper cylinder valve lubrication,” Bozic said. “If a LPG-fueled engine is not suitable modified, it will lead to valve wear. It does not disperse easily and is readily inflammable.

To learn more or to apply for an AFV loan, contact Gayle Sims with MDA’s Energy and Natural Resources Division at 601.359.3449 or gsims@mississippi.org.

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