Alternative Fuels Corridor Economic Feasibility Study Final Report January 23, 2009

Prepared For: Washington State Department of Transportation Office of Public/Private Partnerships Prepared by: Parsons Brinckerhoff

WSDOT 2008 Alternative Fuels Corridor Economic Feasibility Analysis

Final Report

1

TTaabbllee ooff CCoonntteennttss

List of Acronyms ......................................................................................................................................... 3 Executive Summary..................................................................................................................................... 4 Introduction................................................................................................................................................ 12 Chapter 1: Traditional Gasoline Station Model ....................................................................................... 14 Traditional Fuel Station Model Information Sources................................................................. 14 Current State of the Fuel Station Industry.................................................................................. 16 Chapter 1 Conclusions................................................................................................................. 23 Chapter 2: Supply Chain Analysis ........................................................................................................... 25 Introduction................................................................................................................................... 25 Overview of Gasoline/Diesel Supply Chain................................................................................ 25 Ethanol Supply Chain................................................................................................................... 27 Biodiesel Supply Chain................................................................................................................ 33 Compressed Natural Gas Supply Chain ..................................................................................... 36 Electricity Supply Chain............................................................................................................... 41 Hydrogen Supply Chain ............................................................................................................... 48 Summary of Supply Chain Issues............................................................................................... 54 Chapter 3: Station Spacing Analysis ....................................................................................................... 56 Goals and Methodology ............................................................................................................... 56 Station Spacing Analysis Results ............................................................................................... 58 Station Spacing Conclusions ...................................................................................................... 65 Chapter 4: Alternative Fuels Economic Feasibility................................................................................. 66 Approach and Methodology ........................................................................................................ 66 Estimating Demand and Revenue............................................................................................... 67 Operating Pro-Forma.................................................................................................................... 79 Results of Economic Viability Tests ........................................................................................... 83 Analysis Framework: Concessions Models and Internal Rate of Return ............................... 83 Analysis Conclusions .................................................................................................................. 87 Chapter 5: Alliance Opportunities............................................................................................................ 89

WSDOT 2008 Alternative Fuels Corridor Economic Feasibility Analysis

Final Report

2

Introduction: Problem and Opportunity ..................................................................................... 89 Stakeholders: Barriers, Goals and Incentives............................................................................ 90 Barriers to AF Technology Deployment ..................................................................................... 91 Public Policy Tools..................................................................................................................... 109 Conclusion .................................................................................................................................. 112 Appendix A: Gasoline and Diesel Station Survey................................................................................. 115 Appendix B: Population within five minutes of a potential refueling location ................................... 119 Appendix C: Vehicle miles traveled within five minutes of a potential refueling location ................ 123 Appendix D: Analysis of Individual Station Sites ................................................................................. 127 Appendix E: Hydrogen Refueling Equipment Supplement .................................................................. 131 Appendix F: List of Incentives and Laws at the Federal Level and For the States of Washington, Oregon, and California ............................................................................................................................ 142

WSDOT 2008 Alternative Fuels Corridor Economic Feasibility Analysis

Final Report

3

List of Acronyms Acronym Description Acronym Description

AF Alternative Fuels LH2 Liquid HydrogenAFV Alternative Fuel Vehicle LNG Liquid Natural Gas

ASTM American Society Testing and Materials MGY Million Gallons per YearATM Automated Teller Machine MMBTU Million British Thermal UnitsATV Advanced Technology Vehicle MW MegawattB&O Business & Occupation NACS National Association of Convenience StoresB2 2% Biodiesel, 98% Petrodiesel NAS National Academy of SciencesB3 3% Biodiesel, 97% Petrodiesel NB NorthboundB5 5% Biodiesel, 95% Petrodiesel NCDC National Clean Diesel CampaignB20 20% Biodiesel, 80% Petrodiesel NEV Neighborhood Electric VehicleB99 99% Biodiesel, 1% Petrodiesel NFCBP National Fuel Cell Bus Technology Development Program

B100 100% Biodiesel NG Natural GasBC British Columbia NGV Natural Gas Vehicle

BEV Battery Electric Vehicle NREL National Renewable Energy LaboratoryBP Better Place (Company) OCS Outer Continental Shelf

CAFE Corporate Average Fuel Economy OR OregonCCS Carbon Capture and Sequestration P&R Park & Ride

CFCP California Fuel Cell Partnership PB Parsons BrinckerhoffCFFP Clean Fuel Fleet Program PEHV Plug-in Electric Hybrid VehicleCMAQ Congestion Mitigation and Air Quality PNNL Pacific Northwest National LaboratoryCNG Compressed Natural Gas PRD Pressure Relief Device

COGS Cost of Goods Sold psi Pounds per Square InchCTED Dept. of Community, Trade, and Economic Development psia Pounds per Square Inch Absolute

DCTED DLA Center for Training, Education & Development PV PhotovoltaicDOE Department of Energy QAFMV Qualified Alternative Fuel Motor VehicleDOT Department of Transportation R&D Research & DevelopmentE10 10% Ethanol, 90% Gasoline RCW Revised Code of WashingtonE20 20% Ethanol, 80% Gasoline RFS Renewable Fuel StandardE30 30% Ethanol, 70% Gasoline RPS Renewable Portfolio StandardE85 85% Ethanol, 15% Gasoline SB SouthboundE95 95% Ethanol, 5% Gasoline SEP State Energy ProgramEIA Energy Information Administration SF/YR Square Feet per YearEV Electric Vehicle SG&A Sales, General, and Administrative

FCV Fuel Cell Vehicle SMR Steam Methane ReformerFHWA Federal Highway Administration SOI State of the Industry

ft2 Square Feet TPY Tons per YearGal Gallon TRAC Transportation Research Center

gCO2 Grams of Carbon Dioxide UCD University of California, DavisGHG Greenhouse Gas US United States

H2 Hydrogen Gas USA United States of AmericaH2A Hydrogen Analysis Project USCAR United States Council for Automotive ResearchHEV Hybrid Electric Vehicle USDA United States Department of Agriculture

HEVDP Hawaii Electric Vehicle Demonstration Project USDOE United States Department of EnergyHOV High Occupancy Vehicle USDOT United States Department of Transportation

hr Hour VALE Voluntary Airport Low EmissionI-5 US Interstate 5 VAPG Value-Added Producer GrantsIRR Internal Rate of Return VEETC Volumetric Ethanol Excise Tax Creditkg Kilogram VMT Vehicle Miles Traveled

kg/d Kilogram per day WA WashingtonkW Kilowatt WSDOT Washington State Department of TransportationkWh Kilowatt-hour ZEV Zero Emission VehicleLEV Low Emission Vehicle

WSDOT 2008 Alternative Fuels Corridor Economic Feasibility Analysis

Final Report

4

Executive Summary The U.S. transportation sector is heavily dependent on petroleum-based gasoline and diesel, as these fuels provide about 95% of U.S. transportation energy needs. Vehicles using alternative fuels are being developed by private industry to serve a growing market of people, businesses, and the public sector, but a limited retail market through which to purchase these fuels has, to some degree, constrained the use of these vehicles. The Washington State Department of Transportation, through its Transportation Partnerships Office has commissioned a study to examine the underlying economics of the retail alternative fuel industry to see how