BOARD MEETING DATE: May 6, 2005 AGENDA NO. 6

On March 5, 2004, the Governing Board approved the conversion of 35 gasoline hybrid electric vehicles (HEVs) to operate on hydrogen. Hydrogen internal combustion engine (ICE) vehicles offer a potential "bridge" from current technology to future, near zero-emission fuel cell vehicles. One potential obstacle to any hydrogen vehicle technology, however, is the amount of on-board storage possible, which directly affects the vehicle range. Since hydrogen is one of the least dense molecules, it is difficult to store large amounts of the gas without sacrificing weight and space on the vehicle. Different storage technologies are currently being explored, including increased pressure to 10,000 PSI, liquid hydrogen, metal hydride storage, and sodium borohydride slurries. Hydrogen storage is a known technology barrier that the U.S. DOE has established three "Centers of Excellence" at national laboratories to research advanced storage media to address this issue. The research projects stemming from these efforts are envisioned to be completed in five years.

A more near-term solution is to rely on well developed, lower cost technology, specifically lithium-ion batteries and hybrid electric drive technology. This battery-dominant strategy increases battery capacity and electric motor utilization to provide true zero-emission miles, which increases vehicle range, reduces fuel consumption, and decreases the role of the engine or fuel cell. When used in ICE vehicles, the battery-dominant strategy also decreases tailpipe emissions. Because the battery packs must be grid-recharged to fully utilize the electric motor and zero-emission range capability, these vehicles are called plug-in hybrid electric vehicles (PHEVs).

The proposed project is to modify a conventional hybrid electric vehicle (current model year Toyota Prius) to a PHEV.

The Toyota Prius offered for sale in Europe and Asia has an electric vehicle (EV) mode capability that is disabled in the US offering. The proposed project is to enable this capability and extend the EV mode by replacing the original equipment manufacturer (OEM) hybrid battery with a larger capacity battery and the related control system, battery charger, and charging plug. A Valence Saphion lithium-ion battery pack, with approximately 9 kWh of energy storage, will replace the OEM nickel metal hydrogen battery, thereby extending the energy storage by seven times. The battery will be enclosed beneath the rear carpet, displacing the location of the spare tire. A control and display unit will be installed on the vehicle dashboard to communicate with the OEM hybrid system and enable the EV mode. The technical goals of the project include optimization of battery performance and life, maintenance and expansion of the EV mode, double the fuel economy of the conventional HEV, and seamless driver experience from a standard Toyota Prius.

Once the system has been designed and tested, the demonstration phase will consist of installing the system on test vehicles to further optimize the system and ensure the emissions are maintained at SULEV levels. These vehicles will be demonstrated by CalCars, the City of Santa Monica, EVO Transportation Corp., and the AQMD, with each entity providing a vehicle as in-kind cost-share. The entire project is anticipated to conclude within one year of initiation.

EnergyCS will conduct the engineering, design, and optimization of the PHEV replacement system. Clean-Tech, a transportation integrator, will assist in the design migration from demonstration to commercialization, with a focus on eventual sale as a conversion system.

Successful completion of this project will result in growing recognition of the business value of PHEVs and increase consumer demand for PHEVs. This project also has the potential for wide application if commercialized due to the popularity of the Toyota Prius vehicle. Increasing zero emissions miles and doubling the fuel economy of the current Prius population would have dramatic effects on air quality, greenhouse gas emissions, energy diversity, and technology advancement. Furthermore, the conversion system may also have application to other Toyota hybrid vehicles, namely the Ford Escape HEV which uses the Toyota technology, as well as the hydrogen hybrid conversions authorized by the Governing Board in March 2004 as part of the "Five Cities" hydrogen ICE project.

The proposed project was also included in the March 2005 update of the Technology Advancement Plan in the category "Evaluation and Demonstration of Light and Medium-Duty Hybrid Electric Vehicles and Systems."

Section VIII.B.2. of the Procurement Policy and Procedure identifies four major provisions under which a sole source award may be justified. This request for a sole source award is made under provision B.2.d.: Other circumstances exist which in the determination of the Executive Officer require such waiver in the best interest of the AQMD. Specifically, these circumstances are B.2.d.(1): Project involving cost sharing by multiple sponsors.

The cost-share is being provided by EnergyCS, CalCars, Clean-Tech, Southern California Edison, Valence Batteries, the City of Santa Monica, and CARB. The cost-share ratio is better than 3 to 1 in terms of total project costs to AQMD share.

Section VI(A)(4) of the Procurement Policy and Procedure identifies six provisions under which detailed specifications or obtaining of bids may be waived by the Executive Officer or his designee. This request is made under provisions d.; "Required construction, repair, or project completion dates cannot be met" and f.; "Other circumstances exist which, in the determination of the Executive Officer, require waiver in the best interests of the AQMD." Due to low production volume of these vehicles and high demand, it is difficult to identify the specific dealership where the AQMD may procure in-stock hybrid-electric vehicles. Therefore, some flexibility in expeditiously acquiring an in-stock vehicle is necessary, but multiple quotes will be solicited.

The total cost for this project is approximately $539,000. The amount of AQMD funding shall not exceed $159,000 from the Clean Fuels Fund.

The project partners and their amount of cost-share are reflected in the table below:

Partners	Cost-Share	Percentage
EnergyCS (in-kind development)	$91,027	18%
Clean-Tech (funding & in-kind development)	$77,495	15%
CalCars (funding & in-kind demonstration)	$58,800	12%
Edison (in-kind performance testing)	$25,000	5%
Santa Monica (in-kind demonstration)	$50,800	10%
Valence Batteries (funding & in-kind development)	$55,788	11%
CARB (in-kind emissions testing)	$21,000	4%
AQMD requested*	$130,000	25%

Based on recent experience, in order to procure the 2005 Toyota Prius and complete this project as expeditiously as proposed, emphasis will be placed on dealer ability to deliver an in stock vehicle quickly, but multiple quotes will be solicited for a total amount not to exceed $29,000.

Sufficient funds are available from the Clean Fuels Fund, established as a special revenue fund resulting from the state-mandated Clean Fuels Program. The Clean Fuels Program, under Health and Safety Code 40448.5 and 40512 and Vehicle Code 9250.11, establishes mechanisms to collect revenues from mobile sources to support projects to increase the utilization of clean fuels, including the development of the necessary advanced enabling technologies. Funds collected from motor vehicles are restricted, by statute, to be used for projects and program activities related to mobile sources that support the objectives of the Clean Fuels Program.