BOARD MEETING DATE: November 4, 2005
AGENDA NO. 5

Amend Contract to Cosponsor Conversion of Light-Duty Vehicle to Plug-In Hybrid Electric

SYNOPSIS:

In May 2005, the Governing Board approved cofunding to convert a 2005 Toyota Prius to a plug-in hybrid and demonstrate improved mileage including zero emissions range. In order to gain the necessary testing, mileage accumulation, and feedback from users prior to offering the technology as a commercial product, additional partners and vehicles are needed. This action is to amend the May 2005 award to include converting two additional hybrids with an option to convert another two hybrids with the next generation of refinements. Each hybrid converted in this amendment will cost $32,500 with AQMD also providing the hybrid vehicle for conversion. Total project costs will increase to $985,000 (including the original award amount of $159,000), of which the additional AQMD re-quested support for the base cost of the four hybrid vehicles and the four conversions will not exceed $246,000 from the Clean Fuels Fund.

COMMITTEE:

Technology, October 28, 2005. Less than a quorum was present during the discussion of this item; the Acting Chairman communicated his concurrence and recommendation that this item be for-warded for Board consideration.

RECOMMENDED ACTION:

1. Appropriate $116,000 from the Clean Fuels Fund to the General Fund Capital Outlays Major Object of the Science & Technology Advancement Office;
2. Authorize the Procurement Manager to purchase up to four additional Toyota Prius vehicles in stock for a total amount not to exceed $116,000 ($29,000 each); and
3. 3. Authorize the Executive Officer to amend the contract with EnergyCS to design, implement, and demonstrate up to four additional plug-in hybrid electric vehicle conversion systems in an amount not to exceed $130,000 from the Clean Fuels Fund.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

On May 6, 2005, the Board approved the design, implementation, and demonstration of a conversion to a battery-dominant system for the 2005 Toyota Prius hybrid electric vehicle. This battery-dominant strategy increases vehicle range, reduces fuel consumption, and decreases the role of the engine. More importantly, the battery-dominant strategy also decreases tailpipe emissions by allowing zero-emissions range. 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).

Due to the attractive attributes of PHEVs and AQMD support for the technology, there has been increased interest in accelerating the deployment of the PHEV conversions for commercial sale. In order to confidently offer such a technology to the public, additional vehicle testing, increased mileage accumulation, driver feedback, and consumer outreach need to be conducted.

The AQMD has long been a supporter of PHEV technology because (a) it provides a mechanism for bringing electric grid diversity and clean electricity back into the mobile sector and (2) it has the potential for accelerating the deployment of other light-duty and heavy-duty alternative fuel technologies (e.g., natural gas and hydrogen). As such, the current proposal is to amend the contract with EnergyCS to convert an additional two cur-rent model year Toyota Prius vehicles to PHEV with the option to convert another two with next generation enhancements.

Proposal

Through outreach events by the AQMD and EnergyCS, it has become increasingly clear that the PHEV strategy is generating much interest from potential “early adopters” and the news media due, in large part, to the increasing price of gasoline. It has also become clear that there remain significant challenges to confidently offering a commercial product on an accelerated schedule that can meet consumer expectations (durability, performance, and value) from the small business and engineering team assembled by EnergyCS.

In order to assist in the accelerated development of the PHEV conversion system, EnergyCS has initiated partnerships with additional entities to gather test information and feedback through in-kind cost-sharing. The project has increased the number of demonstration vehicles from four up to eight or more. This additional scope of the project will provide increased experience in order to optimize the system through

• more rapid mileage accumulation in different applications,
• two different benchmark testing protocols to compare the vehicles to established standards for electric and hybrid vehicles,
• cold weather durability performance, and
• increased user feedback to help assess the market potential and the price-value proposition for the technology.

Southern California Edison (Edison) is interested in conducting additional testing, including their standardized battery system comparison based on multiple battery manufacturers. Edison has also indicated that they are interested in conducting vehicle performance testing at their Pomona facility to compare to other hybrid and electric vehicles in their database.

Sacramento Municipal Utility District (SMUD) is anticipated to provide a vehicle and fund the conversion in order to conduct testing on the vehicle. If the U.S. DOE approves funding, SMUD plans to sponsor Advanced Vehicle Testing Activity through the Idaho National Laboratory. This standardized testing protocol provides benchmark data for technology modeling, and research and development programs, by benchmarking and validating the performance of light-, medium-, and heavy-duty vehicles that feature internal combustion engines burning alternative fuels (such as hydrogen) and hybrid electric vehicles.

Manitoba Hydro is anticipated to provide a vehicle, fund the conversion, and conduct cold weather testing in parallel with an unmodified hybrid vehicle to ensure the system operates in extremely cold climates.

Austin Energy is interested in providing a vehicle, funding the conversion, and conducting testing. After completing baseline testing, Austin Energy and EnergyCS are planning to investigate the potential for vehicle-to-grid (“V2G”) power flow. This concept was previously supported by the AQMD in the “Tri-fuel Plug-in Hybrid Electric with Vehicle to Grid Power Flow” project by AC Propulsion (also known as the “Tri-fuel Jetta”) awarded by Board on June 15, 2001. The AQMD remains interested in V2G applications due to the potential to use very clean, stored energy (in vehicle batteries) for specific, di-ected energy applications.

Finally, the AQMD will provide two vehicles and fund their conversion in order to pro-vide mileage accumulation, user feedback, outreach to the driving public, and education of local policy-makers. These efforts are necessary to ensure the successful commercialization of the technology, especially with existing Prius owners and potential “early adopters” such as local government fleets. AQMD will also reserve the option to convert an additional two vehicles with next generation enhancements. Staff will make the assessment for executing the additional vehicles depending on the success of the conversion system, demand for outreach vehicles, and value-added for the next generation enhancements.

Benefits to AQMD

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 Ad-vancement Plan in the category “Evaluation and Demonstration of Light and Medium-Duty Hybrid Electric Vehicles and Systems.”

Sole Source Justification

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 original cost-share is being provided by EnergyCS, CalCars, Clean-Tech, Edison, Valence Batteries, the City of Santa Monica, and CARB. Additional cost-share is being provided by SMUD and Manitoba Hydro. Additional support may be provided by Austin Energy and Southern California Edison.

Procurement Process

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.

Resource Impacts

The total cost for this project has increased to approximately $1.2 million. The amount of AQMD funding for this amendment shall not exceed $246,000, with the total AQMD funding for the project not to exceed $405,000 from the Clean Fuels Fund.

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

* Includes vehicle(s)
**May include vehicle, contingent on funding approval

In the event any of the above co-funding partners change or be unable to conduct their portions of the cost-share, staff would still recommend completion of the project provided there is no increased cost to the AQMD or change in scope.

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.

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