California Incentive Programs

California programs now encourage business and industry sectors to accelerate away from fossil fuels and toward electrification. Many organizations do not have the resources or desire to investigate all the opportunities available to them. This article focuses on electric handling equipment and incentive programs available in California to replace equipment run on fossil fuels.

The summary below details payback metrics for purchased electric railcar switcher engines (e-switchers) at facilities that move product and raw material via rail. Facilities with rail deliveries and shipments typically operate under contracts with rail operators like Union Pacific or Burlington Northern Santa Fe (BNSF). These contracts set a price for the facility to pay rail operators per switch to move railcars. A “switch” is each time a smaller switcher engine moves railcars loaded with material to/from the long-haul locomotive lines to the facility loading areas. These movements can be costly and are now increasingly regulated under facility permits by local air districts and the California Environmental Quality Act.

We analyzed the economics of replacing paid switching services with a facility owned and operated e-switcher at multiple locations. Included below are some highlights from our analyses.

Facility operations assumed the following averages:

• 225 railcars annually.
• 3 railcars per switch.
• Rail operators charge $600 per switch.

Key metrics in our model included but are not limited to:

• E-switcher costs including shipping would be ~$600,000.
• California Air Resources Board (CARB) CORE voucher would continue to be available, providing between $225,000 and $270,000 in government grant money towards the cost of the e-switcher.
• The e-switcher would require a full charge every two days using grid electricity and require a 500-hour service each year.
• The electricity pricing used was the February 2024 California average industrial electricity pricing at 17.75 cents per kwh.
• Project would generate LCFS credits by utilizing electricity as an opt-in fuel in a battery electric vehicle.

We ran our models comparing a “baseline scenario” (no changes to current operations) to purchasing the e-switcher, obtaining the CORE voucher, generating LCFS credits, and charging using grid electricity, which we called the “e-switcher scenario”. After 4 years, the e-switcher scenario becomes less expensive than the baseline scenario on total costs. Over an assumed 15-year project lifetime the e-switcher scenario would save more than $1,000,000. Additionally, criteria pollutant and greenhouse gas emissions were reduced allowing for more operation flexibility under existing permitted emission limits. We also found that additional incentives exist for solar applications that would shorten the payback period even further.

Contact us if you would like EcoCira to run a feasibility analysis for your renewable energy project.