Decarbonizing Medium & Heavy-Duty Fleets | Episode 32

John Eichberger:
Hey everybody, welcome back to Carpool Chats. I’m John Eichberger, the executive director of the Transportation Energy Institute, and today we’re with Kim Okafor with Trillium, and we’re going to talk about what we’re doing in the market to help decarbonize the heavy and medium duty transportation space. Kim, thank you so much for joining us on Carpool Chats again.Kimberly Okafor:
Of course. I’m happy to be here.

John Eichberger:
And can you tell us a little bit about what Trillium is? Not everybody in the audience is going to be familiar with the company.

Kimberly Okafor:
Definitely. Definitely. I’m going to start by talking about our parent company, Love’s Truck Stops and Travel Stops.

John Eichberger:
We’re much more familiar with that name, aren’t we?

Kimberly Okafor:
Definitely. Everyone’s familiar with Love’s. We have almost 600 truck stops across the country. We build somewhere between 40 and 50 trucks stops a year, which kind of pans out to a truck stop a week, across the country. Our focus, our target market is the class seven, eight truck, over the road trucking that keeps the backbone of our country up and running every day. So we’re excited to do that. We are a fueling company, so we don’t focus or we don’t push any one fuel. We are customer focused. So if our customer needs biodiesel, diesel, DEF, hydrogen, electric vehicle charging, whatever it is, we make sure to serve our customers.

Kimberly Okafor:
About five years ago, Love’s purchased Trillium, and Trillium was in the CNG business and has been in the CNG business for about 25 years. Trillium’s target market is the transit customer. I would say about 60 to 70% of our customer base is transit customers, but in general, we serve fleets, and those are usually return to base fleets, but we do also serve over the road, class seven and eight types of fleets as well. I would say about three years ago, we noticed that our customers started asking questions about zero emission, so electric vehicle charging and hydrogen fueling.

Kimberly Okafor:
So that made us kind of wonder and move and open up our business into the zero mission business, and that’s where I come in. I manage strategic business development for both Trillium and Love’s. For us, that includes electric vehicle charging, hydrogen fueling, management of our solar business, as well as all of the futuristic stuff. So things like autonomous trucking, we see that coming over the horizon. We want to make sure that we understand those markets so if and when they do come, we’re able to be economical and lucrative in those businesses.

John Eichberger:
I wasn’t really aware of how heavily your business was centered around transit. And I can recognize that if you’re dealing with those entities, their focus from kind of a government perspective on zero emissions is a little maybe higher profile, higher priority than for your over the road commercial customers, right?

Kimberly Okafor:
Yeah. And that’s really the good thing about having a customer base that’s so diverse. You’re absolutely right. The transit market, especially when you’re thinking about places like California where you have the innovative, clean transit rule that’s saying that transits have to be zero mission by a certain amount of time, transits are moving toward zero mission much quicker than the class seven and eight market. You’re starting to see those mandates come out for trucking fleets and things like that, but the good thing for our organization is that we get to have that experience now.

Kimberly Okafor:
So we are building hydrogen fueling stations, electric vehicle charging stations for ourselves and our customers. So we built two hydrogen fueling stations, one for the Orange County Transportation Authority. The second one is for Champaign-Urbana Mass Transit District. We’re in commissioning, actually. That station should be up and running within the next 30 to 60 days. So those experiences that Trillium’s getting with our transit customers is going to help us for our own network, our own public network, our Love’s network. If and when it’s time to start putting in hydrogen fueling stations at our Love’s network, we’re prepared for that because we have those experiences. And not only are we designing and building it, we’re also operating and maintaining it, so we’re getting a really good idea of what OPEX is for these sorts of stations.

John Eichberger:
So let’s chat a little bit about hydrogen. You have the two stations, one operating and one commissioned. How are you sourcing the hydrogen? Because I know you can get it straight from a pipeline, you can [inaudible] natural gas. What’s your commercially viable opportunity to bring hydrogen to the market?

Kimberly Okafor:
So we’ve been really fortunate. The two stations that we built are two different sorts of stations. The first station for OCTA, the Orange County Transportation Authority, is a liquid hydrogen station. We actually partnered up with Air Products on that station, so it is an Air Products molecule that’s being used there. So that’s your typical liquid hydrogen station, a tank with some pumps and some high pressure storage vessels and vaporizers and things like that.

Kimberly Okafor:
On the Champaign-Urbana station, that is a little different. For them, they’re producing hydrogen on-site. We’re utilizing a [inaudible] electrolyzer, a one megawatt electrolyzer at their site. So that’s the way that they’re producing hydrogen. So two different ways. As far as when it comes to things that we’re thinking about now when I put my Love’s hat on, my Trillium public network hat on. How do we think stations are going to be at our state, at our truck stops and at our travel centers?

Kimberly Okafor:
What we’re saying now is, “It depends.” It depends on the electrical tariff. It depends on how much land we have next to our truck stop. It depends if we have ways to get liquid or gaseous hydrogen to our stations. It depends on, can we get a natural gas pipeline to our truck stop? We’re not saying all of the hydrogen stations at every Love’s is going to look exactly like this. We’re open to whatever makes the most economic sense in specific regions.

John Eichberger:
As we think about the future of transportation, the administration says, “We want to go with [ZEV], we want to have infrastructure for charging.” Everybody usually hears that and thinks my car, my passenger vehicle. It is a completely different environment to decarbonize light duty vehicles than it is to decarbonize the medium heavy duty market. Transportation Energy Institute just recently commissioned a white paper, and we’re looking at segmenting the class three to class eight market not just by class, but by vehicle type, by use case, by energy demands. So when you’re looking at the variety of options you guys have available, [inaudible] hydrogen, electric vehicle charging, natural gas, where do you see it kind of playing out, and are you targeting certain use cases and certain customer types with each technology, or is it more trial and error? Excuse me.

Kimberly Okafor:
I hate to… So my background is engineering, and the answer that engineers always say is it depends. And quite honestly, it depends. So I manage both our electric vehicle charging business and our hydrogen business, and we’re taking those businesses in two kind of different ways. So electric vehicle charging, there are a lot of grants throughout the country to put in light duty, to put in chargers, period. You can work with the utility. You can get a federal grant. You can get a state grant. You can get all of this. You can get a grant from the Air Quality Management Districts. There’s all this money that’s out there. And I don’t want to trivialize it, but it’s easier to put in one or two charges at a truck stop than it is to put in a hydrogen fueling station at a truck stop. That costs millions of dollars in order to put in that sort of infrastructure.

Kimberly Okafor:
So in the EV space, we’ve tried dabbling in providing electric vehicle chargers to our transit customers, but what we’ve found is that we can put in 150 kilowatt chargers, three of them at a truck stop for $20,000. That’s a station that should’ve cost us almost $400,000 because of all the money that’s out there. And we’re learning a lot. Not only are we learning how to build it, we’re learning how to operate it. We’re learning about tariffs. We’re learning how to price this stuff. We’re learning how these things work. We’re learning how to really operate a business in the light duty space, so whenever we have to move it to the heavy duty space, we can do so quickly because we’ve already learned it.

Kimberly Okafor:
In that case, it’s kind of trial and error. In the hydrogen space, we’re taking a different approach. It’s still sort of trial and error, but it’s not at our properties, it’s at our transit customer properties, so behind the fence, third-party type stations. So we don’t have complete control. We’re responding to RFPs just like every other company is responding, and we kind of have to do what they say. We don’t have ownership, so it’s still trial and error, but it’s in a different way. So I would say, I guess the short answer is, right now, we’re looking for economic ways to learn, ways that don’t spend so much capital to where we don’t see a return.

Kimberly Okafor:
We’re not a trial and error type company. We’re not really a pilot project type of company. When we make an investment, we like to see a certain type of return. But we do recognize that the transportation market is changing, and in order for us to remain relevant, we have to be able to move where the market’s moving. Now the question is, do we want to be on the bleeding edge or the cutting edge? So it’s really balancing out those things for us.

John Eichberger:
You raised a great point, because when you think about the policy announcements and all of these aspirational goals of going to an electric vehicle market and building out infrastructure, and the word just, just do it, just build it, there’s this lack of awareness that you can’t make money on EV chargers right now. We’ve put together the spreadsheets. We’ve done the analyses. We’ve done all the calculations. It just does not make economic sense. We need to build it if we’re going to have electric vehicles.

John Eichberger:
When we think about scaling up for the heavy duty space, and your transit customers are going to electrify, they’re going to have their depots, they’re going to be charging back at base. I don’t see them very often coming to the Love’s travel center to recharge a bus, a city bus. But if we start electrifying the commercial vehicles that frequent Love’s, we’re not talking about a 150 kilowatt charger. We’re talking about megawatt chargers and the infrastructure to support that and the economics behind that. Have you modeled what the relationship between a megawatt system and a 150 kilowatt system, clearly scale magnitude, but in terms of the economics, are they relatable, or are they completely different animals?

Kimberly Okafor:
That’s a good question.

John Eichberger:
I have a lot of questions. I don’t have any answers, but I have a lot of questions.

Kimberly Okafor:
Let me start there. That’s an amazing question. That’s a question that we’ve been asking ourselves. Right now, and you hit the nail on the head, I didn’t want to be the one to say it, but since you said it, I’ll repeat it, it doesn’t make very much economic sense to put in these chargers. We’re not making very much money off of them. We suspect that we will over a certain time, and we hope that whenever the adoption of EV vehicles happens in a pretty big way, we hope that we’re not stuck with an iPod Nano while everyone else is on the iPhone 24.

John Eichberger:
I had… What was the other one? When iPod came out, there was another MP3 player that I bought because I don’t like Apple products. And two years later, I couldn’t get any attachments to it.

Kimberly Okafor:
You couldn’t get any.

John Eichberger:
I’m like, it’s a dead stick. You don’t want to invest a couple hundred thousand dollars if a dead stick’s sitting there, right?

Kimberly Okafor:
Exactly. Exactly. So it’s really keeping that in mind. To your question specifically, which is a loaded one, what does charging look like in the heavy duty atmosphere? It’s not 150 kilowatts, it’s up to 500 kilowatts, and I’ve even heard people say megawatt chargers. And we’re talking about truck stops that don’t really use that much power today. And we’re also talking about truck stops that aren’t in downtown Houston, Texas, downtown Chicago. It’s middle of nowhere, Ohio. So it’s places where it’s hard to get a lot of power out to, and it takes a significant amount of time to get a lot of power out there.

Kimberly Okafor:
So what are the things that we’re doing today in order to make sure that we’re prepared for the future? We started developing plans within our organization to understand what a truck stop would need if heavy duty charging would be needed at that truck stop. So whenever we are putting in new truck stops across the country, we’re thinking about ways and we’re putting in ways to make sure that we are able to move quickly whenever it is time to put in those chargers. If that means conduits, if that means assessing where the transformer would need to be, if that means when we’re talking to the utility company, instead of asking for just a 240 volt transformer, at this point, we ask for a 480 volt just to be prepared for the future.

Kimberly Okafor:
Maybe that means getting a 12kV type of transformer, things like that, understanding the hazardous area that has to do… If we have a CNG station there, where can we put these chargers? Would we want to put these chargers in the truck parking spots? Would we want to put them in lanes? Same thing with hydrogen dispensers. Would we want to put them in lanes? Would we need chillers next to that dispenser? Now we need more room for that chiller. So we have started thinking about, how do we make sure that we’re retrofitting the new truck stops that we’re putting in today in certain regions of the country so that we’re prepared to move quickly in the future? Really, what it comes down to for us is, does it make economic sense today. Probably not, but how do we set ourselves up so that we can move quickly whenever it does make economic sense?

John Eichberger:
And that’s one of the messages we’re trying to impart to policy makers. Okay, you have a goal of half a million charters. Nice round number, a great sound bite number, but we don’t know what the number is. We also don’t know if we’re going to need half a million chargers by 2030. We don’t know when we’re going to need chargers. We can avoid the lost investment, stranded assets, tweak the policy to support what you’re describing is future-proofing, start building the plans and the capabilities to install the chargers when there is a need for those chargers in a certain market.

John Eichberger:
I think if we can be strategic about it, deploy the type of equipment we need, where we need it, when we need it, we can accelerate the ROI. We can support the market. We can support the transition to a lower emission vehicle system, all of these things. The challenge comes into, we have to get out of the headline grabbing pronouncements and get to the actual strategic plan making. And I’m a former lobbyist. I have very little hope that we’re going to be able to get there in the political environment we’re in. And I’m hoping that the [inaudible] will prevail and they’ll sit down to build plans in conjunction with industry so that the market functions for the consumer, because ultimately, if we’re not putting that customer first, it’s all going to fall apart.

Kimberly Okafor:
I completely agree with you. I think one thing, and you said it in one of your questions, a lot of times, or sometimes, I shouldn’t say a lot of times, sometimes policy makers will make policy and say, “Okay, just do it. Just put in the charger. Why don’t you just put in these fueling stations? It’s coming, so just put it in.”

John Eichberger:
Just. It’s so easy. Just.

Kimberly Okafor:
I was like, “Well, that’s millions of dollars of investment, and there’s nothing on the road today.” So it’s not a just do something. So what I wish would happen, and it’s starting to happen a lot more recently with tasks force and things like this, and conversations like these, quite honestly, is understanding what the challenges are for private industry. Because we’re not saying that we don’t want to put it in. We’re not saying that we’re a diesel company and we will always be a diesel company.

Kimberly Okafor:
We recognize that the future is going to be different. What we’re calling is a truck stop of the future where you have diesel, biodiesel, renewable diesel, CNG, EV charging, hydrogen fueling. You’re going to have a truck stop that has all kinds of different fuels. We recognize that that’s happening. We just want to do it in a way that makes economic sense and recognize the challenges that are going to come as we get there. If we put in 10 chargers, each one one megawatt, that’s a 10 megawatt station. Can you imagine the power.

John Eichberger:
You’d need your own generator.

Kimberly Okafor:
Yeah. It’s absolutely insane. And I just wish that we would think through that and understand that there are challenges that come along with that, and kind of come together as an industry and say, “Okay, utility company, how are you going to get that much power out there?” Because I want it. If I need to put the chargers out there and my customers say they have electric trucks, I’ll put them out there, but how are you going to make sure that you get that power to me? That’s really the conversation that should be happening.

John Eichberger:
Collaboration across sectors is critical if we’re going to be successful in any of this. I want to back up. So you’re focusing on hydrogen electrification now. We know they’re going to have great application. They’re going to fit a variety of use cases, but not going to fit all, but I think you and I first crossed paths several years ago when natural gas was the hot topic in the market. And that’s how I first became familiar with Trillium. When we started the Transportation Energy Institute, we were doing all this natural gas research, and then oil prices tanked and everybody stopped calling me about natural gas. But it’s still a viable product for the heavy duty [inaudible] truck. Where are you guys looking at natural gas, and is it still expanding? Is it still in demand? What are the prospects for that becoming a reliable and really valuable transportation fuel?

Kimberly Okafor:
Yeah. For us, so there’s a term that we’ve started using internally. We call it the Darwinism of energy. We really see energy as, oh, there’s going to be different energies at different points. So there’s going to be different fuels that are used at different points. There’s going to be a time where biodiesel is used in heavy demand, and it’s going to fade out. We see even diesel. It may not be in any of our lifetimes, but it’s going to phase out. Right now we’re in an era where compressed natural gas is a technology that works here and now. It’s economical here and now if you use it in the right way. So incorporate a renewable natural gas, getting environmental attributes, whether it’s a RIN or LCFS, and understanding the revenue that you can get from those things.

Kimberly Okafor:
So for us, we see CNG as the transition fuel to get to the zero emission fuels. Right now, electric vehicle charging, hydrogen fueling is not economic, full-stop. CNG is, and CAG is the technology that works today, that’s economic today, where you can get your payback today. So for us, it’s really a transition fuel, and there’s opportunities for fleets to actually have an alternative fuel that makes money and that has a low carbon intensity. So if you’re looking for an ESG type of solution, an environmentally friendly solution, for us, RNG is still the way to go.

John Eichberger:
Yeah. There’s so many opportunities out there to reduce the carbon footprint of transportation, and the biggest concern I have is the headlines, the announcements, the policy statements are basically robbing the volume from all these other immediate options, natural gas, renewable diesel, biodiesel. All these things have the ability to reduce our carbon footprint now, but if we’re not going to have them part of the equation, they’re not going to get the opportunity to be a contributor to a lower carbon market because we’re focused on that white horse down the road.

John Eichberger:
And I’ve been telling people for the last several months, “If you believe that reducing carbon from the transportation space is necessary to save the planet and you’re waiting for the white knight of electric vehicles ubiquitously across the world, we’ve already lost.” We’re going to have combustion engines on the market for decades. We’re going to have electric vehicles on the market. We’re going to have hydrogen vehicles. We’re going to have them all. And we can reduce the carbon footprint of all of them if we keep our eyes open. I love what you guys are doing because you’re exploring and you’re leveraging all the opportunities that are before you, and I hope more and more companies do the same thing.

Kimberly Okafor:
Yeah. Yeah. And I think it also happens… So I serve on the board of the California Hydrogen Business Council, and I think that the hydrogen market also sometimes gets into, or I shouldn’t say the hydrogen market. Sometimes folks, whether it be policy makers or legislators or whatever, put hydrogen in kind of a bucket to where it needs to be green on day one. All of it needs to come through solar and wind, and all of it has to happen today.

Kimberly Okafor:
Well, there’s ways to make renewable hydrogen that isn’t just through solar and wind power. You can use renewable natural gas through an SMR, and now you have a low carbon intensity, a low carbon intense hydrogen. So instead of going for the green hydrogen on day one, let’s get what we can get that makes economic sense and have a goal to get to that white horse in the end. How do we make it work today? And sometimes what I’ve noticed is that hydrogen kind of gets that rap, but electric vehicle charging doesn’t really get that rap as much. No one’s saying, “All chargers need to have green power tomorrow.” Everyone’s saying, “Okay, let’s go to the utility and get the power.” And not all utility power is green.

John Eichberger:
And then we’ll clean the grid later.

Kimberly Okafor:
Exactly. So I think the hydrogen market should be seen similar to the electric vehicle market. Let’s get what we can get now. Let’s get the market started, and we’ll get it green over a certain period of time. That’ll be the goal, but how do we get it started today?

John Eichberger:
I would love to say the challenge you just described, which is 90% is not good enough in some people’s mind, is a new phenomena. But I’ve run into this dealing with Congress for 25 years, and it is so frustrating because we are letting the idealized perfect, which may not be the right solution long-term, but right now it’s being idealized that way, be the enemy of progress. And man, we got to break that cycle, otherwise we’re going to continue having these conversations about, why didn’t it work? Well, because you wouldn’t let it work. You wouldn’t let us figure out how to make it work.

John Eichberger:
The system needs to be fixed, and I think the collaboration across parties is critical. I think what you guys are doing and demonstrating the feasibility of these solutions is absolutely critical as well. So Kim, thank you so much for joining us and sharing what you guys are doing at Trillium. And I’m going to keep watching what you guys are doing because it’s exciting stuff.

Kimberly Okafor:
I’m happy to be here, and I’m happy to talk about what we’re doing. Trillium is the best company to me, but I’m a little biased. I’m always happy to talk about what we’re doing, both on the Trillium side and the Love’s side. We’re happy to be a part of the market and be learning just like everyone else. Thanks.

John Eichberger:
I appreciate you taking the time to talk with us. And for those back at home, thanks for tuning in to Carpool Chats, and we’ll see you next time. See you. Bye.