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Tennessee Natural Gas and Propane Vehicle Grant Program

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Images of grant-funded vehicles from the first round of the Tennessee Natural Gas and Propane Vehicle Grant Program.

On January 11, 2018, TDEC's Office of Energy Programs released the application materials for a second round of the Tennessee Natural Gas and Propane Vehicle Grant Program.  The purpose of the program is to incentivize the purchase of and/or conversion to natural gas or propane-powered light, medium, and heavy-duty vehicles. Managed by TDEC OEP, the program provides financial assistance to public, non-profit, and private fleets in Tennessee that apply to receive funding to purchase or convert a minimum of one eligible vehicle. The grant program is limited to one application per entity, per location.  Applications were due by 8:00 PM CST on March 15, 2018. Second round grant recipients will be announced in Q4 2018.

Funding

  • $1,700,000 is available under the second round of this competitive funding opportunity.
  • Each grant will provide up to 70% of the incremental purchase cost or vehicle conversion cost of eligible vehicles, with a maximum grant of $25,000 for each eligible vehicle.
  • The maximum amount that may be awarded to a grantee shall not exceed $250,000.

Eligibility

  • A project must propose to receive funding for a minimum of one vehicle.
  • Eligible vehicles must either (1) be purchased new, from an original equipment manufacturer (OEM) or OEM-authorized dealer or (2) be converted to run on natural gas or propane through an EPA-certified, after-market conversion.
  • Vehicles must be registered within the State of Tennessee, unless the vehicle is to receive International Registration Plan (IRP) apportioned registration. In the case of the latter, the entity applying for a grant must submit a letter, certifying the percentage of time that the vehicle is expected to operate within the State of Tennessee.
  • Eligible vehicles include dedicated compressed natural gas vehicles, dedicated liquefied natural gas vehicles, and dedicated propane-powered vehicles. Natural gas or propane-powered bi-fuel vehicles, or vehicles that are capable of operating on gasoline or diesel in addition to natural gas or propane, shall be eligible for emergency response vehicles only. (All bi-fuel vehicles will be required to utilize either natural gas or propane for no less than 75% of the vehicle's fuel use for a period of no less than five years. The grant amount available to bi-fuel vehicles will be 75% that of dedicated vehicles. Bi-fuel vehicles will therefore only be eligible to receive no more than 52.5% of the conversion or incremental purchase cost, up to $25,000 for each eligible vehicle.)
  • Light, medium, and heavy-duty vehicles will be considered eligible, as there will be no gross vehicle weight restrictions or requirements.
  • Applicants must intend to maintain operations in Tennessee for a minimum of six years.

Deadline to Submit:

Applications were due by 8:00 pm CST on March 15, 2018. Second round grant recipients will be announced in Q4 2018, once grant contracts are finalized.

FAQ:

Alexa Voytek, Program Manager / Energy Analyst, TDEC Office of Energy Programs, alexa.voytek@tn.gov, 615-532-0238

  1. A project must propose to receive funding for a minimum of one vehicle. The first round of the program required that applicants propose to receive funding for a minimum of three vehicles. 
  2. Each grant will provide up to 70% of the incremental purchase cost or vehicle conversion cost of eligible vehicles, with a maximum grant of $25,000 for each eligible vehicle. The first round provided up to 50% of the incremental purchase cost of eligible vehicles.
  3. Eligible vehicles can now either be purchased new OR may be converted to run on natural gas or propane through an EPA-certified, after-market conversion.
  4. Natural gas or propane powered bi-fuel vehicles are now eligible, but ONLY for emergency response vehicle applications. Please consult the Tennessee Natural Gas and Propane Vehicle Grant Program Application Manual for more information on this distinction.
  5.    There are no gross vehicle weight restrictions or requirements for the second round of funding. This means that light, medium, and heavy-duty vehicles will all be considered eligible.

No; eligible vehicles must be purchased new from an original equipment manufacturer (OEM) or OEM-authorized dealer or must be converted to run on natural gas or propane through an EPA-certified, after-market conversion.

No. This program may only fund on-road vehicle projects.

  1. The application must include a project description, which must contain:
    •    A description of the number and type of eligible vehicles to be purchased or converted;
    • Confirmation of the existence or planned construction of fueling infrastructure within Tennessee that will be available to supply all vehicles to be supported with grant funds;
    • Confirmation as to whether or not the primary fueling facility will be accessible to the public;
    • A statement on the projected use of natural gas or propane in gasoline gallon equivalents (GGEs) or gallons, accompanied by the methodology utilized to determine the projected use;
    • A plan which demonstrates the financial viability of the project, the proposed project purchase or conversion schedule, and the expected payback;
    • A description of the total incremental purchase costs or vehicle conversion cost of eligible vehicles, as well as the amount of incremental cost or vehicle conversion cost requested as grant share; and
    • A description of the expected driving route of the vehicles to be supported with grant funds (i.e., whether the vehicle will be in service on a daily, weekly, or monthly basis and the expected length of vehicle trips; where the vehicle is expected to travel (will it serve a local route, regional route, state-wide route), the highways/roadways that the vehicle is expected to travel on, etc.).
  2. If the vehicle is to receive IRP apportioned registration, the application must include a letter certifying the percentage of time that the vehicle is expected to operate within the State of Tennessee.
  3. The application must include a budget justification and supporting documentation to detail the calculations, assumptions and information used to determine the new vehicle purchase price, the equivalent diesel or gasoline vehicle purchase price, the total incremental purchase costs or vehicle conversion costs of eligible vehicles, the amount of incremental cost or vehicle conversion cost requested as grant share, applicant or project partner match amount, total project cost, the financial viability of the project, and the expected payback. Supporting documentation should include price quotes and/or other verifiable sources for incremental cost and/or conversion cost calculations.
  4. The application must contain letter(s) documenting financial commitment to the project. Letters of financial commitment from each source, including the applicant, should clearly state the amount and source of matching funds to be committed to the project. Funding "applied for" but not yet awarded from other sources may not be included.
  5. The application must contain documentation confirming the existence of fueling infrastructure available in Tennessee to supply eligible vehicles to be supported with grant funds. For existing fueling stations, the applicant must provide a letter from the owner or operator of the station stating that the fueling station is or will be capable of supporting the projected fuel consumption within the grant period of performance. For proposed new fueling stations, the applicant must provide a letter from the owner/operator of the station identifying the online date, the supplier of natural gas, and the capabilities of fueling station to support the projected fuel consumption of the project within the grant period of performance.

For more information on the above requirements, please refer to the Tennessee Natural Gas and Propane Vehicle Grant Program Application Manual.

Only vehicles purchased or converted within the period of performance of a fully executed grant contract shall be eligible for reimbursement.  

Yes. However, eligible vehicles must be registered within the State of Tennessee, unless the vehicle is to receive IRP apportioned registration. In the case of the latter, the organization applying for a rebate must submit a letter certifying the percentage of time that the vehicle is expected to operate within the State of Tennessee.

No; this will not be an eligibility requirement to receive grant funding. However, the application allows applicants to note the intent to replace and dispose of an older vehicle or engine, and such intent will be taken into consideration when all applications are being reviewed.

No; this will not be an eligibility requirement to receive grant funding. However, the application requests that applicants state whether the vehicles are expected to operate in maintenance areas, so that this can be taken into consideration when all applications are being reviewed.

  • Grantees must submit quarterly reports to include updates on procurement, vehicle operator training (if needed), and fueling infrastructure until the grant-funded vehicles are purchased/delivered or converted, and put into service.
  • Within three months of the conclusion of each year of the grant period, and for three years thereafter, grantees must submit an annual report. Such reporting shall include the demonstrated usage of compressed natural gas, liquefied natural gas, or propane in purchased or converted vehicles, the number of gasoline gallon equivalent (GGE) or gallons purchased, purchase price, refueling locations, miles driven, driving or route habits, metrics regarding emissions reductions, and savings or cost avoidance.
  • Grantees must submit a final project report within three months of the completion of the grant period. The final project report will take the place of the annual report for the final year of the grant period and must include cumulative financial information to match the final reimbursement request. The final project report must also include an inventory control report of all equipment or vehicles purchased or converted with funding through the Grant Contract.

Note: TDEC OEP will provide reporting templates for quarterly, annual, and final reports. These templates will be referenced in the Grant Contract and will be attached to the corresponding grant program manual. If Grantees must track some of the required information for other purposes, OEP will consider accepting that information in other formats.

The following entities were selected to receive funding under the first round of the Tennessee Natural Gas and Propane Vehicle Grant Program:

  • FedEx Express, to purchase twenty-two dedicatednatural gas Freightliner Cascadia CA113DC trucks
  • Knoxville Utilities Board, to purchase three dedicated natural gas Freightliner M2 112 trucks
  • Piedmont Natural Gas, to purchase six dedicated natural gas Freightliner M2 112 trucks
  • Sevier County Utility District, to purchase one dedicated natural gas Ford F650 dump truck, one dedicated natural gas Ford F450 truck, and one dedicated natural gas Kenworth T880 refuse hauler
  • Tranco Logistics, LLC, to purchase three dedicated natural gas Freightliner Cascadia day cab trucks
  • United Parcel Service, Inc., to purchase twelve dedicated natural gas Kenworth T680 trucks