Guidance

How to use the greener bus tool

Published 8 September 2023

What the greener bus tool does

The greener bus tool is an Excel spreadsheet-based appraisal toolkit to inform the value for money (VfM) assessment of zero emission bus (ZEB) investments. This guidance:

• sets out how the tool is structured and formatted
• provides a step-by-step guide to using the tool
• explains how to use the resulting outputs

The toolkit’s key output is a benefit cost ratio (BCR), a metric indicating the benefits generated from a scheme relative to the costs incurred. This provides a measure to help determine the value for money of schemes, which is an important consideration for decision-makers when deciding whether a scheme should be delivered or not.

The tool uses evidence-based assumptions to quantify key costs and benefits of investing in the proposed zero emission buses – whether battery electric or hydrogen fuel cell buses.

It does this based on scheme details obtained by the scheme promoter, such as the capital costs of buses, the cost of supporting infrastructure and the annual vehicle distance of the routes the buses will serve.

The methods the tool uses are in line with:

• the HM Treasury Green Book – guidance issued by HM Treasury on how to appraise policies, programmes and projects
• Department for Transport (DfT) transport analysis guidance (TAG)

The tool helps decision-makers understand the relative impacts of the investment by quantifying the key costs and benefits incurred to bus operators, local and central government finances, the environment and society.

The tool compares a proposal against a scenario where the proposed scheme is not delivered, referred to as the counterfactual. For instance, this is expected to be a scenario where a new diesel (Euro 6) bus is purchased and used instead of a new zero emission bus. Consequently, the costs and benefits are the additional impacts generated because of the scheme and its corresponding funding.

The tool has been designed to be accessible to a wide audience. Therefore, no technical expertise is required to use the tool.

Costs and benefits quantified by the tool

Impact on bus operators​

Additional capital cost of zero emission buses and infrastructure.

Change in maintenance costs​ (if specified in tool to be incurred by operators).

Change in operating costs (if specified in tool to be incurred by operators).

Change in Bus Service Operators Grant (BSOG) revenues​.

Impact on government​ (central and local government)

Funding for the capital expenditure on zero emission buses and infrastructure.

Reduction in tax revenue​ from duty paid on diesel fuel (indirect tax impact).

Change in BSOG expenditure​.

Environmental and societal impacts​

Reduction in greenhouse gas emissions that would otherwise be emitted by non-zero emission buses.

Improved air quality resulting from the reduction in nitrogen oxides and particulate matter emissions​ that would otherwise be omitted by non-zero emission buses.

The greener bus tool has been designed to be consistent with UK government guidance on policy appraisal including the HM Treasury Green Book. Each of the impacts quantified follows the methods and assumptions set out in TAG.

The tool provides other useful outputs beyond the BCR. These include the cost effectiveness indicator (CEI), which indicates the social cost of reducing a tonne of carbon.

Tips on using the tool

Start using the greener bus tool early in the development of a scheme. Use the tool to inform the design of a proposed scheme, through options assessments and using insights from key outputs such as the monetised carbon savings and estimated BCR to inform the development of the scheme design to enhance value for money (VfM) where possible.

If you only use the tool at the end of the process, there may be less or no scope for the outputs to inform the design of the scheme.

Be aware of the key factors influencing the BCR. The most significant factors are the:

• scale of the carbon savings
• additional capital costs to purchase new zero emission buses

Because of this, you should consider the following when using the tool.

Consider key factors influencing the carbon savings generated throughout optioneering and scheme design. These factors are the current diesel consumption per km and annual vehicle distance of the services where zero emission buses could be implemented. Proposing to implement zero emission buses where diesel fuel consumption and vehicle distance are highest will result in higher carbon benefits and increase the BCR.

The table below illustrates what the average vehicle distance per bus would need to be for a battery electric bus proposal to reach a BCR of 1 (implying ‘low’ VfM), assuming all other factors, such as bus and infrastructure costs, are equal to the average seen in the Zero Emission Bus Regional Area (ZEBRA) programme (in today’s prices). Costs also include a mid-life battery replacement cost for a 352kWh battery, which is the average battery size of electric buses from existing Zemo test certificates.

Table 1: Estimated distance per electric bus to reach BCR = 1

Scenario	Scenario description	Annual average km per bus needed for the BCR to be equal to 1*	Equivalent daily km per bus**
High fuel/energy consumption	Based on an inner urban route	67,000km – 77,000km	258km – 296km
Medium fuel/energy consumption	Based on an outer urban route	88,000km – 101,000km	338km – 388km
Low fuel/energy consumption	Based on a rural route	95,000km – 109,000km	365km – 419km

*Range represents uncertainty in outcome of individual scheme quantified risk assessment (QRA), influencing total scheme cost.

**Assuming services are run Monday to Friday for 52 weeks.

Consider a range of options for the specification of buses required, propose buses that satisfy the need/requirements of the services, but do not include unnecessary bus specifications, such as passenger specifications above and beyond a standard bus.

Get quotes from multiple manufacturers and models to determine if costs can be reduced by the choice of manufacturer and/or model.

Consider ways in which the cost per bus can be reduced through the purchasing arrangement.

Consider if a purchasing power agreement can be sought for lower-cost electricity to be used for charging battery electric buses.

Ensure inputs and assumptions are based on suitable evidence. To ensure outputs are robust and representative of the scheme, inputs and assumptions should be backed up with evidence, such quotes on costs and data on vehicle km of the current fleet.

Conduct sensitivity analysis based on scheme-specific risks and uncertainties. Where there is uncertainty in a scheme input/assumption or there is a risk, additional analysis should be conducted to understand how different inputs and assumptions impact the VfM.

Structure and format

The tool has the following visible worksheets:

• Cover Sheet – provides version control and legend
• User Proforma – requires users to input various details related to the investment
• User Parameters – requires users to input various scheme and appraisal parameters
• Bus Costs – requires users to input costs of equivalent diesel buses and zero emission buses
• Hydrogen Costs and Supply – require users proposing hydrogen buses to input details about the source and cost of hydrogen fuel. This tab should only be used for hydrogen proposals
• Input Summary – summarises a range of key inputs related to the investment and calculates the grant cost per bus
• Summary – sets out all monetised impacts and estimated reductions in carbon emissions, and air pollutants such as nitrogen oxides and particulate matter on a yearly basis
• BCR and Dashboard – provides a summary of all monetised impacts over the appraisal period and sets out the estimated BCR

The appraisal period is the period over which costs and benefits of the scheme are monetised. In this case, the appraisal period relates to the useable lifetime of the buses.

In line with best practice, the Excel spreadsheet tool has been formatted such that input, calculation and output sheets are separated. There are divider pages (Inputs> >, Calculations> >, Outputs> >) to group the sheets and to ensure the integrity of the toolkit flow. To simplify the tool, the calculation sheets and some of the input sheets have been hidden. Sheets can be unhidden and viewed by right-clicking in the tab bar and selecting “unhide”. All calculation tabs and some input tabs (where inputs are fixed) have been protected to prevent any changes being made – this is to ensure there is consistency when assessing bids.

The tool is formatted for each sheet such that it follows the format of how a book should be read, from left to right and from top to bottom.

The spreadsheet tool has been developed in the DfT spreadsheet model template. The formatting and colour scheme have been kept consistent with this.

Green highlighted tabs are input sheets for users to input scheme-specific data related to the investment.

Grey highlighted tabs are fixed input tabs or calculation tabs, which are protected to prevent changes being made.

Blue highlighted tabs display the outputs of the tool such as monetised impacts and the BCR.

Cells have been formatted in line with the legend in the Cover Sheet tab (see Figure 1). All yellow-shaded cells in the input sheets must be filled in.

Figure 1: Legend of the greener bus tool

Step-by-step guide to using the toolkit

The process to complete an assessment using the greener bus tool includes:

• inputting basic scheme details in the User Proforma tab, such as specifying the delivery profile of the new zero emission buses, the capital cost of the buses and associated infrastructure and stating the estimated annual vehicle distance per bus
• reviewing and updating the assumptions in the User Parameters tab, for instance specifying the fuel/energy consumption scenario to use, ‘low’, ‘medium’ or ‘high’
• completing the Bus Costs tab, for instance by specifying the cost per bus of an equivalent diesel bus that would be purchased in a scenario without the investment in zero emission buses
• completing the Hydrogen Proforma to specify the source of hydrogen fuel – which is only needed if proposing hydrogen buses

The results of the analysis can be viewed and used in the Summary, Input summary and BCR and Dashboard tabs.

Inputting details of the scheme (I – User Proforma tab)

The User Proforma tab is where the user enters details related to the proposed intervention to invest in zero emission buses. The information entered in this tab includes key information informing the calculation of scheme costs and benefits.

High-level guidance of what is required is provided within the User Proforma tab and is discussed in more detail below.

Vehicles

First year of vehicle delivery

The drop-down menu should be used to select the year the first bus is anticipated to be on the road. This is required to identify the first-year costs/benefits of the scheme should be valued for compared to the counterfactual. This should be reflected in the profile of the number of zero emission buses delivered.

Total delivery period for vehicles

The period in years taken to deliver all buses in the proposed scheme should be entered. This should be reflected in the profile of the number of zero emission buses delivered.

Number of zero emission buses delivered

The delivery profile of single-deck and double-deck buses delivered should be specified in the respective rows.

Total cost of zero emission buses

This represents the total capital cost of zero emission buses for each year including costs of battery replacements/warranties. These rows will sum automatically in the tool and does not need to be adjusted.

Grant required from government for zero emission buses

This should reflect the eligible grant amount requested from DfT for the purchase of zero emission buses for each delivery year. Please refer to the latest available published scheme guidance for further detail on grant funding rules and what is eligible for funding. Values should be entered in nominal prices (outturn/cash prices, for example).

Cost to other funding sources in each year

The profile of costs assigned to other funding sources, excluding the requested grant funding should be specified in this section. The source relates to the funding source, for example, ‘bus operator’ or ‘local transport authority’.

The sector incurring the cost should be specified as either private or public (costs to government departments and LTAs should be selected as ‘public’ and costs to private sector organisations, such as bus operators, should be selected as ‘private’).

A description for each cost line should also be provided, such as ‘battery replacement cost’ or ‘cost of zero emission bus’. All cost values should be entered in nominal prices, such as outturn/cash prices. Quotes from manufacturers should be used to inform vehicle costs and evidenced.

Battery replacement/battery warranty costs

A row for mid-life battery replacement or extended battery warranty costs should also be specified in the costs to other funding sources section (rows 36-43) for the corresponding year that they are expected to be incurred. A description should also be provided in the description box.

If battery warranty costs are included within the cost of the buses, then this should be stated in the tool and application form. If a battery warranty is not being proposed and there is not sufficient evidence of battery costs, the battery cost assumptions below should be used.

These battery cost forecasts are based on research published by the Climate Change Commission (CCC). These costs are stated in nominal prices. A linear change between each of the data points has been assumed to form a data series that covers the appraisal period. The capacity of the battery (in kWh) used to determine the battery cost should also be stated.

Table 2: Forecast of battery costs (£/kWh)

Year	£/kWh
2026	211
2027	198
2028	185
2029	172
2030	158
2031	156
2032	154
2033	151
2034	149
2035	147
2036	146
2037	145
2038	145
2039	144
2040	143

Costs of finance and lease payments

Any additional financing costs, such as cost of borrowing or lease fees incurred to purchase the zero emission buses, should be considered when determining the total cost of zero emission buses and reflected in the grant required (row 30 of the I- User proforma tab) and the costs to other funding sources (rows 36-43, with the relevant description provided in the description box, for example, ‘lease fees/payments’).

This should reflect the extra financing cost that ZEBs represent compared to diesel buses. If the finance cost would be expected to be the same for a diesel bus as a ZEB, then no additional cost should be added in the tool. However, this is not expected to be the case in most scenarios, given that ZEBs are more expensive and, therefore, likely to attract higher leasing costs.

Risk contingency / quantified risk assessment (QRA)

Quantified risk assessment allows an expected value of the cost of the scheme to be calculated. The expected value is defined as the average of all possible outcomes, taking account of the different probabilities of those outcomes occurring. Where possible, a QRA should be conducted for the capital costs related to the purchase of zero emission buses.

In the absence of a robust QRA, the default value of 20% optimism bias should be applied to vehicle capital expenditure for the counterfactual fleet and the proposed fleet. See the section of this guidance on optimism bias for further detail.

There is a 4-step process to a QRA as outlined below. Further details are available in TAG Unit A1.2 Scheme Costs.

We have published a quantified risk assessment (QRA) spreadsheet template to provide a proportionate approach to conduct this assessment.

Step 1. Risk identification

Construct a comprehensive Risk Register listing any identified risks that are likely to affect the delivery and operation of the scheme. Examples of risks can be found in Table 2 of TAG Unit A1.2. Appropriate consideration should be given to the combined risk of both delays and cost rises above those assumed in the base costs.

Step 2. Assessing the impacts of risk to determine possible outcomes

The impact of each risk should be assessed in terms of the cost outcomes of the risk. This should primarily be done using evidence from similar schemes or modelled sensitivity analysis. Where empirical evidence from similar schemes is not available, a common-sense approximation should be used. All costs of identified risks should be considered, including potential knock-on effects as well as direct effects. The objective is to obtain an unbiased estimate of the impacts of the risk on the costs of the scheme.

Step 3. Estimating the likelihood of the outcomes

The likelihood of occurrence of each of the identified risks should be assessed. This should also be based on empirical evidence if possible and should consider any foreseeable changes or developments, rather than arbitrary estimates. If assumptions of probabilities need to be made, these should be reasonable and fully documented in the corresponding application form as well.

Step 4. Deriving the probability distribution for the costs of the scheme

The expected outcome (also known as the ‘mean’ or ‘unbiased’ outcome) is the weighted average of all potential outcomes and associated probabilities. Several methods can be used to derive the probability that the total project cost (the sum of all activities considered in the QRA), will not exceed a particular value.

The QRA template provides a proportionate approach by multiplying the most likely cost impact by the probability of the risk occurring.

As outlined in paragraphs 3.2.7 and 3.2.8 of TAG Unit A1.2, it can be useful to involve specialists (such as project managers, financial and economic advisors, operators and maintainers of existing infrastructure, engineering and insurance professionals, actuaries and lawyers) when organising workshops regarding project risks and assessing the likely cost and likelihoods of these risks. It can also be useful to engage with specialist consultants who have relevant expertise in facilitating risk identification exercises.

When deriving the cumulative probability distribution (based on a standard probability distribution, see figure 1 in TAG Unit A1.2 for more detail), the P value indicates the probability that the total cost of the proposal will be within budget, which is the contingency amount plus base costs. For example, the P50 value is the budget estimate associated with 50% probability that the project will be delivered within budget.

For all economic appraisal, the P(mean) should be used.

The estimated risk contingency/QRA amount associated with the purchase of vehicles should be input in rows 50 and 52 of the tool, specifying the amount of estimated contingency that will be covered by DfT grant funding in row 52 (if applicable) and the amount that will not be covered by grant funding in row 50. The sector expected to incur the contingency cost not covered by grant funding should also be specified.

Evidence of how the QRA has been conducted should be provided, for example, a list of all identified risks with associated cost outcomes and likelihoods in the QRA spreadsheet template provided to validate the level of risk contingency stated in the tool. Where required, schemes may be expected to provide additional detail to DfT on the justification and assumptions underpinning their QRA risks values and likelihoods.

Life expectancy of zero emission buses

The default value of 17 years should be used in the central scenario – based on sector-specific evidence which suggests that the operating life of a bus is expected to be between 15 and 20 years. If there is evidence to suggest that the life expectancy of zero emission buses will differ from the default assumption, then sensitivity analysis should be conducted with alternative values.

Annual average vehicle km per vehicle

An estimate of the annual distance in km travelled per bus should be determined based on the routes the buses will likely operate on. Where proposed buses would serve a variety of different services, a weighted average should be calculated for this input. This will account for the variation in annual vehicle distances per bus depending on the service.

A scheme-specific version of the following table showing the source of the weighted average vehicle distance per bus should be included in the application form.

The table has been populated with an illustrative example. The weighted average can be calculated by determining the total annual distance from all proposed zero emission buses (annual vehicle km per bus for route 1 x number of new ZEBs used on route 1 + …) divided by total number of proposed zero emission buses.

Table 3: example of vehicle distance evidence

Bus service / Route number	Annual vehicle distance per bus (km)	Number of proposed zero emission buses used
Route 1	100,000km	5
Route 2	93,000km	2
Route 2	90,000km	1
Weighted average	97,000km	Not applicable

Supporting infrastructure

First year of infrastructure delivery

The drop-down menu should be used to select the first year the infrastructure is expected to be delivered. This should be reflected in the profile of infrastructure costs.

Total delivery period for infrastructure

The period in years taken to deliver all infrastructure required to support the delivery of the buses in the proposed scheme should be entered. This should be reflected in the profile of infrastructure costs.

Total cost of infrastructure

This represents the total cost of infrastructure for each year required to support the delivery of zero emission buses. This row will sum automatically in the tool and does not need to be adjusted.

Grant required from government for supporting infrastructure

This should reflect the eligible grant amount requested from DfT for the cost of infrastructure required to support the delivery of the zero emission buses for each delivery year. Please refer to specific scheme guidance for further detail on grant funding rules and what is eligible for funding. Values should be entered in nominal prices, that is, outturn/cash prices.

Cost to other funding sources each year

The profile of infrastructure costs to other funding sources, excluding the requested grant funding, should be specified in this section. If possible, provide a breakdown of infrastructure costs in the relevant rows, for example, ‘costs of chargers’ and specify this in the description section.

Similar to the vehicle cost section, the source and sector rows should also be completed and quotes from suppliers should be used and evidenced to inform costs. All cost values should be entered in nominal prices.

To note, from 1 April 2023, demand connection customers will no longer be viable for grid reinforcement costs (also known as “non-contestable works”) to accommodate for their connections. This is a cost to the distribution network operator (DNO) and should not be included in the tool as it may not represent an additional cost as a result of the intervention.

Risk contingency/quantified risk assessment (QRA) for supporting infrastructure

The estimated risk contingency for infrastructure costs should be specified in rows 99 and 101 of the tool, specifying the amount of risk contingency for infrastructure that will be covered by grant funding in row 101 (if applicable) and the amount not covered by grant funding in row 99. The sector expected to incur the contingency cost not covered by grant funding should also be specified.

See the section of this guidance on risk contingency / quantified risk assessment (QRA) for further details on conducting a QRA.

Maintenance cost of supporting infrastructure

The drop-down menu should be used to specify the method by which annual maintenance costs of supporting infrastructure will be calculated.

One method calculates this by assuming that annual infrastructure maintenance costs are equivalent to a specified proportion of the capital expenditure (referred to as ‘capex’ in the tool) on infrastructure. The other method calculates infrastructure maintenance costs based on an annual maintenance cost specified in the tool.

It is recommended that scheme promoters select ‘average annual cost’ and specify a well-evidenced estimate of the annual infrastructure maintenance cost in nominal prices. In the absence of an evidence-based maintenance cost, the default assumption of ‘% of capex’ should be selected.

The default assumption in the tool is that annual maintenance costs will be 2.1% of the total infrastructure capital expenditure, based on past scheme evidence. If scheme promoters wish to use an alternative % of capex figure, then justification for this figure should be provided.

Cost and carbon dioxide emissions per kWh of electricity

Scheme promoters have the option to provide their own cost estimate per kWh of electricity, by selecting ‘yes’ in cell E128 and inputting these costs in row 130 for all years the proposed buses would be in operation. Selecting ‘yes’ alone is not sufficient. There must be a strong rationale for using local estimate of cost/carbon emissions per kWh, such as having a power purchase agreement (PPA) covering the full operational lifetime of the buses.

In the absence of robust evidence, LTAs should only use this information for sensitivity analysis and in the central scenario ‘no’ should be selected in the local evidence drop-down menu, which will result in the tool using the default cost and carbon emission forecasts from the Department for Energy Security and Net Zero (DESNZ). All resource costs based on local evidence should be entered in nominal prices.

Selecting the analysis parameters (I – User Parameters tab)

The User Parameters tab is where the user inputs key appraisal assumptions. The information entered in this tab informs the calculations of the costs and benefits of the proposed intervention.

Default assumptions are used to pre-populate most cells. However, these can be changed with sufficient justification or to conduct sensitivity analysis.

See the sensitivity analysis – understanding risks and uncertainties section of this guidance for further information on sensitivity analysis.

Guidance on what is needed to complete this tab is outlined below:

Appraisal assumptions

Current year

The current calendar year the tool is being completed should be input into the yellow-shaded input cell.

Appraisal base year

This reflects the price base year of the analysis. The tool converts all outputs from nominal input prices to real prices using GDP deflators for the year that is specified in the yellow-shaded input cell. This is to ensure that all outputs are reported in a consistent price base and are adjusted for inflation. In most cases, this will be the same as the current year.

Counterfactual fleet (DM)

The drop-down menu should be used to select the powertrain (for example, diesel or electric) of the vehicles in the ‘do-minimum scenario’, for example, the buses that will be delivered in the absence of the intervention/investment.

Proposed fleet (DS)

The drop-down menu should be used to select the powertrain of the vehicles in the do-something scenario, for example, the buses that will be delivered with the intervention.

Non-traded cost of carbon scenario

Published carbon values from DESNZ (values are in £ per tonne of carbon emitted) are used to monetise the benefit of carbon reductions from investing in zero emission buses. In the central scenario, the ‘central’ carbon values should be used. The drop-down can be used to conduct sensitivity analysis by selecting ‘low’ or ‘high’ to use the lower and higher carbon value estimates.

Changing the drop-down selection will automatically feed through to the O–BCR and Dashboard output sheet of the tool. For ease of comparison with the central scenario, it is recommended that each sensitivity test is saved in a separate version of the tool (and that this is clearly signposted).

Optimism bias

Optimism bias is a proportional increase applied to cost estimates to reflect the extent to which the true cost of an intervention is likely to be greater than the estimated cost. It also accounts for the tendency to underestimate the length of time for intervention development and delivery.

Accounting for this risk is essential for the robust economic appraisal of a proposal. As interventions progress through detailed design and the business case process, the level of optimism bias to be applied reduces; reflecting the increased confidence and awareness of risks associated with the intervention costs. Further details are available in TAG Unit A1.2 Scheme Costs.

In the absence of a robust quantified risk assessment (QRA), the default optimism bias in the I–User parameters tab should be entered as 20% for bus and infrastructure capital costs. To note, bus capital costs are referred to as ‘Vehicle CapEx Optimism Bias’ for the proposed fleet and ‘Do Min Vehicle Replacement Optimism Bias’ for the counterfactual fleet.

If a QRA has been conducted, then 0% optimism bias should be entered for these costs, to avoid double counting.

See the operating cost sensitivity analysis section of this guidance for further detail on this.

The default optimism bias of 20% is based on stage 3 of the ‘Road’ reference class outlined in the table below, which is considered the most suitable of the available reference classes. There is currently insufficient evidence to develop a reference class specifically for zero emission buses, although it is noted that for zero emission bus proposals, scheme promoters are required to have sought quotes from manufacturers to inform vehicle cost estimates.

Where possible, scheme promoters should seek to conduct a QRA, to replace the use of optimum bias.

Table 4: Optimism bias level by business case stage

Category	Stage 1	Stage 2	Stage 3
LTA and public transport schemes	Strategic business case	Outline business case	Full business case
Optimism bias level	46%	23%	20%

Operating cost sensitivity analysis

If the default resource cost values from DESNZ are used in the absence of local estimates, the drop-down menu should be selected as ‘central’ for diesel and electric buses in the central scenario. The drop-down menu can be used to conduct sensitivity analysis for operating costs by selecting ‘low’ or ‘high’ in the drop-down to use the low and high resource cost values in the analysis.

To note, sensitivity analysis for resource costs relating to hydrogen proposals can be conducted by entering values in row 17 in the I- Hydrogen Costs & Supply tab. Further detail can be found in the I- Hydrogen Costs & Supply section below.

Damage cost by pollutant selection

The area type that the buses will be serving should be specified using the drop-down menu in the geography section. This informs the damage cost values (in £ per tonne of pollutant emitted) for particulate matter and nitrogen oxides that are used to calculate air quality impacts arising from the investment in zero emission buses. The ‘central’ scenario should be selected for the central analysis submitted. Sensitivity analysis can be conducted by selecting ‘low’ or ‘high’ in the drop-down menu.

Vehicle maintenance cost technologies, sector incurring vehicle maintenance cost

The sector (private or public) that will be impacted by the change in vehicle maintenance costs between buses purchased in the do-minimum scenario (Euro 6 diesel buses) and the do-something scenario (zero emission buses) should be specified using the drop-down selection.

Vehicle maintenance cost technologies, sector incurring operating cost

The sector (private or public) that will be impacted by the change in operating costs (resource costs and duty costs) from replacing diesel buses with zero emission buses should be specified using the drop-down selection.

Bus Services Operator Grant (BSOG)

In the BSOG drop-down menu, the ‘do-minimum’ BSOG rate should be selected as ‘Basic BSOG rate + LCEB, AVL and Smartcard Uplifts’ as the default assumption.

The do-minimum is assumed to be the purchase new equivalent diesel buses, which are expected to be eligible for the Low Carbon Emission Bus (LCEB) 6p/km incentive, Automatic Vehicle Location (AVL) and smartcard incentives. For the proposed fleet, the BSOG rate of 22p/km should be selected as the default assumption.

Bus fleet being replaced, sector incurring cost of existing fleet replacement (DM costs)

The sector (private or public) that would have incurred the capital cost of purchasing the buses that would be delivered in the absence of the intervention (Euro 6 diesel buses) should be specified using the drop-down menu.

Fuel/energy consumption selection

The drop-down menu presents 3 scenarios, ‘low’, ‘medium’, and ‘high’ for diesel fuel consumption of the counterfactual fleet and electricity/hydrogen consumption for the proposed zero emission fleet. These broadly correlate respectively to the rural, outer urban and inner urban consumption figures from Zemo bus test certificates. Tests for each area type were based on varying distances and average speeds that were considered to represent an average of that route type.

As a guide, if the routes that the proposed buses will serve are mainly in a rural area, then ‘low’ would likely be the most appropriate consumption scenario to select.

If the routes that the proposed buses will serve are mainly in an outer urban area, then ‘medium’ would likely be the most appropriate consumption scenario to select.

If the routes that the proposed buses will serve are mainly in an inner urban area, then ‘high’ would likely be the most appropriate consumption scenario to select.

Sufficient evidence should be provided related to the area that the buses will serve to justify the fuel/energy consumption scenario selected.

The tables below outline the fuel and electricity consumption figures used in the tool for single- and double-deck Euro 6 diesel and electric buses. To note, where a scheme is proposing an investment in both single- and double-deck buses, the tool will automatically calculate a weighted average fuel and electricity consumption figure.

Table 5: Diesel bus fuel consumption scenarios

Scenario	Single deck	Double deck
Low	26	30
Medium	34	38
High	43	51

Table 6: Electric bus energy consumption scenarios

Scenario	Single deck	Double deck
Low	102	108
Medium	137	144
High	157	183

Inputting capital expenditure per bus (I – Bus Costs tab)

The bus costs tab is where the user inputs the capital cost per bus of the proposed zero emission buses and the equivalent diesel buses.

Cost per bus by fuel and vehicle type

Quotes from manufacturers should be used to populate the capital cost per bus of the proposed zero emission buses and the equivalent diesel buses. If the cost per bus of a particular fuel/vehicle type varies across the proposed delivery period, then the weighted average should be used (hence the weighted average of bus costs in nominal prices, if it is expected that bus costs will vary each year).

Determining hydrogen fuel costs (I – Hydrogen Costs & Supply tab)

The hydrogen input tab is where the user enters details related to proposals investing in hydrogen buses only.

Hydrogen cost and CO₂ emission per kg

Scheme promoters have the option to provide their own cost estimate per kg of hydrogen, by selecting ‘yes’ in cell C17 and inputting these costs in row 17 for all years the proposed buses would be in operation. Selecting ‘yes’ alone is not sufficient.

There must be a strong rationale for using local estimates of the cost/carbon emissions per kg. In the absence of strong evidence, LTAs should only use this information for sensitivity analysis and in the central analysis ‘no’ should be selected in the local evidence drop-down menu, which will result in the tool using the default cost and carbon emission forecasts from internal DfT analysis. All resource costs based on local evidence should be entered in nominal prices.

Hydrogen scenario

In the absence of local evidence to inform the cost/carbon emission per kg of hydrogen, the proposed production method should be indicated in this section. This will calculate the costs and emissions per kg of hydrogen based on core assumptions.

If hydrogen will be produced using renewable energy, that is, ‘green’ hydrogen, then the H2 production scenario used should be ‘electrolysis renewable electricity’. This will require entering all values as 100% in row 29. The totals in the H2 production scenario input table should equal 100% (row 31).

Zero emission minibuses

Similar to zero emission buses, proposals to invest in zero emission minibuses should consider the key factors that would influence the carbon savings generated, such as the current diesel consumption and the annual vehicle distance of services where zero emission minibuses could be implemented.

Proposing to implement zero emission minibuses where diesel fuel consumption and vehicle distance are highest will result in higher carbon benefits and increase the BCR.

The table below outlines what the average annual vehicle distance per minibus would need to be for an electric minibus proposal to achieve a BCR of 1 (implying ‘low’ VfM) for a number of illustrative scenarios.

The scenarios differ based on the capital costs of minibuses (vehicles and infrastructure) and the energy intensity of the route they will be introduced on. The fuel/energy consumption, particulate matter and nitrogen oxide emission figures informing the scenarios are based on existing Zemo test certificates for a diesel minibus model and an electric minibus model.

Estimates assume a 10-year life expectancy for minibuses, with no mid-life battery replacement. Stakeholder evidence suggests that the operating life of a minibus could range from 10 to 15 years, with a longer life expectancy reducing the annual vehicle distance needed to reach a BCR of 1.

Table 7: Estimated distance per minibus to reach BCR = 1

Scenario	Scenario description	Annual average km per bus needed for the BCR to equal 1*	Equivalent daily km per minibus**
Small minibus with AC charging, high fuel/energy consumption	£80,000 electric minibus capital cost £2,000 infrastructure cost Based on an inner urban route	23,000km – 28,000km	88km – 108km
Small minibus with AC charging, low fuel/energy consumption	£80,000 electric minibus capital cost £2,000 infrastructure cost Based on a rural route	27,000km – 33,000km	104km – 127km
Small minibus with DC charging, high fuel/energy consumption	£80,000 electric minibus capital cost £50,000 infrastructure cost Based on an inner urban route	53,000km – 63,000km	204km – 242km
Small minibus with DC charging, low fuel/energy consumption	£80,000 electric minibus capital cost £50,000 infrastructure cost Based on a rural urban route	63,000km – 74,000km	242km – 285km
Large minibus with AC charging, high fuel/energy consumption	£180,000 electric minibus capital cost £2,000 infrastructure cost Based on an inner urban route	55,000km – 66,000km	212km – 254km
Large minibus with AC charging, low fuel/energy consumption	£180,000 electric minibus capital cost £2,000 infrastructure cost Based on a rural route	66,000km – 80,000km	254km – 308km
Large minibus with DC charging, high fuel/energy consumption	£220,000 electric minibus capital cost £50,000 infrastructure cost Based on an inner urban route	95,000km – 113,000km	365km – 435km
Large minibus with DC charging, low fuel/energy consumption	£220,000 electric minibus capital cost £50,000 infrastructure cost Based on a rural route	114,000km – 136,000km	438km –523km

*Range represents uncertainty in outcome of individual scheme quantified risk assessment (QRA), influencing total scheme cost.

**Assuming services are run Monday to Friday for 52 weeks.

If completing the greener minibus tool to assess a proposal to invest in zero emission minibuses, the process outlined in the Step by step guide to using the toolkit section of this guidance should be followed, with relevant information, such as capital costs provided for minibuses. The following inputs will differ specifically from the guidance provided for buses.

Life expectancy of zero emission minibuses

A default value of 10 years should be used in the central scenario. Due to uncertainty surrounding the life expectancy zero emission minibuses, a version of the tool using a 15-year life expectancy should also be completed as a required sensitivity test. If there is evidence to suggest that the life expectancy will differ from the 10-year default assumption or the 15-year required sensitivity, then further sensitivity analysis should be conducted with alternative values and evidence provided to justify this.

Fuel/energy consumption selection

The drop-down menu provides 3 options to choose from, ‘low’, ‘medium’ and ‘high’ for diesel consumption of the counterfactual fleet and electricity consumption of the proposed zero emission minibuses.

As with the greener bus tool, if the routes that the proposed minibuses will serve are mainly in a rural area, then ‘low’ would likely be the most appropriate scenario to select. If the routes that the proposed buses will serve are mainly in an outer urban area, then ‘medium’ would likely be the most appropriate scenario to select. If the routes that the proposed buses will serve are mainly in an inner urban area, then ‘high’ would likely be the most appropriate scenario to select.

The table below outlines the fuel and electricity consumption figures used in the tool for diesel and electric minibuses. These are based on a single bus test certificate for a diesel minibus and a zero emission minibus. If there is evidence to suggest that the consumption figures of the proposed minibuses will differ greatly from the default values in the table, then this should be highlighted in the scheme application form and evidence of this provided.

Table 8: Diesel and electric minibus fuel/energy consumption scenarios

Scenario	Diesel minibus (l/100km)	Electric minibus (kWh/100km)
Low	12	40
Medium	15	55
High	21	75

Interpreting outputs

O – Input summary

The input summary tab summarises key inputs related to the proposed scheme. The tab presents both totals and the profile of inputs each year of the following:

Grant costs

The grant amount requested from DfT, split by the grant contributing towards the cost of vehicles and infrastructure. Additional metrics such as the total grant cost per bus, the vehicle grant cost per bus and the infrastructure grant cost per bus are also calculated in this tab.

Number of buses

The total number of buses to be delivered, split by single deck and double deck.

Bus costs (weighted average)

The cost of the proposed zero emission bus (for single deck and double deck) and the cost of an equivalent diesel bus. If the cost per bus of a particular fuel/vehicle type varies across the proposed delivery period, then the weighted average cost should be used.

Capital costs

The total capital costs, split by sector of contribution (private and public). Capital costs include the cost of the buses, supporting infrastructure and battery replacement/warranties. A breakdown of vehicle and infrastructure costs by sector of contribution is also summarised.

O – Summary

The summary tab provides a profile of all quantified costs and benefits of the proposed scheme for each year of the appraisal period. The appraisal period is equivalent to the life expectancy of the buses.

All costs and benefits are stated in present value terms and in a consistent price year, the year of which is specified in the I–User parameters tab.

The tab also summarises the quantified reductions in carbon, nitrogen oxides and particulate matter emissions in both kg and tonnes, for each year of the appraisal period.

O–BCR and Dashboard

The BCR and dashboard tab summarises the quantified costs and benefits of the proposed intervention. All costs and benefits stated are in present value terms. The impacts section summarises the estimated benefits and disbenefits, with the sum of these being equal to the present value benefits (PVB). The costs section summarises the estimated costs incurred to the broad transport budget, with the sum being equal to the present value costs (PVC).

The scheme’s estimated BCR is provided below the summary of different impacts. It is calculated by dividing the PVB by the PVC. If the BCR is between 0 and 1, this indicates that the estimated costs exceed the estimated benefits, and if above 1, this indicates that the benefits exceed the costs. The BCR will help determine the extent the scheme offers value for money. Section 4 outlines how to use the BCR and other considerations to account for when determining the appropriate value for money category.

It is possible to have a scheme where the BCR is negative. This could either indicate that the scheme is expected to offer a net dis-benefit (a negative PVB), in addition to a cost to the broad transport budget, or there would be a cost saving to the broad transport budget (a negative PVC) and a net benefit from the scheme.

Other metrics are also presented in this output tab showing the impact of the scheme such as the net present value (NPV) which offers an alternative metric to the BCR, and the cost effectiveness indicator, indicating the social cost of reducing one tonne of carbon emissions.

How to use the outputs of the toolkit

Value for money (VfM) category definitions

VfM categories provide a succinct, overarching summary of the outcome of an economic appraisal. They are based on an assessment of a proposal’s benefits relative to its costs. They help decision-makers understand the expected impact of a proposal on public value and the extent to which it represents value for money once all potential impacts (monetised and non-monetised) have been considered. Using a consistent approach to express value for money conclusions also allows for easy comparison across proposals.

Where a monetised assessment has been undertaken, DfT’s approach to assigning a category starts by considering the benefit cost ratio. The following table outlines which VfM category is implied by the estimated BCR.

Table 9: Value for money categories implied by BCR

Value for money category	Implied by
Very high	BCR greater than or equal to 4
High	BCR between 2 and 4
Medium	BCR between 1.5 and 2
Low	BCR between 1 and 1.5
Poor	BCR between 0 and 1
Very poor	BCR less than or equal to 0

Four additional categories have also been introduced to reflect special cases where the proposal will result in cost savings. For most cases, these are not expected to be applicable for an investment in new zero emission buses. However, if considered applicable, further details can be found in the DfT VfM framework.

The VfM category should not be determined by the benefit cost ratio alone. Consideration should also be given to the risks, uncertainties and any non-monetised impacts (expected costs and benefits not captured by the greener bus tool). The sections below outline how to consider these when determining the proposed VfM category of the scheme.

Sensitivity analysis – understanding risks and uncertainties

Sensitivity analysis is a way to gain a better understanding of the impact of uncertainties and risks by exploring how the results of the appraisal are affected by changing the respective inputs. It involves changing inputs in the appraisal tool to determine the change to the BCR.

It is expected that all proposals will have risks and uncertainties that could impact value for money, hence sensitivity analysis should be undertaken for all proposals to ensure that the impacts of key risks and uncertainties are understood.

For most schemes these would include at least sensitivities related to the estimated vehicle distance and the fuel/energy consumption scenario. There may also be intervention-specific uncertainties, hence it is recommended that additional sensitivity tests are conducted to have a better understanding of how the BCR can be affected by known risks that are specific to the proposed scheme.

The simplest approach to do this is to increase and decrease parameters by a given percentage. Nevertheless, where evidence is available it is preferable to determine this range empirically; for example, using the highest and lowest estimates for the cost per bus.

Changing the input values used as part of the intervention appraisal will enable a range of BCRs for a proposed intervention to be obtained, helping illustrate uncertainty associated with the intervention’s VfM rating.

DfT has provided a suggested list of minimum sensitivities for areas to use as part of their sensitivity analysis:

• estimated ZEB vehicle mileage reduced/increased 10%
• battery replacement costs decrease/increase 10%
• low and high carbon values (in addition to central in central analysis)
• alternative fuel/energy consumption scenarios (if deemed appropriate)
• low and high operating costs

Sensitivities should be provided in separate versions of the tool.

Input assumptions within the GBT ‘central case’ should be well-evidenced. Where LTAs are unable to sufficiently evidence assumptions but believe that there is strong rationale for use of the assumption, these can be included as sensitivities.

There may be some risks and uncertainties where the impact of these on the BCR is difficult to estimate by adjusting inputs in the tool, such as procurement risks or supply constraints. It is also important to take these risks into consideration when determining the VfM category.

Consideration of non-monetised impacts

Not all impacts can be easily or satisfactorily monetised. In such cases, where it is considered that key impacts of a scheme are not covered by the tool, they should be captured as non-monetised impacts.

To help determine whether identified non-monetised impacts could be sufficient to change the VfM category, scheme promoters should first determine the scale of change in the present value benefits or costs needed to do so.

For instance, if considering whether non-monetised benefits would be sufficient to increase the VfM category, scheme promoters should calculate how much the present value benefits (PVB) would need to increase for the BCR to imply the next VfM category. For example, with a central BCR of 1, implying ‘low’ VfM, the PVB would need to increase by 50% to increase the BCR to 1.5, implying ‘medium’ VfM.

It may also be useful to consider the absolute value that the PVB – switching values approach – would need to change by to imply the next VfM category. For example, if the PVB needs to increase by only a small monetary amount to uplift the VfM category implied by the central BCR, then there may be sufficient justification to do so, once risks, uncertainties and non-monetised costs have also been taken into consideration. It is important to consider non-monetised costs in conjunction with non-monetised benefits.

Where possible, evidence should be used to determine the scale of any non-monetised impacts. This will provide justification as to whether the identified impact will be of the magnitude required to change the VfM category. Evidence-based examples from other schemes can be considered.

In terms of reporting non-monetised impacts, providing a summary narrative explaining the rationale of the identified impact, the suggested scale, and accompanying evidence to support this is sufficient.

Determining a schemes value for money (VfM) category

Determining the value for money of investment in zero emission buses should follow the principles set out in DfT’s value for money framework.

The BCR estimated by the tool should initially be used to check the VfM category implied by it. It is useful to consider whether the BCR is close to implying another VfM category (for example, a BCR of 1.49 implies a ‘low’ VfM category, but is also close to implying a ‘medium’ VfM category) and how much the PVB or PVC would need to change by for the VfM category to change.

Risks, uncertainties and non-monetised impacts should be considered and the relative impact on the PVB and PVC of these should be assessed. An assessment of whether these combined impacts are on a sufficient scale to alter the VfM category from what is implied by the estimated BCR should be made. If the conclusion is that the VfM category is different to that than implied by the estimated BCR, then sufficient justification for this should be provided.

Caveats

The greener bus tool is designed to allow a wide range of users to undertake appraisals of investment in zero emission buses. However, users should also be aware of the known caveats related to the tool.

Toolkit caveats and excluded impacts

Some analytical assumptions in the tool are fixed. This is to reduce the burden on LTAs to find appropriate evidence and prevent inconsistencies between bids. There, however, could be instances where users have access to robust scheme-specific evidence that could have been used to inform particular fixed assumptions.

Where possible, the tool has mitigated for this, by providing a selection of scenarios to choose from. For example, there are 3 scenarios to select from for the fuel and energy consumption expected from the counterfactual fleet and the proposed fleet, which broadly relate to the area type where the scheme will be implemented (inner urban, outer urban and rural). A range of fuel and energy consumption figures to select from helps ensure that the analysis accounts for some of the key variations between schemes.

The greener bus tool monetises key costs and benefits of an investment in zero emission buses, however there are some impacts that are not monetised in the tool (non-monetised impacts), examples of which are outlined below:

Well-to-wheel carbon savings

The tool currently captures the benefits of carbon reductions from replacing a diesel bus with a ZEB on a tank-to-wheel basis, rather than a well-to-wheel basis. The monetised emissions reduction from the combustion of diesel is captured in the tool. However, the emissions reduction from the production of diesel is not. The carbon benefits in the tool may therefore be understated.

Improved journey ambience benefits

Potential user benefits from improved journeys due to reduced vibration and internal noise are not captured in the tool.

Agglomeration effect on the local economy

The potential for direct and indirect jobs created in the local economy to support the delivery and maintenance of new zero emission buses, which can also result in upskilling and improving the skills base of local works is not captured.