Commentary: No, railroad freight electrification is not dead

Wabtec is using a combination of state of California government funding for all-battery (some call it a BEL locomotive) testing. The first BEL pilot program uses investment from a $22.6 million grant awarded to BNSF and the San Joaquin Valley Air Pollution Control District from the state’s Air Resources Board Zero- and Near Zero-Emission Freight Facilities project.

A one-of-a-kind battery-powered mainline locomotive: Beta testing the Wabtec 2020 ‘evolution’ unit

• An alternative in some places to some overhead electrification.
• Supplementing for some diesel-electric locomotives.
• Not yet fully tested under commercial demand use.
• ~18,000 cells.
• 2,400 kilowatt-hours rated capacity with perhaps ~1,900 kWh practical capacity.
• Only one beta test unit manufactured at this time.

Specifications from Jim Blaze research using multiple sources

Initial testing will be done using the BEL locomotive as a support unit to paired diesel-electric powered units.

This rail economist disagrees with the overall negative premises of the AAR and offers a contrary opinion.

Here is the link to the full AAR document: https://www.aar.org/wp-content/uploads/2020/12/AAR-Electrification-Fact-Sheet.pdf

Here is a link to more about possible substitution of battery-electrification: https://www.wabteccorp.com/media/466/download

There are complex questions. 

Why challenge the professional AAR conclusion that we should stick to Tier 4 or higher EPA-rated diesel-fueled locomotives?

Because the AAR conclusion appears too simplistic. It dismisses previous rail industry electrification business case analysis. 

The first counterargument is that the AAR assertions are an all-or-nothing approach.

In contrast, previous rail company reports showed clear circumstances whereby overhead electrification could work — and could be financed with reasonable internal rates of return. 

Previous privileged reports demonstrated that specific route studies are the best determinants of a business case for alternate rail freight fuels. That analytical approach has been true for long trains, heavy axle loadings and overhead clearance business case evaluations. 

It should therefore be true for electrification or selective route battery locomotives.

AAR’s broad assertion is this: “Mandating electrification of the freight rail network is not a viable means for reducing [greenhouse gas] emissions. Proposals that would require all or part of our nation’s freight rail network to be electrified should be set aside to focus on other alternatives.”

The AAR relies in part on a 2016 study. 

Yes, it was true a half-decade ago. There was no “off-the-shelf” near-zero-emission locomotive technology sufficient for North American line-haul freight rail service.

Yet, that university report encouraged additional research.

Government mandating of electrification? Let’s agree that that would indeed be premature.

As to where and why, AAR asserts that electrification would require building and maintaining a vast 140,000 miles of electrification. AAR’s assumptions include these points:

• Requires extensive catenary about everywhere.
• Rebuilding bridges — maybe even tunnels.
• Hundreds of billions of dollars CAPEX.
• Electrified locomotives are too expensive.
• Railroads cannot afford the capital costs.

This is a strategic worst-case view. 

The counterargument is to ask what constitutes the definition of a low-carbon business case network size.

That comes down to these variables in terms of annual traffic volume:

• Traffic density should be in the 50 million or higher gross ton miles.
• Density <20 million GTM is questionable.
• Total trains per day and grades and obstructions are relevant issues.

Market segmentation likely drops the initial electrification planning to around 50,000 route miles, possibly lower.

As to electric locomotive cost per unit, AAR disregards that straight electric locomotives are easier to maintain. Plus each electric locomotive could be as powerful as perhaps two diesel-electric units. There are economic trade-offs.

Contrary assessment

Can a business case be made for electrification? Or substitution of mainline battery-powered locomotives such as Wabtec is testing?

In specific cases and locations, yes.

Instead, the AAR policy paper suggests that:

• Electrification would harm rail service.
• Electrification would shift rail mode share to trucking.
• Even partial electrification is only problematic.
• The railroads can’t afford it.

Those are hypothetical claims. 

The solution requires deeper commercial examination. 

A series of business cases should be used to document both the technical and financial feasibility of the rail freight energy options.

Serious evidence needs to be examined by assessing high-probability route options. 

A blanket rejection as of 2021 is unnecessary. 

Here are some of the analytical tools for examining either battery-powered locomotives or electrification. 

A three-part pro forma financial model could be used for best location evaluations. This technique uses future year changes of income statements, balance sheets and cash flow results.

Why these tools? Because that is how Wall Street will vet the possible project success or commercial failure.

Other useful models will require discounted future cash flows and cost center change analysis. 

The opposing parties within a project group will need to test against a variety of factors to avoid data bias.

Rugged field testing of the equipment will have to demonstrate both long-term maintenance costs and operational reliability.

Takeaway observations

Mainline full battery substitute locomotive reliability and economic testing might require as much as a half-decade to complete — and will require many units rather than just a handful of beta units. 

Testing is just starting. Why stop?

Full electrification requires less testing since there is so much worldwide railway electrification already in place. That body of evidence should not be ignored.

Should it?

Here is the bottom line from multiple expert U.S. rail colleagues:

• Alternative fuels require testing.
• We may be a decade away from looking at balanced case evidence.
• Writing rail freight decarbon alternatives off is premature.

Do you agree? Or not?

Additional sources — these do not necessarily support my opinions:

Michael Iden.

Economic and CAPEX hybrid models modified by Chris Rooney. 

Locomotive experts at Oliver Wyman.

Independent analysis techniques used by analysts like the Stratalis Group.

Quick fact: ~126 “battery locomotives” were built and tested in the U.S. prior to 2014. Many were unsuccessful.