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Fuel
pricing
Liquid and gaseous fuels pricing in every country is
a political decision. International fuel pricing strategies
include:
| 1. |
Liquid
fuels pricing is subsidised meaning the only way
alternative fuels programmes can work is by government
decree. |
| 2 |
Compressed natural gas (CNG) is about the same
as the price of petrol and/or diesel on an energy
basis meaning a poor investment for private enterprise.
|
| 3. |
CNG
is about 1/3 the price of petrol and/or about
1/2 the price of diesel – this means the
industry will expand rapidly. |
The only countries that have viable alternative fuels
programmes use a fuel pricing strategy similar to 3.
For many developing countries, where CNG would have
the double benefit of using a fuel resourced locally
and a reduction in the exhaust emissions, the price
of diesel for many years has been very low because of
subsidies. The political cost of increasing the price
of diesel means CNG has never become a viable replacement
for diesel. Petrol prices have increased and so these
programmes have been more successful.
The attached dual fuel spreadsheet will allow local
information about your market to be entered and calculated.
One interesting aspect is that the cost of the engine
conversion kit is a relatively minor in the overall
calculation. Please contact DieselGas for quotations
of the cost of the application engineering engine development.
In some countries governments or the local gas industry
offer subsidies for vehicle conversions. This strategy
has “kick started” the industry in a number
of countries. In the final analysis it is the price
differential between diesel and CNG that determines
the success or failure of commercial vehicle conversions
and the success of the conversion programme.
History has proven that unless the fuel price differential
is right the project will never fly.
Before embarking on any projects to investment in diesel
replacement with CNG it is suggested that interested
parties use the attached dual fuel spreadsheet to help
define the viability of the project.
Economics comparisons for different fuel options
Accurate fuel cost comparisons between diesel, dual fuel
and dedicated gas engines are not easy to establish. To
have accurate fuel consumption records kept of bus operations
over say 1,000km or 10,000km is a difficult task to confirm.
Short tests, say of one days operations, has the difficulty
of accurately measuring the fuels used for the day. Expansion
and contraction of the gas and diesel because of temperature
change can distraught the results by 10% or up to 50%
in some cases.
DGTech substitution logging facility allows consistent
data to be accumulated and is useful for checking comparative
performance, say comparing varying driving cycles using
the same engine set up. Substantive results that allow
an accurate comparison with other fuels on the same driving
cycle need to be confirmed under carefully controlled
conditions.
Application engineering
cost
The costs for developing dual fuel and dedicated gas engines
can vary between US$150,000 and US$300,000. To gain a
return on such an investment it is necessary to amortise
the costs over a number of conversions. DieselGas encourage
the engine development projects to be undertaken by or
with the engine manufacturer.
Converted engine
cost
The increase in price of dual fuel engines compared to
the price of the original diesel engines is likely to
be US$3,000 to US$5,000 plus the amortisation of development
costs. Other costs that may need to be included are for
an aftercooler and/or turbocharger. The cost of cylinders
is often similar cost of the engine kit.
Dedicated engine kits must always include the price or
new pistons and a new or modified cylinder head plus a
distributor drive. The dedicated engine kit prices are
about US$2,500 to US$3,500. Added to these prices are
the price of cylinders which is likely to be double the
price of the kit.
Maintenance
Because of the lower carbon content in CNG both dual fuel
and dedicated engine oil changes times can often be extended.
There can be slightly more maintenance of dedicated gas
engines than diesel engines and the maintenance on dual
fuel engines is otherwise similar to diesel.
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