What's the Alternative?
As chicken-and-egg dilemma challenges growth, alternative fuels try to find a foothold.
“I’m a believer that we need multiple sources as our energy costs continue to rise and we only have a single source for transportation energy as a whole,” says Scott Zaremba, president of Zarco USA, Lawrence, Kan., which sells biodiesel and a range of ethanol blends. “Being a retailer, we can bring those changes to the consumer today. Whatever they are, as a retailer I want to be able to bring those to the consumer so they can have a choice as to what they want to use.”
“It is recognizing the opportunity,” says Joel Hirschboeck, superintendent of alternative fuels for Kwik Trip Inc., La Crosse, Wis., which plans to offer CNG at more than two-dozen sites by year-end, and also offers E85, biodiesel, propane and charging stations.
As for the chicken-and-egg dilemma, he says, “We want to take it out of [the discussion] and say, ‘Here’s half the solution: We’re going to put it out there and make it available. Come talk to us and find out what’s going on, and how you can fill out the other half of the equation.’ ”
It’s a Gas
At the end of 2012, there were just fewer than 1,300 CNG stations in the United States. That figure is projected to reach 3,300 by 2020, “ by far the largest number of stations being added worldwide,” says Dave Hurst, principal research analyst for Boulder, Colo.-based Navigant Research, which just released a study on CNG fueling infrastructure.
“The challenge is that while [3,300 stations] sounds like a lot, there are 160,000 gas and diesel stations.
“It’s a little like an inchworm, where one will get ahead of the other, and then the other plays catch-up,” Hurst continues. “Right now the vehicles have got a bit ahead of the stations, and the stations are rapidly playing catch-up.”
Kwik Trip has been working both sides of the equation. On supply, the retailer aims to have CNG available at 26 of its 430 sites by the end 2013, with new locations opening in Iowa, Minnesota and Wisconsin. Like most retailers who embrace alternative fuels, Kwik Trip is taking the long view.
“We recognized that gasoline petroleum products and diesel will continue to decline over time,” says Hirschboeck. “It’s really identifying what fuel is going to replace that, and you start to look at all of the advantages CNG has to offer, and it really stands out on its own.” He cites the large domestic supply, the fact that CNG burns cleaner than gasoline, and its lack of reliance on government assistance or support to make it cost-competitive to gasoline or diesel on a per-gallon basis.
But unlike most other retailers who install CNG, Kwik Trip did not first establish an anchor tenant to help recover the high cost of installing the fueling infrastructure. Call it a leap of faith, or just confidence.
“Being a true c-store fuel provider, we’re taking the risk on ourselves to build out the infrastructure without a pre-determined tenant,” says Hirschboeck. “We’re looking at it from the functional infrastructure standpoint, from the overall big picture view of: What makes the most sense for the most people to adopt this technology, this fuel product?”
In building a “functional infrastructure,” Kwik Trip is focusing on the major corridors near or on which its sites reside, the areas of the most freight movement and commuter traffic.
It has been pushing demand by doing educational outreach with local fleets—who make up the bulk of CNG consumers—and hosting an annual natural-gas trade show and summit at its La Crosse headquarters that brings potential consumers, natural-gas vehicle (NGV) manufacturers and suppliers together.