The Economics of Electrifying North American Railways
Published: 30 October 2012
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As fuel costs increase, transportation modes are looking to railways as a cheaper, more efficient and environmentally friendly alternative. Because of railway transportation's immense advantages over road and air transportation, its use is expected to increase two-fold or more over the next 10 years in the US and Canada, and likely all of North America (NA). However, NA railways are still dependent on diesel-electric locomotives, while other countries in Europe and Asia have long ago switched to more efficient electric locomotive technology. Electric locomotives have significant benefits over diesel-electrics, such as increased efficiency and traction, a lower probability of failure, reduced noise and vibrations, potential for brake regeneration, and an overall reduced carbon footprint. Despite these advantages, electric locomotives can cost significantly more than diesel-electrics and require expensive infrastructure, such as catenary lines and electric substations. In 2008, the U.S. Environmental Protection Agency implemented new regulations on diesel-electric locomotives to reduce emission toxins such as particulate matter and NOX. These new regulations create immense health benefits, but come at a cost to railway organizations for more stringent manufacturing and remanufacturing requirements. This paper explored the potential costs associated with electrifying the railway network in NA rather than focusing on improving diesel-electrics. A Monte Carlo Simulation was conducted to compare these costs with converting current railway lines to catenary, or partial catenary with on-board storage systems. Factors such as research costs, noise reduction benefits, health benefits, fuel usage, and productivity were taken into consideration to determine the most suitable alternative for the future of NA's railway organizations, environment, and society. Results suggest that implementing ultracapacitor or battery hybrid locomotive technology would create significant positive net present worth between 2012 and 2040, estimated at $411 Billion for passenger rail and $15.7 Trillion for freight rail, due mainly to less overhead catenary infrastructure and energy costs required, while still gaining the social benefits of reduced noise and improved health. They would also be the quickest electrification technology options to implement in terms of manageable construction and business disruption logistics, which were not considered in this analysis and should be research if and when business case development occurs in pursuit of electrifying railways. Moreover, over 80% of this significant NPW would accrue to railway organizations, suggesting that business case development and investment planning should proceed post haste to electrify, and to phase out diesel electric locomotives at the end of their economic life. Regardless of which route is taken, electrification would have immense benefits to both railway organizations and society. Increased productivity, reduced energy requirements, decreased noise and improved health would all significantly contribute to cost savings and an improved quality of life for residents of North America. As such, there appears to be a strong business case for research into development of hybrid electric locomotives that can operate on- and off-grid.