Stonepeak and Charging Company Nuvve Want to Electrify School Buses

The Stonepeak investment will come in the form of preferred equity. Together with Evolve, Stonepeak will own 49% of Levo’s common equity, with Nuvve owning the remaining 51%.

Founded in 2010, Nuvve started trading publicly in March, when it merged with a blank-check company. It is expected to announce the joint venture ahead of its first-quarter earnings report on Monday.

The company’s technology, known as vehicle-to-grid charging, addresses a central issue with the transition to electric vehicles: While replacing fossil-fuel-powered vehicles with electric ones reduces emissions, the rise in the number of electric vehicles also increases the demand on the grid.

With vehicle-to-grid technology, an electric vehicle’s battery can store energy from other sources and pool it with energy stored on other vehicles’ batteries to form what Nuvve calls a virtual power plant. Owners of the technology can earn money by providing that storage capacity, pushing energy back to the grid and performing services that help stabilize the grid.

Nuvve estimates that cars are parked for 96% of the day. School buses, which are typically used to transport students to school at the start of the day and home at the end, are driven even less. Meanwhile, 95% of the roughly 480,000 school buses on the road in the U.S. use diesel fuel, contributing about 5.3 million tons of greenhouse gas each year, according to a February report by the nonprofit Environment America Research & Policy Center and the U.S. PIRG Education Fund.

Studies have also shown that children breathe significant amounts of diesel fumes while riding in school buses, potentially contributing to respiratory illnesses.

Levo’s initial focus on school buses comes as President Biden is lobbying Congress to pass a $2.3 trillion infrastructure plan that includes $25 billion to electrify school buses. Nuvve and Stonepeak estimate that would be enough to convert about 20% of the nation’s fleet.

Paying for electric buses, which typically cost more than double what a diesel bus costs, isn’t feasible for most school districts. Levo plans to lease new buses to districts, providing them with vehicle-to-grid charging infrastructure and continuing maintenance for a monthly per-vehicle price. Its financing structures will be flexible to accommodate the specific constraints of district budgets.

Levo eventually plans to expand its offering to commercial fleets, including last-mile delivery, ride-hailing and ride-sharing, as well as municipal services. Stonepeak and Evolve can choose to invest more over time.

Energy transition is a significant investment theme for Stonepeak, which oversees about $33 billion of assets. In 2015, it invested in Evolve, which is a publicly traded limited partnership focused on acquiring, developing and owning infrastructure tied to the transition to lower-carbon energy sources.

Write to Miriam Gottfried at [email protected]