Fuel expenses, diesel exhaust health externalities, and climate change are concerns that encourage the
use of electric vehicles. Vehicle-to-grid (V2G) policies provide additional economic incentives. This analysis
evaluates the costs and benefits associated with the use of electric vehicles and determines the cost
effectiveness of using a V2G-capable electric school bus compared to a traditional diesel school bus. Several
factors were analyzed, including fuel expense, electricity and battery costs, health externalities, and
frequency regulation market price. The V2G-capable electric bus provides the school savings of $6070 per
seat in net present value and becomes a net present benefit after five years of operation. Without externalities,
the net present benefit would be $5700 per seat. If the entire school district’s fleet switched to
V2G-capable electric buses, the net present savings would be upwards of $38 million. A sensitivity analysis
was conducted to determine how the factors influenced the costs and benefits. In all cases, purchasing
an electric school bus is consistently a net present benefit. Policies could be set into place to
incentivize public school adoption of electric buses, encourage more efficient batteries, and develop
V2G capabilities.