Written evidence submitted by Zenobē (BCC0119)

Introduction to Zenobē

Communities across the UK are calling out for better public transport. Over the years, as services have been cut and fares have risen, people have come to see buses as expensive, unreliable and dirty. Increasingly, people use their cars because they feel they have no other option, polluting our air, driving up carbon emissions, and congesting our roads. But there is an alternative. By electrifying buses, we can get people from A to B, and we can make progress on clean air without penalising the public.

Zenobē powers over one-quarter of the UK's electric bus market with more than 1,200 vehicles, working with 90% of major operators. With over £2.1 billion raised since 2017 and a goal to support 4,000 vehicles globally by 2026, our extensive experience provides us with insights into how to drive improvements in local bus services.

Zenobē has played a pivotal role in transforming public transport systems, with significant operations in cities such as Oxford, Coventry, Glasgow, London, Nottingham, and Cardiff. Beyond urban centres, we are expanding our services to rural regions, including cross-country routes in Scotland and connecting rural towns in West Yorkshire through our partnership with Transdev in Harrogate – as outlined in our response.

Service improvement through fleet electrification

The UK is Europe’s largest EV bus market.[1] Significant investment into electric buses from innovative green financing sources has already seen cities like Oxford, Coventry, Glasgow and Newport transform their public transport systems, delivering cleaner air and brighter city and town centres.  The blueprint for a full electric bus rollout exists and is already a reality in pockets of the UK.

Electric buses can, with the right support, be up to £120,000 cheaper over their lifetime compared to diesel. This will enable investment in better services while allowing passengers to breathe cleaner air. By cutting emissions and operational costs, there is an opportunity to renew public transport networks, connecting communities with economic opportunities while improving public health.

We have also conducted extensive research and policy analysis into how to improve services through accelerating bus electrification. We outlined our key insights and recommendations in our manifesto published in 2023, and our 2024 report into the benefits of bus electrification, ‘Charging Forward’.

As the UK charges towards a future powered by clean energy, we need a plan for electric buses. Our ‘Charging Forward’ report can serve as a catalyst for collaboration and innovation, helping policymakers, industry leaders, and communities work together towards a cleaner and more cost-effective transport system.

Zenobē’s response to the committee’s consultation questions

1. How the Government’s proposed reforms of powers over buses in England, and recently-announced funding, should take into account the particular challenges of rural areas and local authorities outside major cities, and how authorities in these areas can make best use of those powers and funding. 

Electrifying fleets in rural areas and local authorities outside major cities

Electric buses provide enhanced services for passengers, by offering a quieter, smoother ride compared to traditional diesel buses. Additionally, their reduced environmental impact aligns with broader sustainability goals, helping local authorities and operators to transition to greener public transport without compromising on service quality.

There is a common misconception that rural routes cannot be electrified. Contrary to this belief, electric buses are not limited to urban environments. There are successful examples of rural network electrification that demonstrate the viability and benefits of electric buses in such settings. For example, Zenobē has supported Transdev’s electrification of bus routes in Harrogate, which utilise day charging to ensure reliable services to rural communities.

Furthermore, our partnership with operators in Scotland to electrify cross-country routes will showcase how opportunity charging and shared infrastructure can make electrification in more dispersed areas not only feasible but highly effective.

Advancements in battery technologies continue to extend the range of electric buses. These improvements reduce the need for frequent opportunity charging, making the deployment of electric buses even more practical in rural communities with longer routes. With continued innovation, the barriers to rural electrification will diminish further, enabling greater adoption of zero-emission vehicles in these areas.

Supporting SMEs to electrify fleets

One of the biggest challenges to rural fleet electrification and broader service modernisation is that services in these areas are largely operated by SMEs. Due to the challenges of operating rural services, these businesses often lack the time and financial resources to plan for the future, let alone make the transition to electrification.

Zenobē has a proven track record of providing the support SMEs need to electrify, through our turnkey solutions and ability to invest through initiatives like ScotZEB. For SMEs, credit ratings will inevitably be a challenge, but in our experience, we believe that sustainable and effective solutions can be achieved, through the adoption of structures and reforms - such as direct agreements with local authorities.

Proposed reforms

Franchising and municipal ownership alone are insufficient to address the challenges faced by rural areas and local authorities outside major cities in delivering cost-effective and reliable bus services.

To ensure improvements, the Government must enhance service improvement programs with more stable, predictable, and evenly distributed funding. This would empower Local Transport Authorities (LTAs) to effectively plan and deliver better bus services across all regions.

Nevertheless, franchising and municipal ownership does provide an opportunity for authorities to accelerate the transition to electric vehicles – by ensuring decarbonisation requirements are built into commercial structures and contracts. Direct ownership of bus fleets is not a prerequisite for influencing fleet specifications or transitioning to electric vehicles. Alternative mechanisms, such as joint ventures (JVs), offer effective solutions.

Manchester provides a strong case study: Transport for Greater Manchester (TfGM) and operators share fleet ownership under a cooperative model. Building on this example, local authorities could specify fleet requirements during contract procurement processes, prioritising electric vehicles to accelerate the green transition. Additionally, authorities could adopt policies similar to Transport for London (TfL), mandating that certain contracts be awarded only to operators committed to deploying electric fleets.

Recently announced funding

When purchased with cash on day one, diesel buses are initially cheaper than electric buses. However, within eight years electric buses overtake diesel due to lower fuel costs and the lower maintenance cost. However, it is worth noting this option is often infeasible for operators and local authorities as upfront costs and capital expenditure remain high.

With the right leasing arrangements, electric buses can be up to £120,000 cheaper over their lifetime compared to diesel. Enabled through intelligent private and/or public financing , they can also deliver costs saving from day one, while reducing capex and enabling a greater number of electric buses to be rolled out. This is expanded upon in our ‘Charging Forward’ report.

Beyond government funding, the finance available from the private sector is critical to support the switch to zero emission transport.  These include standard loans from banks or purpose-created finance and turnkey solutions from EV fleet specialists like Zenobē. In May 2024, Zenobē announced a £410m finance deal – the largest electric bus platform financing at the time – with support from Aviva, Lloyds, MUFG, Natwest, Santander, Scottish Widows, Siemens Financial Services through Siemens Bank and Société Générale. New banks and institutions to join the syndicate, which will enable the business to support the deployment of over 2,000 electric buses, include ABN AMRO, CIBC, NAB, Rabobank and SMBC Group.

These innovative platforms, combined with strong inward investment into the sector, such as the £870m equity investment Zenobē received from KKR and Infracapital at the end of 2023, demonstrate the wealth of capital ready to be deployed into the UK electric bus sector.

In rural areas, where SME operators provide the majority of services, Zenobē can support electrification by providing local government supported frameworks that empower both larger operators and SMEs to lease vehicles on an equal footing, ensuring consistent and fair capital costs for all.

2. The effectiveness of recent Government policy in tackling declines in bus services.

Securing the future of Bus Service Improvement Plans (BSIPs)

Since the 2021 National Bus Strategy (NBS), the Bus Service Improvement Plan (BSIP) has been the key measure to enable local authorities in England outside London to introduce bus improvement measures, alongside the £3 fare cap. Scotland has a similar scheme in the form of the Bus Partnership Fund while Wales has had the Bus Transition Fund.

The BSIP model requires local authorities to submit comprehensive yearly plans for bus service improvements in their area, which are then evaluated and awarded funding on a competitive basis. This includes improving bus frequency and reliability, ticketing, accessibility and passenger safety, among other measures.

The “State of County Buses” report, compiled by SYSTRA, says that the 37 largest county and rural authorities, which represented half of England’s population, submitted BSIP bids collectively totalling £3.6 billion. However, it calculated these councils were allocated only about 10% of that – £363 million versus the £739 million handed to urban areas.[2]

Strengthened BSIP programmes, with more stable and evenly distributed funding, could empower Local Transport Authorities to plan and deliver improved bus services across all regions. The plans made by local authorities have genuine potential to reverse the decline in bus patronage. However, two related issues continue to undermine BSIPs:

An inconsistent and uncoordinated funding structure: While local authorities will be expected to update BSIPs in 2025, the future beyond that is unclear and there remain large funding discrepancies between authorities. According to the Campaign for Better Transport, while all 76 original applicants have now received some BSIP funding, 12 councils have over £50 per head, while 15 councils have received less than £6 per head. Furthermore, the competitive nature of BSIP funding has undermined a cross-regional and collaborative approach to improving footfall, reducing the scope for learning.

The lack of capacity and consistency in local authorities when designing BSIPs: During the last Transport Committee review of the BSIPs, bus operators noted that smaller authorities struggled to come up with comprehensive and impactful BSIPs without the support of external consultancies. The result has been large variation in the quality of consultation and research processes to inform BSIPs, as well as the ease and consistency of reviewing their success. Indeed, representatives from West Sussex County Council noted that even the DfT group overseeing BSIPs was insufficiently resourced, leading to bottlenecks and implementation delays.

To address these issues, government needs to:

1. Provide clarity about the future of BSIP funding beyond 2025 and restore funding imbalances. This means prioritising authorities who have received relatively little BSIP funding so far in future allocations. The same principles should apply in Scotland and Wales. 
2. Set up a Bus Service Improvement Taskforce made up of operators, local authority representatives and passenger groups to share learning and best practices as BSIPs are rolled out. This will help address inequality of capacity and expertise.

3. How effectively bus services function as part of integrated multi-modal networks that improve mobility for people who live in areas with declining services. 

Zenobē has no views on this. We are supportive of any efforts that will encourage modal shift, improve the business case for investing in buses and accelerate net zero. 

4. The social and economic impacts of poor connectivity on access to education, healthcare, employment, and social inclusion in communities, as well as on the economy of towns and villages.

Zenobē has no views on this. We are supportive of any efforts that will encourage modal shift, improve the business case for investing in buses and accelerate net zero.

5. The effectiveness of current funding models and governance structures in enabling local transport authorities and commercial operators to improve, sustain and keep bus services outside major metropolitan areas affordable, and the potential effectiveness of alternatives.

Funding models

Introduced in 2021 following the introduction of the National Bus Strategy (NBS), ZEBRA and ScotZEB are periodic grant funding competitions to which local transport authorities (LTA) apply in partnership with bus operators, making the case for how they can deliver zero-emission buses and accompanying infrastructure at scale and least cost.

Their competitive nature means rollout has been geographically uneven and skewed towards major cities and operators. Operators and local authorities expend a great deal of effort over these applications – often at short notice and paying thousands on external consultants for help.

As well as being a time and resource sink across the board, this process advantages those with greater budgets and expertise to draw upon, while incurring significant losses for smaller operators and authorities when bids are unsuccessful.

The Government should focus on BSOG reform that drives the transition through reducing the residual value of existing diesel buses – and thereby making a rapid switchover more appealing.

The Government currently spends about £200m per year on BSOG, split between support for electric buses and diesel buses. Government should look to increase the value of BSOG for electric buses to £0.50 per mile within a year while tapering the diesel BSOG for existing Euro 4, 5 and 6 models to zero by 2032, giving newly bought vehicles time to amortise residual value. Our analysis indicates that while electric BSOG rates will need to decline towards the end of this period in order to maintain spending at current levels, it will be adequate to drive diesel almost entirely out of the market beyond a few specific long-haul routes.

Additionally, in areas where franchising has been implemented, the size of contracts, along with factors such as stringent qualification requirements and the complexity of application processes, have created significant barriers for smaller operators. Alternative ownership structures and leasing arrangements can support SMEs to participate fully in the provision of future services through franchising.

6. Evaluating the potential of alternative service models, including demand responsive transport (DRT) and community transport, and other innovations or technologies which could support or replace buses serving less populated communities, and what steps the Government should take to support them.

Zenobē has no views on this. We are supportive of any efforts that will encourage modal shift, improve the business case for investing in buses and accelerate net zero.

7. How successful Enhanced Partnerships (EPs) have been so far in improving bus services outside major urban areas, whether franchising is likely to provide a better framework for these areas, and whether there are alternative models worth exploring. 

Zenobē has no views on this. We are supportive of any efforts that will encourage modal shift, improve the business case for investing in buses and accelerate net zero.

8. How well policy, funding and oversight of bus services allow services that straddle rural and non-rural areas, and local government boundaries, to be managed.

In 2023, Zenobē and Yorkshire based bus operator Transdev Blazefield were awarded c.£9m of funding from the UK Zero Emission Buses Regional Area (ZEBRA) Scheme to deliver 54 electric buses across Harrogate and Keighley.

Following the successful award of ZEBRA 2 funding, the Zenobē project management and engineering teams assessed the routes to be electrified. Some of the routes, especially Transdev’s flagship route 36 - connecting Leeds, Harrogate and Ripon - operate very high mileages, with an average of up to 300+ miles a day.   

Zenobē’s charging infrastructure design took these long routes into consideration, to ensure the buses would always be sufficiently charged. The design allowed for overnight and opportunity charging strategies. Opportunity charging takes advantage of layovers to charge ‘on-the-go’. To support this, Zenobē over saw the installation of a pantograph charger to support daytime opportunity charging in Harrogate bus station.  

One of the key, longer-term challenges for any operator switching from diesel to electric buses is ensuring the performance of the batteries on board the vehicles. This was of particular importance in Transdev’s case due to the high milage of the routes being electrified.  

To allay this concern, Zenobē is providing a Battery Managed Service contract to support Transdev’s electric fleet. This service guarantees that Transdev will always have a battery on each electric bus capable of operating its route requirements for the duration of the contract.  

Lengthy routes that required electrification and delivering infrastructure within the confines of a live depot presented Transdev Blazefield with significant challenges on their fleet electrification journey.  

However the partnership between Transdev and Zenobē has been fantastic demonstration of the benefit of working in collaboration to develop new solutions to challenges and get more electric buses on to the road at speed and scale.  

January 2025

Endnotes