As technology advances, price often drops while quality improves.
Oklahoma City entrepreneur Ron Peeler hopes that trend will continue in the market for compressed natural gas vehicles and the equipment that fills them with fuel.
Peeler’s HYPRES Equipment adapted its high-pressure breathing air compressors and in 2012 began selling Smart Fill CNG, a natural gas compressor system that can be installed at a home and used to fill a CNG vehicle overnight.
The first design was based on the industrial compressors HYPRES has sold for decades. The company then brought on engineer Nick Chalifoux to help redesign the product and lower its price. The new model, known as the H3, is designed for retail customers.
The improvements dropped the price to about $8,500, down from more than $13,000, Chalifoux said. CNG home fill purchasers also are eligible for a $2,500 state tax credit and a $1,000 rebate from Oklahoma Natural Gas.
Peeler said he expects the industry to continue to evolve.
“There’s a lot of good technology down the road,” Peeler said. “This will be a different industry four or five years from now.”
Home fueling costs about 70 cents per gasoline gallon equivalent, including both the cost of the natural gas and the electrical cost to run the compressor, said Chalifoux, who has since started HYPRES distributor Residential CNG.
HYPRES is working with CNG of OKC to market and sell its home fuel units.
In Okarche, OEM Systems LLC has been working with Oklahoma-based Masterpiece CNG on a similar effort for the past five years.
“Right now, most of our conversion vehicles are for small and large fleets,” OEM contract administrator Taren Robinson said. “The retail customers are the ones interested in home fueling stations. There has been an increase in those. More and more people are interested.”
While home filling appliances have improved in quality and decreased in price in recent years, more improvements are needed before demand will grow significantly, said Norman Herrera, CEO of Oklahoma City-based Spark CNG.
“The $1,500-to-$2,000 range is probably the sweet spot,” Herrera said. “That’s what’s needed for mass adoption. At that point, people can buy a vehicle and home fueling and achieve payback in a good time. Until then, it will be a luxury item. There is still demand for it, but it’s more than just an economic decision at this point.”
The CNG vehicle industry is growing faster in Oklahoma than in most of the country, in part because of the large natural gas production in the state and because of the efforts of political and business leaders who have worked aggressively to help the industry grow.
The effort has quickly led Oklahoma to become one of the leading states for public CNG fueling stations.
While home fueling manufacturers and public fill stations both are working to attract customers, Herrera said the relationship is more complementary than competitive.
“Both add to the pool of new CNG vehicles in the market,” he said. “If automakers see home fueling taking off, it will incentivize them to build new vehicles for individuals and not just fleets. Having more CNG vehicles on the road will benefit public retail stations as well.”
There’s a lot of good technology down the road. This will be a different industry four or five years from now.”