TDEC OEP Announces Grant Funding for Medium- and Heavy-Duty Natural Gas and Propane-Powered Vehicles

October is National Energy Awareness Month, which serves to underscore how critical energy is to our prosperity, security, and environmental well-being. Throughout the month of October, TDEC’s Office of Energy Programs will highlight a variety of case studies and tips to promote energy conservation, resiliency, and smart energy management. Through these efforts, we rededicate ourselves to a more conscious use of energy, so that we can continue to strive for a cleaner, stronger, and more secure future.

In Tennessee, the transportation sector accounts for about 30 percent of all energy consumed. Of this, the energy use of medium- and heavy-duty vehicles represents one of the largest and fastest growing shares of transportation energy demand. TDEC OEP identified this growth in demand and energy use as a huge opportunity for improved efficiency, through the use of cleaner burning, domestically produced alternative fuels. On Tuesday, October 11, TDEC OEP launched a grant program to incentivize the purchase of dedicated natural gas or propane-powered medium- and heavy-duty vehicles by Tennessee fleets. The Tennessee Natural Gas and Propane Vehicle Grant Program will help to spur the reduction of transportation related end-use energy consumption, while also reducing emissions.

Why Natural Gas and Propane?

East Tennessee Clean Fuels Director Jonathan Overly, standing next to a natural gas vehicle at the CNG USA rally stop in Trenton, TN

East Tennessee Clean Fuels Director Jonathan Overly standing next to a natural gas vehicle at the CNG USA rally stop in Trenton, TN

The advantages of natural gas and propane as alternative fuels include their domestic availability, widespread and expanding distribution infrastructure, and clean-burning qualities.[1] Furthermore, natural gas and propane-powered vehicles can save a fleet tens of thousands of dollars in fuel savings over the lifetime of the vehicle, compared to conventional gasoline or diesel. While the vehicles may cost more than their conventional fuel counterparts on the front end, high mileage fleets often recover the incremental cost over the lifetime of the vehicle through fuel savings and lower operational costs. Natural gas and propane-powered vehicles are also well suited for medium- and heavy-duty applications, as they can match the equivalent gasoline or diesel vehicles in terms of their horsepower, torque, and towing capacity. Lastly, natural gas and propane-powered vehicles have the potential to help communities during system-wide emergencies, when gasoline and diesel supply disruptions might occur. Building resilience by diversifying fleets can ensure that the necessary emergency services will be performed.

Tennessee Natural Gas and Propane Vehicle Grant Program

Under the Tennessee Natural Gas and Propane Vehicle Grant Program, $2,500,000 in grant funding will be made available for qualifying Tennessee-based fleets. Each grant will provide up to 50% of the incremental purchase cost of eligible vehicles, with a maximum grant of $25,000 for each eligible vehicle. The maximum amount that may be awarded to a grantee shall not exceed $250,000.


  • A project must propose to receive funding for a minimum of three vehicles.
  • Eligible vehicles must be purchased new, from an original equipment manufacturer (OEM) or OEM-authorized dealer. The vehicles purchased must be fully equipped by the manufacturer or by a third party at the direction of the manufacturer to operate on an alternative fuel prior to the initial purchase and registration of the vehicle.
  • Vehicles must be registered within the State of Tennessee, unless the vehicle is to receive International Registration Plan (IRP) apportioned registration. In the case of the latter, the entity applying for a grant must submit a letter, certifying the percentage of time that the vehicle is expected to operate within the State of Tennessee.
  • Eligible vehicles include dedicated compressed natural gas vehicles, dedicated liquefied natural gas vehicles, and dedicated propane-powered vehicles.
  • Vehicles must be classified as “medium-duty” or “heavy-duty,” and must therefore have a gross vehicle weight rating of at least 14,000 pounds. Examples of “medium-duty” vehicles that would be considered eligible are shuttle buses, delivery trucks, and some bucket trucks. Examples of “heavy-duty” vehicles that would be considered eligible are school buses, tractor trailers, and waste collection vehicles.
  • Applicants must intend to maintain operations in Tennessee for a minimum of six years.


Applications must be received by 8:00 pm CST on December 16, 2016. Awards are expected to be announced by January 16, 2017, and the expected timeframe for award negotiations will be March 2017.

For more information, and to access the Application and Application Manual, click here. If you have questions, please contact Alexa Voytek at or 615-532-0238.

[1] Natural gas emits approximately 6%-11% lower levels of harmful emissions than gasoline throughout the fuel life cycle. The use of propane instead of gasoline can lower harmful emissions by up to 25 percent: