### Review of Activated Carbon Injection Cost

August 6, 2010Costs used to assess activated carbon injection (ACI) systems in the proposed NESHAP for portland

cement manufacturing were developed using cost supplied by the New Jersey Depa rtment of

Environmental Protection. They had prepared an analysis of ACI cost for utility boilers. Based on

those cost and exhaust airflow information, costs were developed for portland cement kilns. Cost

information on an ACI system that was being instal led on a portland cement kiln was received. We

compared our cost with those submitted by a vendor supplying the system. A comparison of the

NJDEP costs and the vendor cost were compared. In addition, we updated our cost to 2005 as well as

updating the cost for powdered activated carbon.Comparison of PAC Capital and Annual Cost Estimates from NJ DEP and Industry (FL Smidth)

3/12/2010

• The capital and annual cost estimates from industry (prepared by FL Smidth) are substantially

higher than those from EPA (pre pared based on data from NJ DEP )

.

o NJ DEP: capital cost $1.69

- $2.79/ton clinker; annual cost $0.80

- $0.99/ton clinker

o Industry: capital cost $13.33/ton clinker; annual cost $5.81/ton clinker

• We attempted to determine the source of the differences in the costs by comparing the sources

and algorithms for the NJ DEP and industry cost estimates.

• The capital costs from NJ DEP were derived from two sources:

o The capital costs for the PAC equipment ($3,000/MW) and polishing baghouse

($24,000/MW) were derived fro m estimates provided by a source identified as “Serpil”

(perhaps Serpil Guran of NJ DEP). The basis for these estimates is not known.

o The other capital costs (instrument at ion, sales tax & freight, and direct/indirect

installation costs) were derived from the fabric filter capital cost algorithms in the

OAQPS Control Cost Manual.

• The capital costs from industry include the purchased equipment cost (PEC) and the

direct/indirect installation costs, which were calculated based on the purchased equipment cost.

o The purchased equipment cost was based on a vendor quote, the components of which

are unknown.

o Industry's algorithms for direct/indirect installation costs include smaller cost factors

than NJ DEP's.

• Given that industry’s capital cost estimate includes sma ller cost factors for direct/indirect

installation than the NJ DEP estimate, it is clear that the difference in PEC estimates is the main

reason for the difference in capital costs. See Table 1 for a more specific comparison of the

capital cost estimates from NJ DEP and industry

.

• The annual costs from NJ DEP are based on OAQPS Con trol Cost Manual cost equations,

although I was unable to determine the exact e qu ation used to calculate ash disposal. Industry

used its own approach to estimating annual costs.

• The following bullets illustrate the differences between the annual cost estimates provided by

NJ DEP and industry. See Table 2 for a more specific comparison.

o Industry's estimates of labor requirements and wage rates are lower than NJ DEP's,

except for s upervisory labor (20% vs. 15% of direct labor).

o Industry's estimate of PAC consumption is higher than NJ DEP's (3.15 lb/hr vs. 0.40 and

1.41 lb/hr).o Industry's estimate of PAC unit cost ($1.15/lb) is more in line with current online cost

estimate s , while NJ DEP's is considerably lower ($0.50/lb)

.

o Industry's estimate of PAC cost includes an extra factor of 57, the reason for which is

unknown , which greatly increases the cost

.

o Industry's estimate of maintenance materials cost is based on direct capital cost, while

NJ DEP's is based on maintenance labor cost, which results in a much higher

maintenance materials cost.

o Industry's estimate of electricity usage (kW) is considerably higher than NJ DEP's.

o Industry's estimate of ash disposal (lb/yr) is considerably h igher than NJ DEP's, likely due

to the higher PAC consumption estimate.

o Industry's estimate of ash disposal unit cost ($100/ton) is much higher than current

landfill tipping fee s ; NJ DEP's estimate ($40/ton) is more in line with current fees

.

o Industry's eq uation for overhead includes a smaller cost factor than NJ DEP's, but the

factor is applied to a higher maintenance materials cost (based on direct capital cost

rather than maintenance labor).

o Industry's equations for indirect annual costs are similar to N J DEP's (4% of TCI overall),

but its cost estimates are much higher due to its higher TCI.

o Industry's estimate of capital recovery is based on 7% interest (consistent with current

EPA guidance) and 10

- year equipment life (20 years is m ore typical for fabri c filter)

, resulting in a higher capital recovery factor than NJ DEP

.

o NJ DEP's estimate of capital recovery is based on 9% interest (7% interest is current EPA

guidance) and 20

- year equipment life (typical for fabric filter) , resulting in a lower

capital r ecovery factor than industry

.Table 1. Comparison of PAC Capital Cost Estimates from NJ DEP and FL Smidth (3/12/2010)

NJ DEP NJ DEP

- Vineland NJ DEP

- BL England I FL Smidth FL Smidth

Parameters Equations $/yr $/ton $/yr $/ton Equations $/yr $/ton

St ack Flow Rate, acfm 132,600 132,600 470,000 470,000 262,614 262,614

Capacity

MW 23 23 135 135

Equiv/actual ton clinker/yr 438,068 438,068 1,552,731 1,552,731 936,225 936,225

Purchased equipment costs

PA C equipment $3,000/MW $69,000 $0.16 $405,000 $0.26

Polishing baghouse $24,000/MW $552,000 $1.26 $3,240,000 $2.09

Total (A) PAC + Pol. BH $621,000 $1.42 $3,645,000 $2.35

Instrumentation 0.1A included included

Sales tax & freight 0.08A included included

Total PEC (B) sum of PECs $621,000 $1.42 $3,645,000 $2.35 vendor

quote $7,370,200 $7.87

Direct installation costs

Foundation & supports 0.04B $24,840 $0.06 $145,800 $0.09

H andling & erection 0.50B included included

Electrical 0.08B $49,680 $0.11 $291,600 $0.19

Piping 0.01B included included

Insulation for ductwork 0.07B $43,470 $0.10 $255,150 $0.16

Painting 0.04B included included

Total DIC (C) 0.74B $117,990 $0.27 $692,550 $0.45 0.45B $3,316,590 $3.54

Indirect costs (installation)

Engineering 0.10B included included

Construction & field expense 0.20B included included

Contractor fees 0.10B included included

Start

- up 0.01B included included

Performance test 0.01B included included 0.03(B+C) $320,604 $0.34Contingencies 0.03B included included 0.20B $1,474,040 $1.57

Total indirect cost s (D) 0.45B $0 $0 0.2435B $1,794,644 $1.92

Total capital investment (TCI) E = B + C + D $738,990 $1.69 $4,337,550 $2.79 E = B + C + D $12,481,434 $13.33

TCI (using 6/10 rule) $1,113,533 $2.54 $3,058,979 $1.97Table 2. Compa rison of PAC Annual Cost Estimates from NJ DEP and FL Smidth

NJ DEP NJ DEP

- Vineland NJ DEP

- BL England I FL Smidth FL Smidth

Parameters Equations $/yr $/ton $/yr $/ton Equations $/yr $/ton

Stack Flow Rate, acfm 132,600 132,600 470,000 470,000 262,614 262,614

Capacity

MW 23 23 135 135

Equiv/actual ton clinker/yr 438,068 438,068 1,552,731 1,552,731 936,225 936,225

Direct Capital Costs $738,990 $1.69 $4,337,550 $2.79 $10,686,790 $11.41

Total Capital Investment $ 738,990 $1.69 $4,337,550 $2.79 $12,481,434 $13.33

Direct Annual Costs

Operating labor

Direct labor 2 hr/shift * 3 shifts/d * $30/hr * 360 d/yr $64,800 $0.15 $64,800 $0.04 1 man

- yr at $60,000/yr * 0.25

man

- yrs $15,000 $0 .02

Supervisory labor 15% of direct labor $9,720 $0.02 $9,720 $0.01 20% of direct labor $3,000 $0.003

Operating materials

PAC consumption 3 lb PAC/M acfm * stack flow rate / 1E6 0.40 1.41 12 lb PAC/M acfm * stack flow

rate / 1 E6 3.15

PAC cost $0.50/lb PAC * lb/hr PAC * 8760 hr/yr $1,742 $0.004 $6,176 $0.004 $1.15/lb PAC * lb/hr PAC *

8,760 hr/yr * 57? $1,809,569 $1.93

Maintenance

Maintenance labor 1 hr/shift * 3 shifts/d * $30/hr * 360 d/yr $32,400 $0 .07 $32,400 $0.02 1 man

- yr at $60,500/yr * 0.25

man

- yrs $15,125 $0.02

Maintenance materials 100% of maintenance labor $32,400 $0.07 $32,400 $0.02 5% of direct capital cost $534,340 $0.57

Utilities

Electricity 0.000181 * stack flow rate * 5.15 in. H2O *

8,640 hr/yr * $0.0671/kWh $71,658 $0.16 $253,992 $0.16 (25 + 925) kW * $0.0665/kWh

* 8,760 hr/yr $553,413 $0.59

Compressed air 1.5 scfm/1000 acfm * stack flow rate *

$0.25/1000 scf * 8,640 hr/yr * 60 min/hr $25,777 $0.06 $91,368 $0.06

-- no cost no cost

Ash disposal $40/ton ($0.02/lb) $2,142 $0.005 $22,882 $0.01 1,573,538 lb/yr * $0.05/lb

($100/ton) $78,677 $0.08

Total DAC $240,640 $0.55 $513,738 $0.33 $3,009,123 $3.21

Indirect Annual CostsOverhead 60% of labor & material $84,637 $0.19 $87,297 $0.06 30% of operating labor + 26%

of total labor & maint. mat. $152,941 $0.16

Administrative charges 2% of TCI $14,780 $0.03 $86,751 $0.06 2% of TCI $249,629 $0.27

Property tax 1% of TCI no c hange no change no change no change 1% of TCI $124,814 $0.13

Insurance 2% of TCI $14,780 $0.03 $86,751 $0.06 1% of TCI $124,814 $0.13

Capital recovery 0.10955 * TCI (9%, 20 yrs) $80,956 $0.18 $475,179 $0.31 0.14238 * TCI (7%, 10 yrs) $1,777,075 $1.90

Total IAC $195,153 $0.45 $735,978 $0.47 $2,429,273 $2.59

Total Annual Cost $435,793 $0.99 $1,249,716 $0.80 $5,438,397 $5.81Revised PAC Capital Cost Estimates from NJ DEP, April 2, 2010

NJ DEP NJ DEP

- Vineland NJ DEP

- BL Engl and I

Parameters Equations $/yr $/ton $/yr $/ton

Stack Flow Rate, acfm 132,600 132,600 470,000 470,000

Capacity

MW 23 23 135 135

Equiv/actual ton clinker/yr

revised 446,046 446,046 1,581,006 1,581,006

Purchased equipment costs

PAC equipment 2005 $3,000/MW $80,423 $0.18 $472,046 $0.30

Polishing baghouse 2005 $24,000/MW $643,382 $1.44 $3,776,370 $2.39

Total (A) PAC + Pol.

BH $723,804 $1.62 $4,248,417 $2.69

Instrumentation 0.1A i ncluded included

Sales tax & freight 0.08A included included

Total PEC (B) sum of PECs $723,804 $1.62 $4,248,417 $2.69

Direct installation costs

Foundation & supports 0.04B $28,952 $0.06 $169,937 $0.11

Handling & erection 0.50B included included

Electrical 0.08B $57,904 $0.13 $339,873 $0.21

Piping 0.01B included included

Insulation for ductwork 0.07B $50,666 $0.11 $297,389 $0.19

Painting 0.04B included included

Total DIC (C) 0.74B $137 ,523 $0.31 $807,199 $0.51

Indirect costs (installation)

Engineering 0.10B included included

Construction & field expense 0.20B included includedContractor fees 0.10B included included

Start

- up 0.01B inclu ded included

Performance test 0.01B included included

Contingencies 0.03B included included

Total indirect costs (D) 0.45B $0 $0

Total capital investment (TCI) E = B + C + D $861,327 $1.93 $5,055,616 $3.20

Average TCI 2.56Revised PAC Annual Cost Estimates from NJ DEP, April 2, 2010

NJ DEP NJ DEP

- Vineland NJ DEP

- BL England I

Parameters Equations $/yr $/ton $/yr $/ton

Stack Flow Rate, acfm 132,600 132,600 470,000 470,000

Capacity

MW 23 23 135 135

Equiv/actual ton clinker/yr

revised 446,046 446,046 1,581,006 1,581,006

Direct Capital Costs $861,327 $1.93 $5,055,61

6 $3.20

Total Capital Investment $861,327 $1.93 $5,055,61

6 $3.20

Direct Annual Costs

Operating labor

Direct labor 2 hr/shift * 3 shifts/d * $30/hr * 360 d/yr $64,800 $0.15 $64,800 $0.04

Supervisory labor 15% of direct labor $9,720 $0.02 $9,720 $0.01

Operating materials

PAC consumption 3 lb PAC/ M acfm * stack flow rate / 1E6 0.40 1.41

PAC cost, updated $1.15/lb PAC * lb/hr PAC * 8760 hr/yr $4,007 $0.009 $14,204 $0.009

Maintenance

Maintenance labor 1 hr/shift * 3 shifts/d * $30/hr * 360 d/yr $32,400 $0.07 $32,400 $0.02

Maintenance materials 100% of maintenance labor $32,400 $0.07 $32,400 $0.02

Utilities

Electricity 0.000181 * stack flow rate * 5.15 in. H2O * 8,640 hr/yr *

$0.0671/kWh $71,658 $0.16 $253,992 $0.16

Compressed air 1.5 scfm/1000 acfm * stack flow rate * $0.25/1000 scf * 8,640

hr/yr * 60 min/hr $25,777 $0.06 $91,368 $0.06

Ash disposal $40/ton ($0.02/lb) $2,142 $0.005 $22,882 $0.01

Total DAC $242,905 $0.54 $521,766 $0.33Indirect Annual Costs

Overhead 6 0% of labor & material $85,996 $0.19 $92,115 $0.06

Administrative charges 2% of TCI $17,227 $0.04 $101,112 $0.06

Property tax 1% of TCI no change no

change no

change no

change

Insurance 2% of TCI $17,227 $0.04 $101,112 $0.06

Capital recovery, revis ed 0.0944 * TCI (7%, 20 yrs) $81,309 $0.18 $477,250 $0.30

Total IAC $201,759 $0.45 $771,589 $0.49

Total Annual Cost $444,664 $1.00 $1,293,35

6 $0.82

Average cost/ton clinker ($1.00+$0.82)/2 0.91

Annual cost, excluding capital recov ery $363,355 $0.81 $816,106 $0.52

Average cost/ton

clinker(w/o CR) ($0.81+$0.52)/2 0.67ACI Capital, Annual, and Annualized Capital Costs ($2005)

Total Cost ($) Clinker Production

(tpy) Cost/Ton Clinker

Avg $/Ton Clinker VL

plant BLE plant V L

plant BLE plant VL

plant BLE

plant

TCI 861,327 5,055,616 446,046 1,581,006 1.93 3.20 2.56

Annual Cost, excluding CR and carbon 359,348 801,902 446,046 1,581,006 0.81 0.51 0.66

Carbon ($/yr) 4,007 14,204 446,046 1,581,006 0.01 0.01 0. 01

Capital Recovery (7%, 20yr) 81,309 477,250 446,046 1,581,006 0.18 0.30 0.24

Total Annualized Cost 444,664 1,293,356 446,046 1,581,006 1.00 0.82 0.91