2 | February 23, 2010 ICAPCD RULE 400.2 APPENDIX C There is not a federal policy that establishes maximum cost ef fectiveness values for NOx

RACT . The San Joaquin Valley APCD uses a BARCT thresho ld of $9,700.00 (California

Air Resources Board (CARB) , Report to the Legislature, Implications of Future Oxides of Nitrogen Controls from Seasonal Sources in the San Joaquin Valley, January 2002, Table 9, Comparison of BARCT Cost Effectiveness Thresholds) . T herefore, for the purpose of
this evaluation, the IC APCD will use a RACT cost effectiveness value of $8,000

- $10,000/ton of NOx. The cost of control equipment is highly dependent on the size of the unit and the type of control selected. According to th e APCD survey, the majority of the boilers that will be impacted by Rule 400.2 are in the range of 50

- 200 MMBtu/hour.
Therefore, t he cost effectiveness evaluation was conducted for several size boilers ranging

from 50 to 200 MMBtu/hour and capacity factors ranging from 10% to 75%. To estimate cost effectiveness, ICAPCD staff obtained capital cost estimates of a low NOx burner with flue gas recirculation system from Jeff Welton and Pete Santner , R.F. MacDonald Company. According to Pete Santner (e

- mail message on December 3, 2009), boilers with capacity 50

- 200 MMBtu/hr would need to be retrofit with a combination of low

- NOx burner and flue gas recirculation system in order to reduce NOx emissions to a minimum of 30 ppmv for gaseous fuel

- fired units

.

The total initial cost (capital cost and installation) for a low NOx burner and flue gas

recirculation system for boilers 50 to 200 MMBtu/hr ranges from $ 401 ,000 to $ 732 ,000.

The average cost effectiveness ranges from approximately $ 6

, 470 to $ 48

, 580 per ton of

NOx reduced. The high end of the cost effectiveness range is due to low annual heat input

of boilers

. This evaluation indicates that it is cost effective to retrofit boilers to low

- NOx burner and flue gas recirculation but only for t hose units operating under an annual capacity factor above 30 %. T herefore, Rule 400.2 will establish an alternative NOx emission limit of 70 ppmv for those existing emission units with an annual capacity factor

of 30 % or less. The annual capacity factor is the ratio of the amount of fuel burned by an emission unit in a calendar year to the amount it could have burned if it had operated all year around; in other words, it represents 30 % of the potential annual fuel consumption for

the emission unit.

The ICAPCD staff conducted a survey of the permit database to identify the number of boilers which will need to be retrofitted to comply with the new RACT requirements. Approximately 13 units rated 50 million Btu per hour or greater are operated at three of Imperial County’s major source facilities and will be affected by the requirements of Rule 400.2. The ICAPCD survey indicates that one of the boilers (Unit 4) operated by Imperial Irrigation District at the El Centro Generating Facility and three of th e natural gas boilers operated by Spreckels Sugar Company would be out of compliance with the
30 ppm v emission limit with current NOx control technology . Unit 4 is currently equipped

with Selective Catalytic Reduction ( SCR ) and Spreckels Sugar Company has indicated that its natural gas boilers will be retrofitted with Flue Gas Recirculation technology.
However, t his type of NOx control technology would not be able to reduce NOx emissions to the 30 ppm v limit. Therefore, a 70 ppm v NOx limit would be feasible to

achieve with the current and proposed technology for these units. The ICAPCD staff evaluated cost effectiveness for retrofitting the Spreckels Sugar boilers and the El Centro3 | February 23, 2010 ICAPCD RULE 400.2 APPENDIX C Generating Facility Unit 4 boiler to meet the 30 ppm v limit, a detailed cost effectiveness evaluation for these boilers is included in Section II.b of this report. This evaluation indicates that due to the seasonal nature of operation of the Spreckels Sugar natural gas boilers and El Centro Generating Unit 4 boiler, the cost for retrofitting these boilers is higher than the recommended cost eff ectiveness threshold . Therefore, these emission units will be restricted to 70 ppm v NOx and maximum annual capacity factor of 30 %.

It is important to point out that a ny new boilers will need to comply with BACT requirements ; therefore, these units will be require d to install more efficient technology to

reduce NOx emission

, hence the capital and operational cost will be higher.

II. COST EFFECTIVENSS

A Low NOx with Flue Gas Recirculation System

The cost of retrofitting units to comply with the proposed rule varies with the size of the unit and the type of controls used. ICAPCD staff analyzed the cost effectiveness of Rule 400.2 based on installing and operating of low

- NOx burner system and flue gas recirculation because this is the control technology that will most likely be used by local industry to comply with this rule. The cost effectiveness evaluation was conducted for several sizes of units ranging from 50 to 200 MMBru/hour.

The potential NOx emission reductions were evaluated using the following assumptions:

**•** Baseline emissions are 0.0848 lb/MMbtu (70ppmv @ 3% O 2 )

**•** Controlled emissions are 0.036 lb/MMbtu (30ppmv @ 3% O 2 )

**•** Operating schedule 24 hour/day; 365 d ays/year

**•** 0.10, 0.25, 0.30, 0.50 and 0.75 capacity factors

Table 1 provides a summary of NOx emissions reductions for boilers at different capacity

factors.

Table 1 Potential NOx Emissions Reductions

Unit Size

MMBtu/hr Capacity Factor Uncontrolled

Emissions

Tons/yr Controlled

Emissions

Tons/yr NOx Reductions Tons/year

50 0.10 1.86 0.79 1.07

50 0.25 4.64 1.97 2.67

50 0.30 5.57 2.36 3.31

50 0.50 9.29 3.94 5.35

50 0.75 13.93 5.91 8.02

100 0.10 3.71 1.58 2.13

100 0.25 9.29 3.94 5.35

100 0.30 11.14 4.73 6.41

100 0.50 18.57 7.88 10.69

100 0.75 27.86 11.84 16.02

150 0.10 5.57 2.37 3.2

150 0.25 13.93 5.91 8.024 | February 23, 2010 ICAPCD RULE 400.2 APPENDIX C 150 0.30 16.71 7.10 9.61

150 0.50 27.86 11.83 16.03

150 0.75 41.79 17.74 24.05

200 0.10 7.43 3.15 4.28

200 0.25 18.57 7.88 10.69

200 0.30 22.28 9.46 12.82

200 0.50 37.14 15.77 21.37

200 0.75 55.71 23.65 32.06

To estimate cost effectiveness, ICAPCD staff obtained capital cost estimates of a low NOx burner with flue gas recirculation system from Jeff Welton and Pete Santner , R.F. MacDonald Company. In addition, to estimate cost for installation and operation of the boilers, ICAPCD staff used information provided by the CARB, Report to the Legislature, Implications of Future Oxides of Nitrogen Controls from Seasonal Sources in the San Joaquin Valley, January 2002. The method for calculating cost effectiveness on CARB’s evaluation assumes a 10% interest rate and useful life for the control equipment of 10 years. Table 2 provides a summary of cost to control NOx emissions for d ifferent boiler capacities.

Table 2 Cost of NOx Control for Boilers
Boiler Capacity,

MMBtu/hr 50 100 150 200

NOx emission limit, ppm 30 30 30 30

Capital cost, $ 336K 475K 525K 600K

Installation cost, $ 65K 96K 108K 132K

Total initial cost, $ 401K 571K 633K 732K

Capital cost amortization

factor 1 0.163 0.163 0.163 0.163

Annual repair and maintenance cost, $ 5K 10K 15K 20K

Annual operation cost, $ 306 1222 2750 4888

Annual source test cost, $ 4K 4K 4K 4K

Total annual cost, $ 74.7K 108.3K 124.9K 148.2K

Table 3 indicates the cost effectiveness for boilers at various capacity factors that are subject to the 0.036 lb/MMBtu or 30 ppm standard.

Table 3 Cost Effectiveness for Boilers 50 to 200 MMBtu/hour

Unit Size (MMBtu/hr) Capacity Factor (%)

10 25 30 50 75

50 69.81K 27.98K 22.57K 13.96K 9.31K

100 50.84K 20.24K 16.90K 10.13K 6.76K

1 Uses a 10% interest rate and useful life data from the manufacturers survey, when available.5 | February 23, 2010 ICAPCD RULE 400.2 APPENDIX C 150 39.03K 15.57K 13.00K 7.79K 5.19K

200 34.63K 13.86K 11.56K 6.93K 4.62K Average 48.58K 19.41K 16.00K 9.70K 6.47K

B Alternative NOx Emission Limit

Rule 400.2 established an alternative NOx emission limit of 70 ppmv for those existing emission units with an annual capacity factor of 30 % or less. The annual capacity factor is the ratio of the amount of fuel burned by an emission unit in a calendar year to the amount it could have burned if it had operated all year around; in other words, it represents a 30 % of the potential annual fuel consumption for the emission unit. This alternative emission

threshold has been established for existing seasonal emis sion units for which installation of advanced control technology would not have a significant impact in reducing NOx emissions due to irregular operation of the emission unit.

Spreckels Sugar Company operates three boilers which are not equipped with any type of NOx controls. The three natural gas boilers were installed in 1977 and will have to comply with Rule 400.2 RACT requirements. The operation of these boilers is seasonal and therefore retrofitting of the boilers to comply with the 30 ppm v @ 3% O2 may not be cost

effective. Spreckels Sugar Company has indicated that its natural gas boilers will be retrofitted with Flue Gas Recirculation technology to comply with the 70 ppm v @ 3% O2.

Table 5 Spreckels Sugar Company Cost Effectiveness Evaluation

Emission Unit Approximate

Unit Size (MMBtu/hr) Annual Cost for Retrofitting

at 30 ppm Cost per Ton of

NOx Reductions

Based on Potential

Reductions Cost

Effective (yes/no)

CE Boiler 200 148.2 K 16.21 K No

Union Boiler 150 124.9 K 99.92 K No Auxiliary Boiler 100 108.3 K 773.57 K No Table 4 Spreckels Sugar Company Potential NOx Reductions 70 ppm to 30 ppm (Year 2006

- 2008 Av erage Natural Gas Consumption )

Emission

Unit Unit Size (MMBtu/hr) Average

Natural Gas

Used MMBtu/year NOx Emissions at 70 ppm 3% O2 (0.0848 lb/MMBtu) (tpy) NOx Emissions at 30 ppm 3% O2 (0.036 lb/MMBtu) (tpy) Potential NOx

Reductions (tpy)

CE Boiler 202 374,448 15.88 6.74 9.14

Union

Boiler 144 51,448 2.18 0.93 1.25

Auxiliary

Boiler 95 5,938 0.25 0.11 0.146 | February 23, 2010 ICAPCD RULE 400.2 APPENDIX C Imperial Irrigation District operates one boiler which is currently equipped with selective catalytic reduction system for NOx control ( SCR system ) . This unit was installed in 1968 without any NOx controls. This boiler has a h eat input capacity of 829.8 MMBtu/hr. In

2000 the boiler was retrofitted with the SCR system to meet the 140 pounds per hour

limit of the IC APCD Rule 400. The operation of this boiler is seasonal by nature and

therefore further ret rofitting of this boiler to comply with the 30 ppm v @ 3% O2 may not be cost effective. Imperial Irrigation District has indicated that it will adjust the operation of its natural gas boiler to comply with the 70 ppm v @ 3% O2 . The IC APCD Cost

Effectivenes s evaluation does not analyze cost effectiveness for Imperial Irrigation District size boiler. The facility provided the estimated capital and installation cost for retrofitting of

Unit 4 Boiler to meet the 30 ppm v limit of Rule 400.2 . The IC APCD staff estimated the

cost effectiveness for retrofitting the Unit 4 boiler from 70 ppm v to 30 ppm v

. Table 6 presents cost effectiveness evaluation for retrofitting the Unit 4 boiler to 30 ppm v . This evaluation indicates that based on the $8,000

- $10,000 threshol d established by the

IC APCD for RACT determination, it is not cost effective to require unit 4 to retrofit to 30

ppm v but rather limit operation of this unit at 70 ppm v and 30 % capacity factor.

Table 6 Cost of NOx Control for Boilers

Unit 4 Boiler 829.8 MMBtu/hr

NOx emission limit, ppm 30

Capital and Installation cost, $ 4,250 K

Capital cost amortization

factor 2 0.1 63

Equivalent annual capital cost

of controls 3 692.75 K
, $

Annual repair and maintenance cost, $ 5K

Annual operation cost, $ 40K

Annual source test cost, $ 4K

Total annual cost, $ 741.75 K

Average annual emissions

reduction, TPY 40.47

Cost Effectiveness, $/Ton 18.33 K

Cost Effective? No

2 Uses a 10% interest rate and useful life data from the manufacturers survey, when available.

3 Uses average capital and installation costs.