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 (prepared 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 from 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 (instrumentation, 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 smaller 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 Control Cost Manual cost equations, 

although I was unable to determine the exact equation 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 supervisory 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 

estimates , 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 higher 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 fees; NJ DEP's estimate ($40/ton) is more in line with current fees.

o Industry's equation 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 NJ 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 more typical for fabric 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 recovery factor than industry.
Piping 01B included included

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

Parameters Equations $/yr $/ton $/yr $/ton Equations Stack Flow Rate, acfm 132,600 132,600 470,000 470,000 

Capacity

MW 23 23 135 135

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

Purchased equipment costs

PAC 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 

Direct installation costs

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

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) Contingencies 0.03B included included 0.20B 

Total indirect costs (D) 0.45B $0 $0 0.2435B 

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

TCI (using 6/10 rule) $1,113,533 $2.54 $3,058,979 $1.97
4

Table 2. Comparison of PAC Annual Cost Estimates from NJ DEP and FL Smidth

NJ DEP NJ DEP‐Vineland NJ DEP‐BL England I 

FL Smidth

Parameters Equations $/yr $/ton $/yr $/ton Equations Stack Flow Rate, acfm 132,600 132,600 470,00 470,00 0 0 

Capacity

MW 23 23 135 135

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

Direct Capital Costs $738,990 $1.69 $4,337,55 $2.79 0 

Total Capital Investment $738,990 $1.69 $4,337,55 $2.79 0 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 

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

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 / 1E

PAC cost $0.50/lb PAC * lb/hr PAC * 8760 hr/yr $1,742 $0.00 $6,176 $0.004 $1.15/lb PAC * lb/hr PAC * 8,760 hr/yr 

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 

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

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 h

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 1,573,538 lb/yr * $0.05/lb ($100/ton) 

Total DAC $240,640 $0.55 $513,73 $0.33 8 

Indirect Annual Costs

Overhead 60% of labor & material $84,637 $0.19 $87,297 $0.06 30% of operating labor + 26% of total la

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

Property tax 1% of TCI no change no change no change no change 1% of TCI 

Insurance 2% of TCI $14,780 $0.03 $86,751 $0.06 1% of TCI Capital recovery 0.10955 * TCI (9%, 20 yrs) $80,956 $0.18 $475,179 $0.31 0.14238 * TCI (7%, 10 yrs) 

Total IAC $195,153 $0.45 $735,97 $0.47 8 

Total Annual Cost $435,793 $0.99 $1,249,71 $0.80 6