# 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 sour ces

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 so urce 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 co st 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.

 Th e 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 illust rate 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 low er ($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 hi gher 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

.LSmidthPiping01BincludedincludedTable1.ComparisonofPACCapitalCostEstimatesfromNJDEPandFLSmidth(3/12/2010)NJDEP NJDEP‐Vineland NJDEP‐BLFLSmidthEnglandI FParametersEquations$/yr$/ton$/yr$/tonEquations $/yr $/tonStackFlowRate,acfm132,600132,600470,000470,000262,614 262,614CapacityMW2323135 135Equiv/actualtonclinker/yr438,068438,0681,552,7311,552,731936,225 936,225PurchasedequipmentcostsPACequipment$3,000/MW$69,000$0.16$405,000 $0.26Polishingbaghouse$24,000/MW$552,000$1.26$3,240,000 $2.09Total(A)PAC+Pol.BH$621,000$1.42$3,645,000 $2.35Instrumentation0.1AincludedincludedSalestax&freight0.08AincludedincludedTotalPEC(B)sumofPECs$621,000$1.42$3,645,000$2.35vendorquote $7,370,200 $7.87DirectinstallationcostsFoundation&supports0.04B$24,840$0.06$145,800 $0.09Handling&erection0.50BincludedincludedElectrical0.08B$49,680$0.11$291,600 $0.19Piping0.01BincludedincludedInsulationforductwork0.07B$43,470$0.10$255,150 $0.16Painting0.04BincludedincludedTotalDIC(C)0.74B$117,990$0.27$692,550$0.450.45B $3,316,590 $3.54Indirectcosts(installation)Engineering0.10BincludedincludedConstruction&fieldexpense0.20BincludedincludedContractorfees0.10BincludedincludedStart‐up0.01BincludedincludedPerformancetest0.01Bincludedincluded0.03(B+C) $320,604 $0.34Contingencies0.03Bincludedincluded0.20B $1,474,040 $1.57Totalindirectcosts(D)0.45B$0$00.2435B $1,794,644 $1.92Totalcapitalinvestment(TCI)E=B+C+D$738,990$1.69$4,337,550$2.79 E=B+C+D $12,481,434 $13.33TCI(using6/10rule)$1,113,533 $2.54$3,058,979 $1.974LSmidthTable2.ComparisonofPACAnnualCostEstimatesfromNJDEPandFLSmidthNJDEPNJDEP‐VinelandNJDEP‐BLEnglandFLSmidthI FParametersEquations$/yr$/ton$/yr $/tonEquations$/yr $/tonStackFlow Rate, acfm132,600132,60000470,00 470,00262,614262,614CapacityMW2323 135 135Equiv/actualtonclinker/yr438,068438,0681,552,731 1,552,731936,225 936,225DirectCapital Costs$738,990$1.690$4,337,55 $2.79$10,686,790$11.41TotalCapital Investment$738,990$1.690$4,337,55 $2.79$12,481,434$13.33DirectAnnualCostsOperatinglaborDirectlabor2hr/shift*3shifts/d*$30/hr*360d/yr$64,800$0.15$64,800$0.041man‐yrat$60,000/yr*0.25man‐yrs$15,000$0.02Supervisorylabor15%ofdirectlabor$9,720$0.02$9,720 $0.01 20%ofdirectlabor$3,000 $0.003OperatingmaterialsPACconsumption3lbPAC/Macfm*stackflowrate/1E60.401.4112lbPAC/Macfm*stackflowrate/1E63.15PACcost$0.50/lbPAC*lb/hrPAC*8760hr/yr$1,742$0.00$6,176 $0.004$1.15/lbPAC*lb/hrPAC*8,760hr/yr*57?$1,809,569$1.93MaintenanceMaintenancelabor1hr/shift*3shifts/d*$30/hr*360d/yr$32,400$0.07$32,400$0.02 1man‐yrat$60,500/yr*0.25man‐yrs$15,125 $0.02Maintenancematerials100%ofmaintenancelabor$32,400$0.07$32,400$0.02 5%ofdirectcapitalcost$534,340$0.57UtilitiesElectricity0.000181*stackflowrate*5.15in.H2O*8,640hr/yr*$0.0671/kWh$71,658$0.16$253,992 $0.16 (25+925)kW*$0.0665/kWh*8,760hr/yr$553,413 $0.59Compressedair1.5scfm/1000acfm*stackflowrate*$0.25/1000scf*8,640hr/yr*60min/hr$25,777$0.06$91,368 $0.06‐‐nocost nocostAshdisposal$40/ton($0.02/lb)$2,142$0.005$22,882 $0.01 1,573,538lb/yr*$0.05/lb($100/ton)$78,677 $0.08TotalDAC$240,640$0.558$513,73 $0.33$3,009,123 $3.21IndirectAnnualCostsOverhead60%oflabor&material$84,637$0.19$87,297 $0.06 30%ofoperatinglabor+26%oftotallabor&maint.mat. $152,941 $0.16Administrativecharges2%ofTCI$14,780$0.03$86,751 $0.06 2%ofTCI$249,629 $0.27Propertytax1%ofTCInochangenochange nochange nochange 1%ofTCI$124,814$0.13Insurance2%ofTCI$14,780$0.03$86,751 $0.06 1%ofTCI$124,814$0.13Capitalrecovery0.10955*TCI(9%,20yrs)$80,956$0.18$475,179 $0.31 0.14238*TCI(7%,10yrs)$1,777,075 $1.90TotalIAC$195,153$0.458$735,97 $0.47$2,429,273 $2.59TotalAnnual Cost$435,793$0.996$1,249,71 $0.80$5,438,397$5.81