Tetra Tech, Inc.

10306 Eaton Place, Suite 340 Fairfax, VA 22030 phone 703 - 385 - 6000 fax 703 - 385 - 6007 TO : Paul Shriner and Jan Matuszko, EPA FROM : John Sunda (SAI C) and Kelly Meadows DATE: April 2 2 , 2010 SUBJECT: Comparison of Cooling Tower Retrofit Costs to the Cost of New

Repowered Power Plants EPA requested that Tt and SAI C compare the cost of retrofitting a facility cycle cooling to the cost of constructing a new power plant and to the cost to plant. This memo describes the results of the research. Capital Costs for a New Plant Table 1 presents a comparison of the tower at an existing power plant with the same generating capacity
. for both the existing and new plant. Cooling tower retrofit costs are based on cost factors derived for EPA 316(b) compliance costs , which are ba sed on the factors used Cost s for “average” difficulty and “difficult” retrofits are presented will vary depending on existing plant site conditions. These cost factors flow rate s as the basis , which have been estimated and ty pical heat rates of 9,300 BTU/Kwh (plant efficiency = 37%) for plant and 10,200 BTU/Kwh (plant efficiency = 33%) for The n ew plant construction capital costs are based on cost assumptions used by EIA in developing economic data in their costs and do not include escalation or financing costs e sti mates for construction costs of new nuclear power plants have increased in recent 

### MEMORANDUM

10306 Eaton Place, Suite 340

Paul Shriner and Jan Matuszko, EPA John Sunda (SAI C) and Kelly Meadows , 2010 Comparison of Cooling Tower Retrofit Costs to the Cost of New

Power Plants that Tt and SAI C compare the cost of retrofitting a facility with cycle cooling to the cost of constructing a new power plant and to the cost to plant. This memo describes the results of the research. Costs for a New Plant Table 1 presents a comparison of the capital costs of retrofitting a recirculating cooling an existing power plant to the costs of building a new gr eenfield power plant with the same generating capacity
. A plant capacity of 1,000 MW was chosen as the size for both the existing and new plant. Cooling tower retrofit costs are based on cost factors derived for EPA 316(b) compliance

sed on the factors used in the EPRI Tower Calculation Worksheet. for “average” difficulty

and “difficult” retrofits are presented , since the actual costs will vary depending on existing plant site conditions. These cost factors use

which have been estimated assuming a condenser d elta T of 15 rates of 9,300 BTU/Kwh (plant efficiency = 37%) for an existing coal plant and 10,200 BTU/Kwh (plant efficiency = 33%) for an existing nuclear plant. ew plant construction capital costs are based on cost assumptions used by EIA in developing economic data in their Annual Energy Outlook 2009
. These are overnight escalation or financing costs
. Other sources suggest mates for construction costs of new nuclear power plants have increased in recent

Comparison of Cooling Tower Retrofit Costs to the Cost of New and
with closed
cycle cooling to the cost of constructing a new power plant and to the cost to repower a

costs of retrofitting a recirculating cooling

eenfield power plant A plant capacity

of 1,000 MW was chosen as the size Cooling tower retrofit costs are based on cost factors derived for EPA 316(b) compliance EPRI Tower Calculation Worksheet.

since the actual costs use conden ser elta T of 15 o F existing coal existing nuclear plant. ew plant construction capital costs are based on cost assumptions used by EIA in These are overnight suggest that the mates for construction costs of new nuclear power plants have increased in recentye ars and are very uncertain , with costs possibly being greater than those used by EIA. A 2008 report stated that companies that were planning new nuclear units indicated th at the total costs (including escalation and financing costs) would be in the range of $5,500/kW to $8,100/kW (Sy

napse 2008 a)
. To capture these higher costs, the “advanced nuclear

– high” costs were added to Table 1 to reflect these higher estimates using the upper end of the range of cost s that Florida Power & Light (FPL) projected in October 2007 for two new plants (Sy

napse 2008). Interest and escalation may add between 35% and 75% to the costs. Other sources indicate that the estimated costs of new coal plants have been increasing recentl y as well. A 2008 report states that the estimated costs of building new coal plants has reached $3,500 per kW , not including financing costs ( Sy napse 2008 b )
. These cost increases are mostly

due to a significant increase in the worldwide demand for power plant design and construction resources, commodities, and equipment. This report was written in mid 2008, a time when commodity prices had increased rapidl y an d reached a peak and have subsequently dropped to lower levels due to the rece nt worldwide economic downturn
. However, high construction costs remain as a concern Table 2 provides some recent examples of capital cost estimates for both nuclear and coal
- fi red plants. Two of the coal plants were cancelled in late 2008 and 2009 due to concerns about increased costs and greenhouse gas emissions. Table 2 also shows that the estimated cost of the cooling tower and basin component are a small portion ( ≤ 2%) of t otal costs
. This is based on the assumption that cooling tower and basin costs are roughl y $80/gpm (SAIC 2010). In summary

(a s shown in Table 1 ) , costs for construction of a conventional fossil fuel plant can be nearl y 14 times higher than the cost to retrofit a closed
- cycle cooling s ys tem at a comparable facility . Costs for a new combined cycle plant can be nearly 7 times higher, while the costs for a new nuclear facility can be as much as 20 times higher. Capital Costs for a Repowered Plant While the costs in Table 1 reflect greenfield costs for a new plant , they can be viewed as indicative of the magnitude of costs for a full repowering at coal and combined cycle power plants as well. 1 T he generating capacities of new repowered plants will in most cases be greater than th ose of the existing plant s . In the case of repowering of an existing steam plant to combined cycle, the repowered capacity could be as much as 200% greater than the existing plant , while producing the same amount of waste heat and requiring the same amount of cooling water as before
. On a non
- incremental dollar/MW basis, f ossil
- fuel repowering projects can ty picall y be implemented for about 70
- 80% of the cost of a greenfield plant in dollars/MW , because

1 It is a common misconception that repowered plants cost more than greenfield plants, but this is only true if cost differences are based on the incremental changes in MW capacity (i.e. , if the dollars/MW estimate is based on the difference in MW between the existing and repowered units).they

are able to utilize ex isting infrastructure and steam turbines ( ALSTOM Power Inc. 2003). 2 Other Cost Considerations There are man y other cost considerations, in addition to differences in capital costs, that factor into the decision to construct new generating units either onsite or at a new location. The decision to construct new generating units requires a detailed economic evaluation of all of these factors. These cost factors include:  Plant efficiency

and energy

penalty
- New power generating units can be designed to o perate more efficiently than existing units that are retrofitted. Thus, new generating units will use less fuel and cost less to operate. This increased efficiency results from the use of state
- of
- the
- art power generation and cooling technology

that is mo re efficient and designed for optimized performance. While the use of a recirculating cooling tower with the new unit may still experience some amount of both parasitic energy requirements and turbine efficiency reductions compared to a once
- through s ys tem , there is a greater opportunity to design the s ys tem to optimize sy stem performance plus in most cases the increase d generating unit efficiency will be much greater than the energy penalty
.  Changes in plant dispatch schedule and capacity utilization
- A m ore cost efficient plant will tend to be dispatched more frequently resulting in a higher utilization rate affecting long term revenue estimates.  Fuel t ype
– Changes in fuel ty pe can also affect operating costs, dispatch rate, pollution emissions, and pote ntial costs associated with carbon emissions.  Permitting

– Existing generating units may require only

minor modification to existing permits. New units may undergo an extensive, length y, and potentially restrictive permitting process.  Downtime costs

– Offs ite new generating units will have no downtime costs. Onsite new generating units will result in minimal downtime, if any , depending on the need to tie into existing infrastructure such as water intakes or power distribution.  Timeframe

– Cooling tower retrofits can be accomplished within a period of several ye ars. New generating units require a long lead time of several y ears to plan plus up to seven years to obtain required permits.  Service life

– New generating units will tend to have a much longer servi ce life than retrofitted existing generating units. O&M costs of generating units tend to increase over time.  New generating unit tower costs

– New units with recirculating cooling towers will completely

avoid retrofit costs and may have lower capital cos ts than new units with once
- through cooling s ys tems. See SAIC memo: “ Estimation of Net Difference in Capital and O&M Costs for Once
- through Versus Closed C ycle

2 The dow

nside is that the repowered plant usually will be less efficient than a comparable greenfield plant. In many cases, the repowering option may produce a more favorable long
- term financial return than the greenfield alternative because the lower capital costs make up for the higher fuel cost associated with the lower efficiency. The development of repowering costs and the financial tradeoffs inv olved will vary from site to site and are beyond the scope of this analysis.Cooling for New Generating Units at Existing Power Plants and for Repowering of Existing Generat ing Units ” March 5 , 2010.  Flue gas disposal
- New and repowered units requiring air pollution equipment upgrades where natural draft cooling towers (NDCT) are an available option can save costs of a new stack by disposing of flue gas through the NDCT. See SAI C memo: “ Technology

Analy sis for the Discharge of Power Plant Combustion Flue Gas Through Natural Draft Cooling Towers. ” March 12 , 2010.  Future environmental requirements and regulations

– Uncertaint y about future regulation and associated costs regarding emission of carbon dioxide is clouding the current decision making process. Once these regulations are enacted, the associated costs and credits will factor in as well.

References AL STOM Power Inc. Schretter, J. Williams, S. Brandett, J. Repowering: A Financiall y Compelling Method to Improve Existing Assets . Winter 2003. http://beaconenergy .com/html/JSPF%20Repower%20Winter03%20article.pdf EIA. Assumptions to the Annual Energy Outlook 2009. Table 8
- 2 Costs and Performance Characteristics of N ew Central station Electricit y Generation technologies. 2009. Sy napse Energy

Economics Inc. David Schlissel and Bruce Biewald . Nuclear Power Plant
- Construction Costs. July 2008 a . Sy napse Energy

Economics Inc. D avid Schlissel, Allison Smith and Rachel Wilson
. Coal
- Fired Power Plant
- Construction Costs. July 2008 b
. AMP. News Release “ AMP ANNOUNCES LIKELY CONVERSION OF AMPGS PROJECT ” November 25, 2009
. http://media.cleveland.com/business_impact/other/Project%20conversion%20release.pdf Journal Sentinel. Milwaukee Wisconsin. PSC rejects Alliant Energy 's proposed coal plant
. Nov. 11, 2008 http://www.jsonline.com/business/34277094.html Miami Herald “FPL suspends long
- term projects, hints at job cuts” January 15, 2010. http://www.miamiherald.com/2010/01/14/1426344/fpl
- suspends
- long
- term - projects.html Charlotte Business Journal. “Cost of Duke Energy's Cliffside project holding steady” March 19, 2010.iSt ockAnaly st . “ Federal loan guarantees encourages Lev y County, Fla., plant

construction ” February

18, 2010. http://www.istockanaly st.com/article/viewiStockNews/articleid/3880743 SAI C memo: “ Estimation of Net Difference in Capital and O&M Costs for Once
- thr ough Versus Closed Cycle Cooling for New Generating Units at Existing Power Plants and for Repowering of Existing Generating Units ” March 5, 2010.Table 1. Comparison of the Capital Costs for Closed - Cycle Cooling Tower Retrofit at an Existing P lant to the Capital Cost of

a New Greenfield Power Plant of a Similar Size Old New Old New Plant Ty pe Conventional

Coal Scrubbed

New Coal 3 Conventional

Combined Cycle 3 Conventional

Nuclear Advanced

Nuclear (L ow) 3 Advanced

Nuclear (High) 4 Plant Capacity (MW) 1000 1000 1000 1000 1000 1000 Unit Cooling Flow 1 (gpm/MW) 600 910 Existing Condenser Flow (gpm) 600,000 910,000 “Average” Difficult y Cooling Tower Retrofit Costs 2 (million $) $150 $228 “Difficult” Cooling Tower Retrofit Costs 2 (million $) $234 $355 Overnight Total Cost Factor ($2007/kw) 2,058 962 3,318 4,540 New Plant Overnight Capital Costs (million $) $2,058 $962 $3,318 $4,540 All costs are in 2007 dollars. 1 Based on a delta T of 15 ° F and a heat rate of 9300 BTU/Kwh for coal and 10,200 BTU/Kwh for nuclear. 2 Based on EPRI Cooling Tower Retrofit Estimates
. 3 Based on data in Table 8
- 2 of EIA Assumptions to Annual Energy Outlook 2009. 4 Based on FPL estimate in 2008 Synapse Report.Table 2 . Recent Capital Cost Estimates

Company and Plant Ty

pe of Unit Capacity Total Plant Costs 1 Wet Cooling Tower Costs as % of Project Total Florida Power and Light Turkey Point, Florida 1 Nuclear 2200 MW (2 units) $12.1 billion to

$17.8 billion. <1% Progress Energy

L evy County , Florida2 Nuclear 2200 MW (2 units) $10.5 billion with

financing costs the total becomes $13

- 14 billion. <1% Duke Energy

Cliffside, North Carolina 3 Coal
- supercritical 800 MW $1.8 billion 2% AMP
- Ohio Meigs County , Ohio 4 Coal

– supercritical 960 MW $3 billion plus financing <2% WPLNelson Dewey

3, Wisconsin 5 Coal and Biomass
-

Circulating Fluid Bed 300 MW $1.3 billion plus financing <1% Costs are based on 2007/2008 estimates. 1 FPLhas suspended all long term capital projects for the next 5 years due to rejection of $1.3 billion rate increase in January 2010 but continue to seek nuclear licenses. 2 Plant construction originally scheduled to begin construction in 2010, will be delayed 20 to 36 months due to economic and regulatory

problems including rejection of $500 million rate hike. 3 Plant was 55% complete at end of 2009 with projected costs rem aining at $1.8 Billion 4 Plant was cancelled in 2009 when cost estimate increased 37% to $4 Billion. There are tentative plans for a smaller gas

- fired combined cycle plant instead. 5 Unit 3 was rejected b y state regulators in November 2008 citing concern s about increased total cost of $1.3 billion and greenhouse gas emissions. Source s : Sy

napse 2008a; Sy

napse 2008b; AMP 2009; Journal Sentinel 2008; Miami H erald 2010; Charlotte Business Journal 2010; iStockAnaly st 2010.