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Appendix C: Cost Effectiveness Analysis October 16, 2008

Final Draft Staff Report with Appendices for Proposed Amendments to Rule 4306 and Rule 4307 and Proposed New Rule 4320 

### C - 1 

# APPENDIX C

COST EFFECTIVENESS ANALYSIS FOR PROPOSED AMENDMENTS

TO RULE 4306 AND RULE 4307 AND PROPOSED NEW RULE 43 20

October 16, 2008

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Appendix C: Cost Effectiveness Analysis October 16, 2008

Final Draft Staff Report with Appendices for Proposed Amendments to Rule 4306 and Rule 4307 and Proposed New Rule 4320 

### C - 2 APPENDIX C

COST EFFECTIVENESS ANALYSIS

I. INTRODUCTION

The California Health and Safety Code 40920.6(a) re quires the San Joaquin Valley

Unified Air Pollution Control District to conduct b oth an "absolute" cost effectiveness analysis and an incremental cost effectiveness anal ysis of available emission control options prior to adopting each Best Available Retro fit Control Technology (BARCT) rule. The purpose of conducting a cost effectiveness ana lysis is to evaluate the economic reasonableness of the pollution control measure or rule. The analysis also serves as a guideline in developing the control requirements of a rule.

II. SUMMARY AND CONCLUSION

A. Absolute Cost Effectiveness Analysis

Absolute cost effectiveness examines the cost of re aching the proposed emission limits using the current emissions as a baseline. Cost ef fectiveness is calculated as the added annual cost (in $/year) of a control technolo gy or technique, divided by the emission reduction achieved (in tons reduced/year). The annual costs include annualized capital equipment costs and engineering design costs plus the annual labor and maintenance costs. Higher cost numbers are typ ically for smaller, low-use units since the annual costs result in relatively lower e mission reductions. The analysis shows that the cost effectiveness values improve fo r larger units, units with a higher operating capacity factor, and more restrictive NOx limits relative to the current limits.

The detailed analyses showing the costs for install ed capital equipment, electricity, fuel, and operations and maintenance costs are shown in T ables C-2 to C-19. Results are summarized in Table C-1, below. The Rule 4320 Adva nced Emission Reduction Option (AERO) limits are meant to be the most stringent te chnologically feasible options but may not be economically feasible for all units to a chieve. The controls required to

reach the final NOx emission levels are either Sele ctive Catalytic Reduction (SRC) or Ultra-Low NOx Burners (ULNB). As summarized in Ta ble 1, cost for these controls can be very high and implementation may not be possible due to space limitations that would prevent installation of the control equipment . As discussed in the Staff Report, an option for operators to pay a lower-cost emissio n fee is included in the rule to mitigate the economic feasibility of the proposed l imits.

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Appendix C: Cost Effectiveness Analysis October 16, 2008

Final Draft Staff Report with Appendices for Proposed Amendments to Rule 4306 and Rule 4307 and Proposed New Rule 4320 

### C - 3 Table C-1 Cost Effectiveness Summary
Compliance Scenario Average Cost

Effectiveness ($/ton) Absolute Cost

Effectiveness Range ($/ton)

RULE 4320 SCR (15 ppmv to 5 ppmv) $22,000 to $37,000 $11,000 to $81,000 SCR (9 ppmv to 5 ppmv) $60,000 to $90,000 $26,000 t o $200,000 SCR (5 ppmv)

Stakeholder info $51,000 to $69,000 $29,000 to $240,000

ULNB (30 ppmv to 9 ppmv) $8,600 to $13,000 $6,600 t o $19, 000 Refinery (30 ppmv to 9 ppmv) – Stakeholder info $25,000

Refinery (30 ppmv to 5 ppmv) – Stakeholder info $134,000 $86,000 to $180,000

ULNB (15 ppmv to 9 ppmv) $31,000 to $46,000 $23,000 to $67, 000
ULNB (15 ppmv to 9 ppmv)

- Stakeholder info $41,000 $22,000 to $68,000

SOx Controls –

Stakeholder info $89,000 $21,000 to $89,000

RULE 4307 Low NOx (82 ppmv to 30 ppmv) $12,000 to $18,000 $10,000 to $23,000

ULNB (30 ppmv to 9 ppmv)

new unit $100,000 $58,000 - $130,000

ULNB (30 ppmv to 9 ppmv)

retrofit burner $7,700 $3,300 - $16,000

Note: The Average Value is the average for the ran ge of units with a spread indicating the different fuel usages that were analyzed. The Absolute Value is the lowest and highest values calculated under that compliance sce nario and typically represent the cost for a large, high-use unit and a small, low-us e unit. All values were rounded to two significant digits due to uncertainty in the data a nd variations between units.

B. Incremental Cost Effectiveness

Incremental cost effectiveness (ICE) is indicates t he additional cost for further controlling a unit from the proposed limit to the l owest possible level. Costs are evaluated similar to absolute costs but are only ca lculated for the controls and reductions beyond what is required to comply with t he rule. ICE does not reveal the emission reduction potential of the control options , but examines the more stringent options which were not considered to be cost effect ive. Due to the increased costs and marginal emission reductions, the ICE calculati ons are typically much higher cost

effectiveness than the absolute cost effectiveness values are not directly comparable.

### SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Appendix C: Cost Effectiveness Analysis October 16, 2008

Final Draft Staff Report with Appendices for Proposed Amendments to Rule 4306 and Rule 4307 and Proposed New Rule 4320 

### C - 4 The incremental cost effectiveness analysis result would be similar to those shown in Tables C-4 and C-5. For the ICE analysis, the emi ssion reduction is the difference between the proposed 9 ppmv and going to a 5 ppmv. Those tables show that the

cost-effectiveness for the smaller units. Table C- 18 to C-19 detail the cost

effectiveness for Rule 4307.

III. SOURCES OF COST DATA

District staff used cost information provided by co ntrol equipment manufacturers and vendors, and from stakeholders to conduct a cost ef fectiveness analysis of the proposed NOx limits in Draft Rule 4320. Specifical ly the data used in the analysis came from the following sources:

1. Alzeta (Rule 4306 project in 2003) 2. Applied Utility Systems, Inc. 3. Belco Technologies Corporation 4. California League of Food Processors

5. Chevron U.S.A. 6. CRI Catalyst 7. Kern Oil & Refining Co. 8. Manufacturers Council of the Central Valley

9. Nationwide Boiler 10. San Joaquin Refining, Inc. 11. Tricor Refining, LLC

12. Western States Petroleum Association

Cost information submitted to the District was used to create the range of costs located in Tables C-1 through C-20.

IV. COST EFFECTIVENESS ANALYSIS PROCEDURE

A. Cost Effectiveness Analysis Procedure

To illustrate the cost effectiveness of complying w ith the proposed limits, District staff's method of analysis provides varying cost effectiven ess values depending on the size of the unit and the annual capacity factor that the un it is operated. The actual compliance costs and cost effectiveness values would depend on several factors such as the type of unit, site-specific operating conditions, and th e appropriate emission limits the unit

has to meet.

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Appendix C: Cost Effectiveness Analysis October 16, 2008

Final Draft Staff Report with Appendices for Proposed Amendments to Rule 4306 and Rule 4307 and Proposed New Rule 4320 

### C - 5 B. Absolute Cost Effectiveness (ACE) Calculation Me thod

The absolute cost effectiveness of a control techno logy is calculated as follows:

1. Determine an equivalent annual equipment cost us ing a capital recovery factor based on an assumed interest rate of 10 perc ent and equipment life of 10 years. The annualized capital equipment cost is calculated by multiplying the installed capital equipment cost by the capital recovery

factor of 0.163. 2. Determine the annual electricity, fuel, and oper ation and maintenance costs of a control technology. 3. Calculate the annual cost by adding the costs ca lculated in Step 1 and Step 2. 4. Calculate the emission reduction in tons/year. 5. Calculate the absolute cost effectiveness by div iding the cost in Step 3 by the emissions reduction in Step 4.

C. Incremental Cost Effectiveness (ICE) Calculation Method

The incremental cost effectiveness of a control tec hnology is calculated as follows:

1. Identify the complying control options appropria te to the existing equipment. 2. Estimate the annual average cost of each control option by using Steps 1

to 3 of the ACE calculation method. 3. Calculate the potential emission reduction for e ach control option. The potential emission reductions (PE) are the differen ce between the current emissions and the potential emissions using the new control technology.

D. Cost Calculation Details

For Rule 4320, District staff analyzed the absolute cost effectiveness based on installing and operating an ultra low NOx (ULNB) bu rner system or a selective catalytic reduction (SCR) system. Most units would need to o perate an SCR system to achieve the proposed NOx limit of 5 ppmv. The absolute cos t effectiveness analysis was conducted for several sizes of units operating at 5 0% and 75% capacity factors relative to 15 ppmv and 9 ppmv NOx baselines versus the 9 pp mv and 5 ppmv emission limits.

For Rule 4320, cost effectiveness for SO2 control e quipment was conducted for units operating at 75% capacity factors relative to an un controlled emission factor of 0.0633

lb SO2/MMBtu baseline versus a controlled emission factor of 0.0169 lb SO2/MMBtu. The 75% capacity reflects the typical operations fo r oilfield and refinery equipment, according to the emissions inventory. Oilfield an d refinery units make up the main

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Appendix C: Cost Effectiveness Analysis October 16, 2008

Final Draft Staff Report with Appendices for Proposed Amendments to Rule 4306 and Rule 4307 and Proposed New Rule 4320 

### C - 6 group of units which have to install SOx controls s ince they are the units most likely to be fired on non-PUC quality gas.

For Rule 4307, NOx limit compliance costs were base d on installing and operating a low NOx burner system which meets the initial 30 pp mv limit. There could be situations where existing units could not be retrofitted becau se of control equipment design limitations, so a cost effectiveness analysis for r eplacing existing units with new units is also included. Costs for new units or replacement units that are installed after the final compliance dates and must meet a 9 ppmv or 12 ppmv NOx limit were not specifically analyzed. Preliminary information suggests that co sts for the ultra-low NOx burners (ULNB) may be 1/3 higher than costs to comply with 30 ppmv burner. Since the ULNB would only be required when the entire unit was ins talled or replaced, the additional cost of the ULNB would not be as significant as if they were required as a retrofit option.

E. Cost Effectiveness Tables

Currently, two groups of units have Rule 4306 NOx e mission limits of 15 ppmv, oilfield steam generators and load-following units. Table C-2 presents the details for the cost of installing SCR on current oilfield steam generat ors units to reach the 5 ppmv NOx emission level. The 75% capacity factors represent the typical use for these units, according to the emissions inventory. These units have a nominal size of 62.5 MMBtu/hr so the average cost effectiveness of appro ximately $23,000/ton would be representative for this group.

Table C-2 SCR Cost Effectiveness Calculation for U nits at 75% Capacity Factor

15 ppmv to 5 ppmv Cost Effectiveness

Actual Size Capital Cost NH3 Incremental

O&M Annualized

Cost NOx

reduced CE

MMBtu/hr $ Annualized Capital Cost $/yr $/yr $/yr tons/yr $/ton NOx

250 $472,500 $76,876 $9,166 $18,000 $104,041 9.691 $10,736

200 $405,000 $65,894 $7,332 $13,500 $86,726 7.753 $ 11,186

150 $360,000 $58,572 $5,499 $11,250 $75,321 5.814 $ 12,955

100 $292,500 $47,590 $3,666 $9,000 $60,255 3.876 $1 5,546

50 $270,000 $43,929 $1,833 $6,750 $52,512 1.938 $2 7,096

30 $247,500 $40,268 $1,100 $5,400 $46,768 1.623 $2 8,816

20 $225,000 $36,608 $734 $4,500 $41,841 0.775 $53, 988 Average Cost

Effectiveness $22,903.29

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Appendix C: Cost Effectiveness Analysis October 16, 2008

Final Draft Staff Report with Appendices for Proposed Amendments to Rule 4306 and Rule 4307 and Proposed New Rule 4320 

### C - 7 Table C-3 indicates costs that may be applicable to the load-following units which operate seasonally. The larger, greater than 100 M MBtu/hr units are typically baseload with medium sized units being used to follow t he highly variable loads. The average cost effectiveness of approximately $37,000 /ton is considered to be representative of the costs for this category.

Table C-3 SCR Cost Effectiveness Calculation for U nits at 50% Capacity Factor

15 ppmv to 5 ppmv Cost Effectiveness

Actual Size Capital Cost NH3 Incremental

O&M Annualized

Cost NOx

reduced CE

MMBtu/hr $ Annualized Capital Cost $/yr $/yr $/yr tons/yr $/ton NOx

250 $472,500 $76,876 $9,166 $18,000 $104,041 6.461 $16,103

200 $405,000 $65,894 $7,332 $13,500 $86,726 5.168 $ 16,781

150 $360,000 $58,572 $5,499 $11,250 $75,321 3.876 $ 19,433

100 $292,500 $47,590 $3,666 $9,000 $60,255 2.584 $2 3,319

50 $270,000 $43,929 $1,833 $6,750 $52,512 1.292 $4 0,644

30 $247,500 $40,268 $1,100 $5,400 $46,768 0.775 $6 0,346

20 $225,000 $36,608 $734 $4,500 $41,841 0.517 $80, 930 Average Cost

Effectiveness $36,793.71 

### Most units rated greater than 20 MMBtu/hr have a Ru le 4306 NOx emission limit of 9 ppmv. Tables C-4 and C-5 indicate the costs associ ated with controlling these units to meet a 5 ppmv NOx emission limit. Because these un its are currently controlled to a lower level than the oil field steam generators, th eir emission reductions would be less, resulting in a higher cost effectiveness cost for t he same controls. These higher cost effectiveness levels have been offset by the inclus ion of extended compliance schedule to allow for cheaper burner technology to be develo ped. Operators also can opt to pay an annual emissions fee, which would be used by the District to generate emission

reductions.

Table C-4 SCR Cost Effectiveness Calculation for U nits at 75% Capacity Factor

9 ppmv to 5 ppmv Cost Effectiveness

Actual Size Capital Cost NH3 Incremental

O&M Annualized

Cost NOx

reduced CE

MMBtu/hr $ Annualized Capital Cost $/yr $/yr $/yr tons/yr $/ton NOx

250 $472,500 $76,876 $9,166 $18,000 $104,041 3.942 $26,393

200 $405,000 $65,894 $7,332 $13,500 $86,726 3.154 $ 27,497

150 $360,000 $58,572 $5,499 $11,250 $75,321 2.365 $ 31,848

100 $292,500 $47,590 $3,666 $9,000 $60,255 1.577 $3 8,209

50 $270,000 $43,929 $1,833 $6,750 $52,512 0.788 $6 6,640

30 $247,500 $40,268 $1,100 $5,400 $46,768 0.473 $9 8,875

20 $225,000 $36,608 $734 $4,500 $41,841 0.315 $132 ,829 Average Cost

Effectiveness $60,327.29

### SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Appendix C: Cost Effectiveness Analysis October 16, 2008

Final Draft Staff Report with Appendices for Proposed Amendments to Rule 4306 and Rule 4307 and Proposed New Rule 4320 

### C - 8 Table C-5 SCR Cost Effectiveness Calculation for U nits at 50% Capacity Factor

9 ppmv to 5 ppmv Cost Effectiveness

Actual Size Capital Cost NH3 Incremental

O&M Annualized

Cost NOx

reduced CE

MMBtu/hr $ Annualized Capital Cost $/yr $/yr $/yr tons/yr $/ton NOx

250 $472,500 $76,876 $9,166 $18,000 $104,041 2.628 $39,590

200 $405,000 $65,894 $7,332 $13,500 $86,726 2.102 $ 41,259

150 $360,000 $58,572 $5,499 $11,250 $75,321 1.577 $ 47,762

100 $292,500 $47,590 $3,666 $9,000 $60,255 1.051 $5 7,332

50 $270,000 $43,929 $1,833 $6,750 $52,512 0.526 $9 9,833

30 $247,500 $40,268 $1,100 $5,400 $46,768 0.315 $1 48,470

20 $225,000 $36,608 $734 $4,500 $41,841 0.21 $199, 243 Average Cost

Effectiveness $90,498.43

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Appendix C: Cost Effectiveness Analysis October 16, 2008

Final Draft Staff Report with Appendices for Proposed Amendments to Rule 4306 and Rule 4307 and Proposed New Rule 4320 

### C - 9 Stakeholders also provided a variety of cost inform ation which is shown in Table C-6. In many cases, these costs are below that calculate d by the District. If all 15 values are used, the average cost effectiveness is about $70,0 00/ton which is in the range calculated by staff for the units which need to con trol their NOx emissions from the current 9 ppmv limit down to a 5 ppmv limit. If th e data is adjusted by removing the two highest values, the adjusted average is approximate ly $51,000/ton. As previously mentioned, Rule 4320 contains lower cost options fo r compliance to mitigate the high projected cost-effective numbers.

Table C-6 Summary of Stakeholder Projected SCR Cost s for Various Units

5 ppmv Cost Effectiveness

Actual Size Capital Cost Incremental

O&M Annualized

Cost NOx

reduced CE

MMBtu/hr $ Annualized Capital Cost $/yr $/yr tons/yr $/ton NOx

22 $135,000 $21,965 $54,968 $76,933 2.13 $36,119

25 $150,000 $24,405 $4,380 $28,785 0.53 $54,311

25 $150,000 $24,405 $4,380 $28,785 0.53 $54,311

25 $150,000 $24,405 $4,380 $28,785 0.53 $54,311

30 $200,000 $32,540 $6,570 $39,110 0.63 $62,079

50 $225,000 $36,608 $7,665 $44,273 1.06 $41,767

63 $350,000 $56,945 $54,800 $111,745 0.46 $242,924

72 $631,000 $102,664 $35,200 $137,864 0.98 $140,677

73 $341,000 $55,481 $30,000 $85,481 2.21 $38,679

96 $341,000 $55,481 $30,000 $85,481 2.90 $29,476

96 $341,000 $55,481 $94,000 $149,481 3.77 $39,650

156 $365,000 $59,386 $94,700 $154,086 2.46 $62,662

156 $486,281 $79,118 $94,700 $173,818 2.46 $70,686

156 $696,000 $113,239 $94,700 $207,939 2.46 $84,563

181 $401,000 $65,243 $100,000 $165,243 5.47 $30,209
Average Cost

Effectiveness $69,494.93
Adjusted Average

Cost Effectiveness $50,678.69



### Ultra-low NOx burners (ULNB) have a significant cos t savings over SCR systems. While some burners have achieved less than 9 ppmv N Ox level, they are currently not considered to be 5 ppmv NOx systems. The costs for the ULNB was previously submitted by stakeholders for the size units listed

.

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Appendix C: Cost Effectiveness Analysis October 16, 2008

Final Draft Staff Report with Appendices for Proposed Amendments to Rule 4306 and Rule 4307 and Proposed New Rule 4320 

### C - 10 Table C-7 reflects the costs for installing ULNB on refinery units, which have a 30 ppmv NOx limit under Rule 4306, and achieving a 9 ppmv l evel for initial Rule 4320 compliance. These units typically operate at a 75% capacity factor and the average cost effective level of $8,600/ton is considered re presentative for the typical unit, although the $10,000 to $12,000/ton values for the smaller units is also considered to be very cost effective. Table C-8 has costs for lo wer-use refinery units.

Table C-7 ULNB Cost Effectiveness Calculation for U nits at 75% Capacity Factor

30 ppmv to 9 ppmv Cost Effectiveness

Actual

Size Capital

Cost Installation

Cost Incremental

Elec. Incremental

O&M Annualized

Cost NOx

reduced CE

MMBtu/hr $ $ Annualized Capital Cost $/yr $/yr $/yr tons/yr $/ton NOx

150 $214,411 $40,000 $41,469 $34,995 $4,950 $81,414 12.32 $6,609

130 $194,560 $40,000 $38,233 $30,329 $4,275 $72,8 37 10.68 $6,823

115 $179,672 $40,000 $35,807 $26,829 $3,825 $66,461 9.44 $7,037

92 $151,766 $30,000 $29,628 $21,463 $3,075 $54,166 7.56 $7,170

68 $127,200 $30,000 $25,624 $15,864 $2,250 $43,738 5.58 $7,833

44 $114,172 $20,000 $ 21,870 $10,265 $1,425 $33,560 3.613 $9,289

33.8 $94,762 $20,000 $18,706 $7,885 $1,125 $27,716 2.78 $9,988

14.7 $37,750 $15,000 $8,598 $3,429 $450 $12,477 1.21 $10,337

8.4 $28,550 $10,000 $6,284 $1,960 $300 $8,544 0.69 $12,400
Average Cost

Effectiveness $8,609.56



### Table C-8 – ULNB Cost Effectiveness Calculation for Units at 50% Capacity Factor

30 ppmv to 9 ppmv Cost Effectiveness

Actual

Size Capital

Cost Installation

Cost Incremen tal

Elec. Incremental

O&M Annualized

Cost NOx

reduced CE

MMBtu/hr $ $ Annualized Capital Cost $/yr $/yr $/yr tons/yr $/ton NOx

150 $214,411 $40,000 $41,469 $34,995 $4,950 $81,414 8.212 $9,914

130 $194,560 $40,000 $38,233 $30,329 $4,275 $72,837 7.117 $10,234

115 $179,672 $40,000 $35,807 $26,829 $3,825 $66,461 6.296 $10,556

92 $151,766 $30,000 $29,628 $21,463 $3,075 $54,166 5.037 $10,754

68 $127,200 $30,000 $25,624 $15,864 $2,250 $43,738 3.723 $11,748

44 $114,172 $20,000 $21,870 $10,265 $1,425 $33,560 2.409 $13,931

33.8 $94,762 $20,000 $18,706 $7,885 $1,125 $27,716 1.85 $14,982

14.7 $37,750 $15,000 $8,598 $3,429 $450 $12,477 0.804 $15,519

8.4 $28,550 $10,000 $6,284 $1,960 $300 $8,544 0.459 $18,614
Average Cost

Effectiveness $12,916.89

### SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Appendix C: Cost Effectiveness Analysis October 16, 2008

Final Draft Staff Report with Appendices for Proposed Amendments to Rule 4306 and Rule 4307 and Proposed New Rule 4320 

### C - 11 The stakeholder-provided cost for a small 30 ppmv N Ox refinery unit achieving a 9 ppmv NOx limit is higher than the costs in Table C- 7 and C-8, but, at $25,035/ton, is still within the cost range from past projects. Based on the limits, these are assumed to be for ULNB replacements.

Table C-9 – Stakeholder Projected Refinery Unit Cos t Effectiveness Calculation

9 ppmv Cost Effectiveness

Actual

Size Capital

Cost Installation

Cost Annualized

Cost NOx

reduced CE

MMBtu/hr $ $ Annualized Capital

Cost $/yr tons/yr $/ton NOx

8.4 $82,330 $30,000 $18,276 $18,276 0.73 $25,035



### The stakeholder-provided costs for a larger 30 ppmv NOx refinery unit achieving a 5 ppmv NOx limit is higher than the costs in Table C- 6, with an average cost of over $134,000, compared to the approximately $70,000/’to n provided by the other
stakeholders. Based on the limits, these are assum ed to be for SCR installations.

Table C-10 Stakeholder Projected Refinery Unit Cost Effectiveness Calculation

5 ppmv Cost Effectiveness

Actual

Size Capital

Cost Installation

Cost Annualized

Cost NOx

reduced CE

MMBtu/hr $ $ Annualized Capital

Cost $/yr tons/yr $/ton NOx

18 $1,000,000 $162,700 $162,700 1.88 $86,542

52.2 $708,890 $6,000,000 $1,091,536 $1,091,536 6 $1 81,922
Average Cost

Effectiveness $134,232.00

### SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Appendix C: Cost Effectiveness Analysis October 16, 2008

Final Draft Staff Report with Appendices for Proposed Amendments to Rule 4306 and Rule 4307 and Proposed New Rule 4320 

### C - 12 As stated earlier, two groups of units have Rule 43 06 NOx emission limits of 15 ppmv, oilfield steam generators and load-following units. Table C-11 presents the details for the cost of installing ULNB on current oilfield ste am generators units. The average cost effectiveness of approximately $31,000/ton indicate s that it may be more cost effective to install an SCR at $23,000/ton, than an ULNB.

Table C-11 ULNB Cost Effectiveness Calculation for Units at 75% Capacity Factor

15 ppmv to 9 ppmv Cost Effectiveness

Actual

Size Capital

Cost Installation

Cost Incremental

Elec. Incremental

O&M Annualized

Cost NOx

reduced CE

MMBtu/hr $ $ Annualized Capital Cost $/yr $/yr $/yr tons/yr $/ton NOx

150 $214,411 $40,000 $41,469 $34,995 $4,950 $81,414 3.45 $23,605

130 $194,560 $40,000 $38,233 $30,329 $4,275 $72,837 2.99 $24,368

115 $179,672 $40,000 $35,807 $26,829 $3,825 $66,461 2.64 $25,136

92 $151,766 $30,000 $29,628 $21,463 $3,075 $54,166 2.12 $25,610

68 $127,200 $30,000 $25,624 $15,864 $2,250 $43,738 1.56 $27,983

44 $114,172 $20,000 $21,870 $10,265 $1,425 $33,560 1.01 $33,195

33.8 $94,762 $20,000 $18,706 $7,885 $1,125 $27,716 0.78 $35,671

14.7 $37,750 $15,000 $8,598 $3,429 $450 $12,477 0.34 $36,915

8.4 $28,550 $10,000 $6,284 $1,960 $300 $8,544 0.19 $44,268
Average Cost

Effectiveness $30,750.11



### Table C-12 indicates costs that may be applicable t o the load-following units which operate seasonally. The average cost effectiveness of approximately $46,000/ton shows that SCR may also be the cost-effective optio n than ULNB for this category.

Table C-12 – ULNB Cost Effectiveness Calculation fo r Units at 50% Capacity Factor

15 ppmv to 9 ppmv Cost Effectiveness

Actual

Size Capital

Cost Installation

Cost Incremental

Elec. Incremental

O&M Annualized

Cost NOx

reduced CE

MMBtu/hr $ $ Annualized Capital Cost $/yr $/yr $/yr tons/yr $/ton NOx

150 $214,411 $40,000 $41,469 $34,995 $4,950 $81,414 2.299 $35,413

130 $194,560 $40,000 $38,233 $30,329 $4,275 $72,837 1.992 $36,565

115 $179,672 $40,000 $35,807 $26,829 $3,825 $66,461 1.762 $37,719

92 $151,766 $30,000 $29,628 $21,463 $3,075 $54,166 1.41 $38,416

68 $127,200 $30,000 $25,624 $15,864 $2,250 $43,738 1.042 $41,975

44 $114,172 $20,000 $21,870 $10,265 $1,425 $33,560 0.674 $49,792

33.8 $94,762 $20,000 $18,706 $7,885 $1,125 $27,716 0.518 $53,506

14.7 $37,750 $15,000 $8,598 $3,429 $450 $12,477 0.225 $55,454

8.4 $28,550 $10,000 $6,284 $1,960 $300 $8,544 0.128 $66,747
Average Cost

Effectiveness $46,176.33

### SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

Appendix C: Cost Effectiveness Analysis October 16, 2008

Final Draft Staff Report with Appendices for Proposed Amendments to Rule 4306 and Rule 4307 and Proposed New Rule 4320 

### C - 13 Table C-13 lists actual costs provided by stakehold ers for ULNB installation projects, which seem to be in the same range as the average c osts calculated above.

Table C-13 Stakeholder Actual ULNB Costs for Past Projects

9 ppmv Cost Effectiveness

Actual

Size Capital

Cost Installation

Cost Incremental

Elec. Incremental

O&M Annualized

Cost NOx

reduced CE

MMBtu/hr $ $ Annualized Capital Cost $/yr $/yr $/yr tons/yr $/ton NOx

180 $155,827 $25,353 $87,311 $112,664 5.17 $21,792

96 $220,000 $35,794 $52,499 $88,293 3.77 $23,420

266 $456,650 $74,297 $126,914 $201,211 7.64 $26,337

22 $130,503 $21,233 $47,200 $68,433 2.13 $32,128

96 $317,000 $51,576 $45,227 $96,803 2.9 $33,380

181 $400,000 $65,080 $157,939 $223,019 5.47 $40,771

73 $320,000 $52,064 $44,579 $96,643 2.21 $43,730

120 $349,578 $56,876 $159,205 $216,081 3.45 $62,632

120 $284,039 $46,213 $170,546 $216,759 3.45 $62,829

36 $168,768 $27,459 $95,618 $123,077 1.82 $67,624
Average Cost

Effectiveness $41,464.30



### Stakeholders also provided a wide range of costs fo r controlling sulfur emissions from these units. As result of these cost estimates, sta ff propose to allow equivalence with the sulfur content of PUC quality gas. This reduce s the impact of those units requiring SOx controls to a smaller number of refinery units and oilfield steam generators firing on field gas and waste gas. Extended schedules hav e also been provided for SOx control installations at refineries to recognize th e technical and monetary challenges presented in the design and construction of these c ontrols.

Table C-14 Stakeholder SO2 Control Equipment Cost E ffectiveness Calculation for Units at 75% Capacity Factor

Capital Cost Installation

Cost Incremental O&M Annualized

Cost NOx

reduced CE

$ $ Annualized Capital Cost $/yr $/yr tons/yr $/ton NOx
$650,000 $105,755 $80,000 $185,755 8.5 $21,854

$2,000,000 $500,000 $406,750 $406,750 8.5 $47,853
$3,666,666 $596,567 $596,567 8.5 $70,184
$4,166,666 $677,917 $600,000 $1,277,917 8.5 $150,3 43
$6,500,000 $1,057,550 $250,000 $1,307,550 8.5 $153 ,829
Average Cost

Effectiveness $88,812.60SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICTAppendix C: Cost Effectiveness AnalysisOctober 16, 2008Final Draft Staff Report with Appendicesfor Proposed Amendments to Rule 4306and Rule 4307 and Proposed New Rule 4320C - 14For Rule 4307, NOx limit compliance costs were based on installing and operating a low NOx burner system which meetsthe initial 30 ppmv limit. There could be situations where existing units could not be retrofitted because of controlequipment design limitations, so a cost effectiveness analysis for replacing existing units with new units is also included InTables C-15 and C-16. Because this is existing, off-the-shelf technology, the cost are relatively lowcompared to theULNB and SCR options. The average cost effectiveness of approximately $18,000/ton is considered reasonablecompared to recently adopted rules. As was indicated earlier, many of these units are operated by school districts so anextended compliance schedule is recommended to mitigate possible financial issues.Table C-15 Absolute Cost Effectiveness Calculationfor Units at 30 ppmv and operating at 75% CapacityFactorBoiler Size Capital Equip. Cost Installation Cost Total Capital Cost Total Annual CostNOx ReducedCEMMBtu/hr New Retrofit New Retrofit New Retrofit NewRetrofit Tons/Year New Retrofit2.0 $26,000 $18,000 $26,000 $18,000 $52,000 $36,000$9,076 $6,468 0.42 $21,610 $15,4004.0 $36,000 $26,000 $36,000 $26,000 $72,000 $52,000$12,336$9,076 0.82 $15,044 $11,0685.0 $40,000 $28,000 $40,000 $28,000 $80,000 $56,000$13,640$9,728 0.97 $14,062 $10,029Average CostEffectiveness$12,165.67Table C-16 Absolute Cost Effectiveness Calculationfor Units at 30 ppmv and operating at 50% CapacityFactorBoiler Size Capital Equip. Cost Installation Cost Total Capital Cost Total Annual CostNOx ReducedCEMMBtu/hr New Retrofit New Retrofit New Retrofit NewRetrofit Tons/Year New Retrofit2.0 $26,000 $18,000 $26,000 $18,000 $52,000 $36,000$9,076 $6,468 0.28 $32,414 $23,1004.0 $36,000 $26,000 $36,000 $26,000 $72,000 $52,000$12,336$9,076 0.55 $22,429 $16,5025.0 $40,000 $28,000 $40,000 $28,000 $80,000 $56,000$13,640$9,728 0.64 $21,313 $15,200Average CostEffectiveness$18,267.33Calculations assumed•An uncontrolled baseline of 0.1 lb-NOx/MMBtu (82 ppmv) and final emissions of 0.036 lb-NOx/MMBtu (30ppmv).The Annualized Cost is based on 10 years and a 10%annual interest rate.•Total capital cost includes the capital equipmentcost, installation cost and an annual $600 tune upcost.•Total Annual Cost = (Total Capital Cost * 0.163) +Annual Tune-Up Costs•The 75% capacity calculations are typical of oilfield units while the 50% capacity is more common ofschool units.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICTAppendix C: Cost Effectiveness AnalysisOctober 16, 2008Final Draft Staff Report with Appendicesfor Proposed Amendments to Rule 4306and Rule 4307 and Proposed New Rule 4320C - 15The estimated incremental cost effectiveness valuesfor units rated at 2.0 MMBtu/hr to 5.0 MMBtu/hr, inclusive,are shown in Table C-19. In the ICE analysis, theannual cost and emission reductions for units to meet a 30ppmv NOx limit, shown in Table C-17, are compared with the annual cost and emission reductions for units tomeet a 12 ppmv NOx limit, shown in Table C-18. TheICE analysis annual cost and emission reduction isthedifference between attaining the 30 ppmv limit anda more stringent limit of 12 ppmv NOx.Table C-17 30 ppmv Costs Used in Incremental CostEffectivenessBoiler Size Capital Equip. Cost Installation Cost Total Capital Cost Annual Cost NOx ReducedMMBtu/hr New Retrofit New Retrofit New Retrofit NewRetrofit Tons/Year2.0 $26,000 $18,000 $26,000 $18,000 $52,000 $36,000 $9,076 $6,468 0.554.0 $36,000 $26,000 $36,000 $26,000 $72,000 $52,000 $12,336 $9,076 1.095.0 $40,000 $28,000 $40,000 $28,000 $80,000 $56,000 $13,640 $9,728 1.28Table C-18 12 ppmv Costs Used in Incremental CostEffectivenessSizeCapital Equip. CostNewCapitalEquip. CostRetrofitInstallation CostNewTotal Capital CostNewTotal Annual CostNewTotalAnnualCostRetrofitNOxReductionsMMBtu/hrWaterTube Fire-TubeWater-TubetoFire-TubeWater-Tube Fire-TubeWater-Tube Fire-TubeWater-Tube Fire-TubeWater-Tubeto Fire-TubeTons/Year2.0 $65,000$100,000$55,000 $65,000$100,000$130,000$200,000$21,790 $33,200$9,565 0.744.0 $75,000$110,000$60,000 $75,000$110,000$150,000$220,000$25,050 $36,460$10,380 1.465.0 $80,000$120,000$65,000 $80,000$120,000$160,000$240,000$26,680 $39,720$11,195 1.73SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICTAppendix C: Cost Effectiveness AnalysisOctober 16, 2008Final Draft Staff Report with Appendicesfor Proposed Amendments to Rule 4306and Rule 4307 and Proposed New Rule 4320C - 16The Incremental Annual Cost assumes that the entireunit has to be replaced to achieve the 12 ppmv limit, whilethe retrofit cost assumes that it is possible to reach the lower limit by replacing the burners. Theincrementalreduction indicates the additional reduction whichcould be obtained by reducing the limit from 30 ppmv to the 9ppmv limit. As expected, units requiring the complete replacement to meet the limit have a significantly highercost-effectiveness than the units which can be retrofit with ULNB.Table C-19 Incremental Cost EffectivenessSizeIncremental Annual CostNewIncremental Annual CostRetrofitIncrementalReduction3IncrementalCostEffectivenessNewIncrementalCostEffectivenessRetrofit(MMBtu/hr) Fire-Tube Water-Tube to Fire-TubeTons/Year $/Ton $/Ton2.0 $24,124 $3,097 0.19 $126,968 $16,3004.0 $24,124 $1,304 0.37 $126,968 $3,5245.0 $26,080 $1,467 0.45 $57,956 $3,260Average Cost Effectiveness$103,964.00 $7,694.6712 ppmv and 30 ppmv costs used for incremental cost effectiveness are from separate vendorsIt is important to note that the requirement for new and replacement units to meet a 12 ppmv or 9 ppmvlimit wouldbe comparable to the retrofit option. Under this scenario, the operator is committed to installing anew unit so theadditional costs for meeting the lower limit is thecost of the new burners. If the rule had a specific compliancedeadline for the switch to the lower unit, cost effectiveness would be similar to the incremental costfor the newunits.