### IPM Model – Revisions to Cost and Performance for APC Technologies

Wet FGD Cost Development Methodology

FINAL
August 2010 Project 12301-007 Perrin Quarles Associates, Inc.

Prepared by

55 East Monroe Street • Chic ago, IL 60603 USA • 312-269-2000LEGAL NOTICE
This analysis ("Deliverable") was prepared by Sargent & Lundy, L.L.C. ("S&L"), expressly for the sole use of Perrin Quarles Associates, Inc. ("Client") in accordance with the agreement between S&L and Client. This Deliverable was prepared using the degree of skill and care ordinarily exercised by engineers practicing under similar circumstances. Client acknowledges: (1) S&L prepared this Deliverable subject to the particular scope limitations, budgetary and time constraints, and business objectives of the Client; (2) information and data provided by others may not have been independently verified by S&L; and (3) the information and data contained in this Deliverable are time sensitive and changes in the data, applicable codes, standards, and acceptable engineering practices may invalidate the findings of this Deliverable. Any use or reliance upon this Deliverable by third parties shall be at their sole risk.

This work was funded and reviewed by the U.S. Environmental Protection Agency under the supervision of William A. Stevens, Senior Advisor – Power Technologies. Additional input and review was provided by Dr. Jim Staudt, President of Andover Technology Partners.Project No. 12301-007 IPM Model – Revisions to Cost and Performance for APC Technologies August 20, 2010 

### Wet FGD Cost Development Methodology – Final

Page 1 

### Establishment of Cost Basis The 2004 to 2006 industry cost estimat es for wet FGD units from the " Analysis of MOG and Ladco's FGD and SCR Capacity and Cost Assump tions in the Evaluation of Proposed EGU 1 and EGU 2 Emission Controls " prepared for Midwest Ozone Group (MOG) were compared to the Sargent & Lundy LLC (S&L) in -house database. Agreement of the data was confirmed between the industry estimates and the S&L data.

The MOG and S&L cost data from 2004 to 2006 were converted to 2007 dollars based on the Chemical Engineering Plant Index (CEPI) data. Additional proprietary S& L in-house data from 2007 were included to confirm the index validity.

Cost data from the various sources showed simila r trends versus genera ting capacity. Escalation based on the CEPI was deemed acceptable. All th ree data sources were combined so as to provide a representative wet FGD cost basis.
The 2004 through 2007 data were escalated to 2009 to represent market conditions.
The least squares curve fit of the data was defined as a " typical " wet FGD retrofit for removal of 98% of the inlet sulfur. It should be noted that the lowest available SO 2 emission guarantees, from the original equipment manufactures of wet FGD systems, are 0.04 lb/MMBtu. The typical wet FGD retrofit was based on:

• Retrofit Difficulty =1 (Average retrofit difficulty) ;

• Gross Heat Rate = 9500 Btu/kWh;

• SO 2 Rate = 3.0 lb/MMBtu;

• Type of Coal = Bituminous;

• Project Execution = Multiple lump sum contracts; and

• Recommended SO 2 emission floor = 98% removal efficiency or 0.06 lb/MMBtu.
Units below 100 MW will typically not install a wet FGD system . Sulfur reductions for the small units would be accomplishe d by; treating smaller units at a single site with one wet FGD system, switching to a lower sulfur coal, repower ing with natural gas, dry sorbent injection, and/or a reduction in operating hours. Capital costs of approximately $750/kW may be used for units below 100 MW under the premis e that these will be combined.Project No. 12301-007 IPM Model – Revisions to Cost and Performance for APC Technologies August 20, 2010 

### Wet FGD Cost Development Methodology – Final

Page 2 

### Methodology Inputs Several input variables are required in order to predict future retrof it costs. The gross unit size in MW (equivalent acfm) and sulfur content of th e fuel are the major variables for the capital estimation. A retrofit factor that equates to difficulty in constr uction of the system must be defined. The costs herein could increase signific antly for congested sites. The gross unit heat rate will factor into the amount of flue gas generated and ultima tely the size of the absorber, reagent preparation, wast e handling, and balance of plant costs. The SO 2 rate will have the greatest influence on the reagent handling and wa ste handling facilities. The type of fuel (Bituminous, PRB, or Lignite) will influence the fl ue gas quantities as a result of the different typical heating values.

The evaluation includes a user se lected option for a wastewater treatment facility. The base capital cost includes minor physical and chemical wastewater treatment. However, in the future more extensive wastewater handling may be required. Although an option for wastewater treatment is provided, no logic has been developed to accommodate the additional wastewater treatment costs.
Outputs Total Project Costs (TPC)
First the base installed costs are calculated fo r each required module (BM_). The base installed costs include:

• All equipment;

• Installation;

• Buildings;

• Foundations;

• Electrical;

• Minor physical and chemical wast ewater treatment (WWT); and

• Average retrofit difficulty.

The modules are:

BMR = Base absorber island cost BMF = Base reagent preparation cost BMW = Base waste handling cost

BMB = Base balance of plan costs including: ID or booster fans, new wet chimney, piping, ductwork, minor WWT, etc. BMWW = Base wastewater treatment facility for future use.
BM = BMR + BMF + BMW + BMBProject No. 12301-007 IPM Model – Revisions to Cost and Performance for APC Technologies August 20, 2010 

### Wet FGD Cost Development Methodology – Final

Page 3 The total base installed cost (BM) is then increased by:

• Engineering and construction management costs at 10% of the BM cost;

• Labor adjustment for 6 x 10 hour shift prem ium, per diem, etc., at 10% of the BM cost; and

• Contractor profit and fees at 10% of the BM cost.
A capital, engineering, and construc tion cost subtotal (CECC) is established as the sum of the BM and the additional engin eering and construction fees.
Additional costs and financing expenditures for the project are computed based on the CECC. Financing and additional project costs include:

• Owner's home office costs (owner's engine ering, management, and procurement) at 5% of the CECC; and

• Allowance for Funds Used During Constr uction (AFUDC) at 10% of the CECC and owner's costs. The AFUDC is based on a three-year engineer ing and construction cycle.
The total project cost is base d on a multiple lump sum contract approach. Should a turnkey engineering procurement constructio n (EPC) contract be executed, th e total project cost could be 10 to 15% higher than what is currently estimated.
Escalation is not included in the estimate. The total project cost (TPC) is the sum of the CECC and the additional costs and fina ncing expenditures. Table 1 c ontains an example capital cost estimation.Project No. 12301-007IPM Model – Revisions toCost and Performance forAPC TechnologiesAugust 20, 2010Wet FGD Cost Development Methodology – FinalPage 4Table 1. Example Capital Cost Estimate for the Wet FGD System (Costs are all based on 2009 dollars)Project No. 12301-007 IPM Model – Revisions to Cost and Performance for APC Technologies August 20, 2010 

### Wet FGD Cost Development Methodology – Final

Page 5 Fixed O&M (FOM) The fixed operating and maintenance (O&M) cost is a function of the additional operations staff (FOMO), maintenance labor and materials (FOMM), and administrative labor (FOMA) associated with the wet FGD installation. A future fixed O&M cost category is included to account for an extensiv e wastewater treatment facility. At this time, the wastewater treatment fixed O&M (FOM WW) is not estimated and is included at zero dollars. The FOM is the sum of the FOMO, FOMM, FOMA, and FOMWW.
The following factors and assumptions underlie calculations of the FOM:

• All of the FOM costs were tabulated on a per kilowatt-year (kW yr) basis.

• In general, 12 additional operators are required for a 500 MW or smaller installation. Units larg er than 500 MW require a total of 16 additional operators. The FOMO was based on the number of additional operations staff required as a function of generating capacity.

• The fixed maintenance materials and labor is a direct function of the process capital cost (BM).

• The administrative labor is a f unction of the FOMO and FOMM.

Variable O&M (VOM) Variable O&M is a function of:

• Reagent use and unit costs;

• Waste production and un it disposal costs;

• Additional power required and unit power cost; and

• Makeup water required and unit water cost.Project No. 12301-007 IPM Model – Revisions to Cost and Performance for APC Technologies August 20, 2010 

### Wet FGD Cost Development Methodology – Final

Page 6 The following factors and assumptions underlie calculations of the VOM:

• All of the VOM costs were tabulated on a per megawatt-hour (MWh) basis.

• The reagent usage is a func tion of gross unit size, SO 2 feed rate, and removal efficiency. The estimated reagent usage was based on a sulfur removal efficiency of 98% and a calcium-to-sulf ur stoichiometric ratio of 1.03. The basis for the limestone purity was 90% CaCO 3 with the balance being inert material.

• The waste generation rate is directly proportional to the reagent usage and is estimated based on 10% moisture in the by-product.

• The additional power required includes increased fan power to account for the added wet FGD pressure drop. This re quirement is a function of gross unit size (actual gas flow rate) and sulfur rate.

• The makeup water rate is a function of gross unit size (actual gas flow rate) and sulfur feed rate.
Input options are provided for the user to adjust the variable O&M costs per unit. Average default values are included in the ba se estimate. The variable O&M costs per unit options are:

• Limestone cost in $/ton;

• Waste disposal costs in $/ton;

• Auxiliary power cost in $/kWh;

• Makeup water costs in $/1000 gallon; and

• Operating labor rate (incl uding all benefits) in $/hr.Project No. 12301-007 IPM Model – Revisions to Cost and Performance for APC Technologies August 20, 2010 

### Wet FGD Cost Development Methodology – Final

Page 7 The variables that contribut e to the overall VOM are:

VOMR = Variable O&M costs for limestone reagent VOMW = Variable O&M costs for waste disposal VOMP = Variable O&M costs for additional auxiliary power VOMM = Variable O&M costs for makeup water
VOMWW = Variable O&M costs for wastewater treatment
A future variable O&M cost category is incl uded to account for an extensive wastewater treatment facility. At this time, the wastewater treatment variable O&M (VOMWW) is not estimated and is incl uded at zero dollars.

The total VOM is the sum of VOMR, VOM W, VOMP, VOMM, and VOMWW. Table 2 contains an example O&M cost estimate, wh ile Table 3 is a complete capital and O&M cost estimate worksheet.Project No. 12301-007IPM Model – Revisions toCost and Performance forAPC TechnologiesAugust 20, 2010Wet FGD Cost Development Methodology – FinalPage 8Table 2. Example O&M Cost Estimate for the WetFGD System (Costs are all based on 2009 dollars)Project No. 12301-007IPM Model – Revisions toCost and Performance forAPC TechnologiesAugust 20, 2010Wet FGD Cost Development Methodology – FinalPage 9Table 3. Example Complete Cost Estimate for theWet FGD System (Costs are all based on 2009 dollars)Project No. 12301-007IPM Model – Revisions toCost and Performance forAPC TechnologiesAugust 20, 2010Wet FGD Cost Development Methodology – FinalPage 10