Appendix B. SCR Cost Information

According to an article in the June 2009 “Power” magazine: 1

“One more current data set is the historic cap ital costs reported by AEP averaged over several years and dozens of completed projects. For example, AEP reports that their historic average capital costs for SCR systems are $162/kW for 85% to 93% NO X removal...” “...historical data finds the installed cost of an SCR system of the 700MW-class as approximately $125/kW over 22 units with a maximum reported cost of $221/kW in 2004 dollars. This data was reported prior to the dramatic increase in commodity prices of 14% per year average experienced from 2004 to 2006 (from the FGD su rvey results). Applying those annual increases to the 2004 estimates for three year s (from the date of the survey to the end of 2007) produces an average SCR system installed cost of $185/kW...” “Overall, costs were reported to be in the $100 to $200/kW range for the majo rity of the systems, with only three reported inst allations exceeding $200/kW.”

Five industry studies conducted between 2002 and 2007 have reported the installed unit capital cost of SCRs, or the costs actually incurred by owners, expressed in dollars per kilowatt.

The first study evaluated the installed costs of more than 20 SCR retrofits from 1999 to 2001. The installed capital cost ranged fro m $106 to $213/kW, convert ed to 2007 dollars. 2 Costs are escalated through using the Chemical Engi neering Plant Cost Index ("CEPCI"). The second survey of 40 installations at 24 st ations reported a cost range of $76 to $242/kW,

converted to 2007 dollars. 3

The third study, by the Electric Utility Cost Group, surveyed 72 units totaling 41 GW, or 39% of installed SCR systems in the U.S. This st udy reported a cost rang e of $118/kW to $261/kW,

converted to 2007 dollars. 4

A fourth study, presented in a course at PowerGen 2005, reported an upper bound range of $180/kW to $202/kW, converted to 2007 dollars. 5

1 June 13, 2009 “Power” magazine article “Air Quality Compliance: Latest Costs for SO2 and NOx Removal (effective coal clean-up has a higher–but known–price tag)” by Robert Peltier. http://www.masterresource.org/2009/06/air-quality-compliance- latest-costs-for-so2-and-nox-removal-effective-coalclean-up-has-a-higher-but-known-price-tag/

2 Bill Hoskins, Uniqueness of SCR Retrofits Translates in to Broad Cost Variations, Power Engineering, May 2003. Ex. 2. The reported range of $80 to $160/kW $123 - $246/kW was converted to 2008 dollars ($116 - $233/kW) using the ratio of CEPCI in 2008 to 2002: 575.4/395.6.

3 J. Edward Cichanowicz, Why are SCR Costs Still Rising? , Power, April 2004, Ex. 3; Jerry Burkett, Readers Talk Back, Power, August 2004, Ex. 4. The reported range of $56/kW - $185/kW was converted to 2008 dollars ($83 - $265/kw)using the ratio of CEPCI for 2008 to 1999 (575.4/.390.6) for lower end of the range and 2008 to 2003 (575.4/401.7) for upper end of range, based on Figure 3.

4 M. Marano, Estimating SCR Installation Costs, Power, January/February 2006. Ex. 5. The reported range of $100 - $221/kW was converted to 2008 dollars ($130 - $286/kW) using the ratio of CEPCI for 2008 to 2004: 575.4/444,2. http://findarticles.com/p/articles/mi_qa5392/i s_200602/ai_n21409717/print?tag=artBody;col1

5 PowerGen 2005, Selective Catalytic Reduction: From Planning to Operation, Competitive Power College, by Babcock Power, Inc. and LG&E Energy, December 2005, Ex. 6. The reported range of $160 - $180/kW) was converted to 2008 dollars ($197 - $221/kW) using the ratio of CEPCI for 2008 to 2005 (575.4/468.2).2 A fifth summary study, focused on recent applicati ons that become operational in 2006 or were scheduled to start up in 2007 or 2008, reported costs in excess of $200/kW on a routine basis, with the highest application slat ed for startup in 2009 at $300/kW. 6

Thus, the overall range for these industry stud ies is $50/kW to $300/kW. The upper end of this range is for highly complex retrofits with severe space constraints, such as Belews Creek, reported to cost $265/kW, 7 or Cinergy's Gibson Units 2-4. Gibson, a highly complex, spaceconstrained retrofit in which the SCR was built 230 feet above the power station using the largest crane in the world, 8 only cost $251/kW in 2007 dollars. 9

6 J. Edward Cichanowicz, Current Capital Cost and Cost-Effectiveness of Power Plant Emissions Control Technologies, June 2007, pp. 28-29, Figure 7-1 (Ex. 1).

7 Steve Blankinship, SCR = Supremely Complex Retrofit, Power Engin eering, November 2002, Ex. 7. The unit cost: ($325,000,000/ 1,120,000 kW)(608.8/395.6) = $290/kW. http://pepei.pennnet.com/display_article /162367/6/ARTCL/none/none /1/SCR-=-SupremelyComplex-Retrofit/

8 Standing on the Shoulder of Giants, Modern Power Systems, July 2002, Ex. 8.

9 McIlvaine, NOX Market Update, August 2004, Ex. 9. SCR was retrofit on Gibson Units 2-4 in 2002 and 2003 at $179/kW. Assuming 2002 dollars, this escalates to ($179/kW)(608.8/395.6) = $275.5/kW. http://www.mcilvainecompany.com/sample updates/NoxMarketUpdateSample.htm