Appendix B. NPS Comments on Milton R. Young Station (MRYS) Unit #1 Tail-End 

Selective Catalytic Reduction (TESCR) Costs 

As discussed in Appendix B, recent industry literature suggests that most SCR retrofits 

can be accomplished at a Total Capital Investment (TCI) under $200/kW, with the 

average cost at about $185/kW. We have found that the OAQPS Control Cost Manual 

(Cost Manual) tends to produce much lower estimates for TCI. In order to allow one to 

“adjust” the Cost Manual approach to produce TCI estimates more comparable to the 

industry literature, we have added “extra1

 retrofit” factors to adjust both the Direct 

Capital Cost (DCC) and the Indirect Capital Cost. These extra retrofit factors also allow 

us to account for unusual retrofit situations. In this case, we assumed extra retrofit factors 

that yielded a TCI of $185/kW for the addition of SCR (with bypass, or $179/kW without 

bypass). Because this is consistent with the industry estimates, we believe this to be a 

reasonable estimate of TCI for the SCR portion of this project. Following is a detailed 

discussion of selected individual elements of the cost analysis. 

Baseline Emissions 

The EPA New Source Review Workshop Manual (NSR Manual) states that “...baseline 

emissions are essentially uncontrolled emissions, calculated using realistic upper 

boundary operating assumptions.” (emphasis added) The enclosed document “NPS 

Comments on Milton R. Young Station (MRYS) Baseline Emissions” describes our 

rationale for determining the following “upper boundary baseline emissions” for MRYS #1 

instead of the average values used by Minnkota and NDDH:

• Heat input = 3,200 mmBtu/hr stated in NDDH BART analyses. NDDH used 

2,728 in its BACT analysis which appears to represent a historic two-year average 

and not a historic annual upper bound. 

• Utilization = 100% from NDDH underlying assumptions in their BART analyses 

and resulting Title V permit. Instead, NDDH used 96.4% in its BACT analysis 

which appears to represent a historic two-year average and not a historic annual 

upper bound. 

• Uncontrolled NOx Concentration (lb/mmBtu) = 0.86 because this is consistent 

with the MRYS #1 Title V permit and MRYS Unit 1’s highest annual NOX mass 

emissions averaged 0.866 lb/mmBtu in 1995 and NDDH used 0.86 lb/mmBtu in 

its BART analysis. NDDH used 0.840 lb/mmBtu in its BACT analysis which 

appears to represent a historic two-year average and not a historic annual upper 

bound. 

 

1

 The Cost Manual approach already includes an estimate for additional retrofit costs. 
Given Information, Assumptions, and Direct Capital Costs 

We applied the Cost Manual approach to MRYS #1 to estimate the cost of adding SCR

but did not include any estimates for the associated reheat systems because that 

information was not made available to us.2

 Following is a discussion and comparison 

of specific combustion control (Advanced Separated Over-Fire Air = ASOFA) plus 

stand-alone tail-end SCR (TESCR) cost items that warrant explanation: 

• ASOFA Annualized Capital Cost = $403,719 based upon $4,277,000 DCC 

amortized over a 20-year life @ 7% interest (Cost Manual). 

• ASOFA Annual O&M Cost (not levelized) = $65,776 calculated from company 

BACT analysis minus the $1,631,000 lost generation cost3 and adjusted to 

100% availability. 

• ASOFA Total Annual Cost = $469,494. NDDH estimated $2,489,000/yr. The 

differences are primarily due to the unsupported cost of lost generation and the 

application of an improper levelization factor. 

• Fuel Sulfur Content was held at the pre-scrubbed value but would effectively 

decrease for a TESCR and yield a smaller SCR. 

• 29% Ammonia Solution Cost ($/lb) was taken from the BART analyses 

conducted by PacifiCorp in Wyoming because Minnkota chose urea as the SCR 

reagent, primarily for safety reasons. However, according to the Institute of Clean 

Air Companies,4

 “With the proper controls, ammonia use is safe and routine.” 

• Catalyst Cost ($/m3) = $3,000 was taken from the BART analyses conducted by 

PacifiCorp in Wyoming because the Minnkota/Burns & McDonnell estimate of 

$7,500/m3 was much higher than the $3,000 - $6,000/m3 we typically see from 

other consultants. 

• Operating Life of Catalyst (hours) = 16,000 which appears to be the consensus 

estimate from the catalyst vendors. 

• Natural gas unit cost ($/mcf) = $5 based upon current prices according to EIA. 

• Natural gas for reheat (mcf) = 460,090 mcf (from Minnkota) and does not include 

NG to vaporize urea because ammonia is used in this scenario. 

 

2

 We are requesting information that will allow us to evaluate the costs of each major component and will 

then be able to apply our SCR-only cost estimates to the SCR-specific costs included in the information we 

are requesting. 

3

 Minnkota estimated that retrofitting of ASOFA would result in 181 hr/yr of lost operating time due to 

maintenance of ASOFA, and that Unit 2 operation would drop to 8,048 hr/yr as a result. Minnkota installed 

ASOFA on Unit #2 in 2007 and availability increased from the pre-ASOFA 89% (7,792 hr/yr) average to 

the post-ASOFA 95% (8,256hr/yr).

4

 May 2009 Institute of Clean Air Companies white paper titled “Selective Catalytic Reduction (SCR) 

Control of NOx Emissions from Fossil Fuel-Fired Electric Power Plants”Can Ammonia Be Handled Safely? 

Yes. Concern over the handling of ammonia was initially raised as a problem with SCR technology 

applications due to the transportation and storage of a hazardous gas under pressure. However, large 

quantities of ammonia already are used for a variety of applications with an excellent overall safety record. 

(In 2006, 17 billion pounds of ammonia were produced in the U.S.) These applications include the 

manufacture of fertilizers and a variety of other chemicals, as well as refrigeration. With the proper 

controls, ammonia use is safe and routine.

2
• Volcatalyst = 634 m3

 for one reactor. The Cost Manual approach results in the 

reactor having four layers of catalyst plus one spare layer. Minnkota estimated 

three layers plus one spare with catalyst volume at 633 m3. 

• Direct Capital Cost (DCC), A = $14 million before adjustments and $29 

million with adjustments. Minnkota estimates DCC = $127 million for SCR 

plus ASOFA and the associated reheat equipment. Subtracting the $4 million 

DCC cost of ASOFA results in DCC = $123 million for SCR plus the 

associated reheat equipment. We would like to see the separate cost estimates 

developed by Minnkota for the SCR as well as the reheat system so that we could 

directly compare our SCR cost estimate. 

Total Capital Investment 

The next portion of our cost analysis will assume that Minnkota has properly estimated 

its Direct Capital Costs for SCR plus the associated reheat equipment. We will also 

assume that the ratios of Indirect Capital Costs (ICC) to Direct Capital Costs (DCC) used 

by the Cost Manual for stand-alone SCR also apply to the complete SCR plus reheat 

“package” evaluated by Minnkota.5

 Our SCR-only costs are estimated on the “ICC” tab 

of the associated Excel workbook. Our evaluation of the Minnkota SCR+reheat system 

costs are shown on the “ICC (2)” tab. 

• Total Indirect Installation Costs (TIIC), B = $9 million; this is 30% of DCC 

(because of our extra retrofit factor—instead, the Cost Manual estimates TIIC = 

20% of DCC.) Minnkota estimates TIIC = $45 million for SCR plus associated 

equipment; this is 37% of Minnkota’s $123 million DCC and appears excessive 

when compared to the 20% ratio used by the Cost Manual. A more appropriate 

value for TIIC would be $25 million. 

• Project Contingency, C = $9 million; this is 29% of (DCC+TIIC). (The Cost 

manual estimates TIIC = 18% of (DCC+TIIC).) Minnkota estimates Project 

Contingency = $20 million for SCR plus associated equipment; this is 16% of 

(DCC = $127 million + adjusted TIIC = 25 million). A more appropriate value 

for Project Contingency would be $22 million.

• Total Plant Cost (TPC), D = $46 million = our estimate is 159% of the DCC upon 

which it is based. However, the Cost Manual ratio (without extra retrofit factors) 

is TPC = 138% of DCC. Minnkota estimates TPC = $188 million for SCR plus 

associated equipment; this is 153% of DCC and appears excessive. A more 

appropriate value for TPC would be $170 million.

• Allowance for Funds During Construction (AFDC), E = $0. Minnkota estimates 

AFDC = $27 million for SCR plus associated equipment; this is not allowed 

by the Cost Manual. 

• Total Capital Investment (TCI = D+G+H) = $47 million for SCR; this is 163% of 

the DCC upon which it is based. However, the Cost Manual ratio (without extra 

retrofit factors) is TPC = 146% of DCC. Minnkota estimates TCI = $290 

million for SCR plus reheat equipment; this is 236% of DCC. In addition to 

overestimates and the invalid $27 million for AFDC noted above, Minnkota has 

 

5

 Minnkota appears to have used a similar approach. 

3
included $42 million for “Escalation” and $26 million for “Owner’s Costs” 

which are not allowed by the Cost Manual. Adjusting for these unsupported 

costs and applying the Cost Manual 146% ratio to the $123 million DCC, the 

resulting TCI for TESCR on MRYS #1 becomes $180 million ($701/kW). 

Annual Costs & Cost-effectiveness 

We believe that the Cost Manual approach is directly applicable and appropriate to 

estimate annual costs of the stand-alone SCR (“Ann Cost” tab) and of the entire 

Minnkota SCR+reheat system (“Ann Cost (2) tab) using the corrected TCI derived above. 

The following discussion describes the cost estimates in the “Ann Cost (2)” tab. 

• Annual Maintenance Cost = 1.5% of TCI (= $47 million). Minnkota has 

incorrectly assumed 3% of TCI to estimate $7 million. If we assume that Annual 

Maintenance Cost = 1.5% of the $180 million TCI for TESCR derived above, 

then we estimate $3 million. 

• Annual Reagent Cost = $1 million for ammonia. Minnkota estimates $3 million 

for urea. 

• Annual Electricity Cost = $0.5 million. Minnkota estimates $6 million, 

primarily due to “lost generation.” 

• Annual Catalyst Cost = $1 million. Minnkota estimates $1 million. 

• Annual natural gas Cost = $2 million. Minnkota estimates $4 million, primarily 

due to use of NG to vaporize urea and a higher unit gas price. 

• Direct Annual Cost (DAC) = $7 million and is the sum of the individual annual 

costs using our estimates modified to reflect a TCI of $180 million. (See the 

“Annual Cost (2)” tab. Minnkota estimated $20 million. 

• Indirect Annual Cost = $17 million based a TCI of $180 million. 

• Total Annual Cost (TAC) = $25 million for ASOFA+SCR plus reheat 

equipment based a TCI of $180 million (for ASOFA+SCR plus reheat 

equipment); Minnkota estimates TAC = $44 million and includes an improper 

“levlization” factor to escalate cost.

• SCR Cost-effectiveness to remove 6,503 tpy of NOX is = $3,800/ton. 

• Total Cost-effectiveness to remove 11,367 tpy of NOX is = $2,200/ton. NDDH 

estimates $4,615/ton

Results & Conclusions 

Based upon the approach recommended by the Cost Manual, our estimate for the cost of 

adding only the ASOFA and SCR components of a Tail-End SCR (TESCR) system to 

MRYS #1 is a Total Capital Investment of $52 million ($201/kW) and a Total Annual 

Cost of $8 million. Using upper bound emission estimates, as recommended by the NSR 

Manual, combined with NDDH estimates of controlled emissions, we estimate that 

ASOFA + TESCR could reduce NOX emissions by 11,367 tpy (6,503 tpy by the SCR 

alone). The Average Cost-Effectiveness for the ASOFA + TESCR system would be 

$700/ton and addition of the TESCR has a cost-effectiveness of $1,200/ton. 

4
5

Because some method must be applied to reheat the gases leaving the wet scrubber, 

additional equipment would be required and additional costs would be incurred. It was 

not possible from the information provided to determine how much this additional 

equipment cost. Therefore, we compared the estimates presented by Minnkota to the 

ratios used by the Cost Manual to relate capital and some operating costs to Total Direct 

Capital Cost. Minnkota incorrectly included major costs for “Allowance for Funds 

During Construction,” “Escalation” and “Owner’s Costs” which are not allowed by the 

Cost Manual. Adjusting for these unsupported costs, the resulting Total Capital 

Investment for TESCR on MRYS #1 becomes $180 million ($701/kW) versus the 

Minnkota estimate of $295 million. 

The Cost Manual can be applied for estimation of annual operating costs and we found 

several differences between the Cost Manual approach and the Minnkota estimates. Our 

corrected Direct Annual Cost estimate is $7 million versus the Minnkota estimate of $20 

million; the major differences are costs for “Lost Generation” and “Maintenance.” Our 

estimated Total Annual Cost (TAC) is $25 million. Minnkota estimates TAC = $44 

million. Our estimate of the Average Cost-Effectiveness for the complete ASOFA + 

TESCR + reheat system would be $2,200/ton and addition of the TESCR has a costeffectiveness of $3,800/ton.