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OAR Box 1781 

Prepped by Ollie Stewart 

Document Number: 

89) IV-C-3 

Docket Number: 

A-90-37 

Printed 10/29/2008 10:46:22 AM Sheet 89 of 142 
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Date: 12/7/98 

To: Air and Radiation Docket # A-90-37 U/-C- 3 

From: David Solomon, EPA's Office of Air Quality Planning and StandaMay(MD-12 andarQay(] ) 

Re: Materials for Submission to the Docket. 

The attached material was prepared by EPA and on 12/4/98 transmitted to Henry Nickel 

of the Utility Air Regulatory Group and Charles Goodman of the Southern Company in response 

to a 12/24/98 meeting with Mr. Goodman, Mr. Nickel and EPA staff in which physical and 

operational changes to existing utility units were discussed. 

cc: Pam Smith (MD-12) 
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Types of Energy Efficiency Improvements to 

Generation Units Using Fossil Fuels that Could Lead to Environmental Benefits 

Many types of energy efficiency improvements should be possible without triggering the 

NSR process. Under the present NSR rules, if actual emissions do not increase significantly as a 

result of a physical or operational change to an electric utility steam generating unit (such as a 

change undertaken to increase energy efficiency), NSR is not triggered. Although EPA has 

proposed revisions to the NSR rules, this essential fact will not change under these proposed 

amendments. Specifically, under the proposed rules, if a particular physical or operational 

change will not result in a significant increase in actual emissions over a baseline of the source's 

highest operation in the last 10 years, and the source accepts a temporary permit limit on its 

allowable emissions to ensure such an increase will not occur, NSR will not apply. 

Where a source increase its electric generation because of the energy efficiency 

improvements, such increased utilization may cause actual emissions to exceed baseline levels 

by more than a significant amount. If this situation occurs, EPA's rules would subject the units 

to the NSR process. Some power companies have claimed that when changes to their electric 

generation units would trigger NSR, some sources will not make the improvements. They have 

asked EPA to consider whether it could take into account the possibility or likelihood that these 

energy efficiency improvements will reduce pollution per unit production (i.e., per MWe output) 

or lead to the displacement of power generation by less efficient units that emit higher levels of 

pollution. 

In reviewing this situation to see what could be done under the CAA, EPA has 

examined several situations described below which have been represented to us as the type 

of changes which promote energy efficiency. To more fully address the issue, however, the 

EPA needs to understand how the Agency and States could be assured by power 

companies that electric generation units that become more efficient by undertaking these 

types of changes and run more are actually displacing the generation of units with higher 

emission levels. In particular, in regard to the type of changes listed below, the Agency 

presently lacks information about, and would appreciate feedback from the utility 

industry on: (1) how a company can guarantee that more efficient units will displace less 

efficient units with higher emissions; (2) how emission decreases elsewhere in the system 

could be quantified and enforced; (3) the amount of emission reductions or increases that 

will result (of both criteria and climate-related pollutants); and (4) the degree to which 

NSR presently acts as a barrier to efficiency improvements. 

• Converting to Combined Heat and Power (CHP) - Converting traditional gas 

or steam turbines used for the generation of electricity to combined heat and 

power systems allows for the conversion of wasted heat to useful energy in the 

form of process steam. As a result, overall efficiency of fuel use can increase 

from around 30% to as much as 80 to 85%. CHP is particularly applicable in 

distributed energy situations where electricity is generated at or near the user and 

there is a nearby or onsite demand for process steam. In the case where a CHP 

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project replaces an existing steam boiler, a preliminary analysis on the part of the 

Agency indicates that, in general, sufficient reductions should occur at the existing 

emissions unit as to provide a net reduction in emissions overall at the facility. 

Where the new CHP unit will be part of the existing facility, the facility should be 

able to avoid major NSR review by using the reductions at the existing unit to 

"net" the CHP project out of NSR review. 

Increasing the Heat Rate of Unit - Over time electric generation units have their 

efficiency decline (heat rate increase) due to wear-and-tear on the boiler and 

auxiliary equipment. Until the current shift to competition, there has been no 

strong economic value in maintaining efficiency (fuel costs were commonly 

passed through to consumers). However, with the advent of competition, there 

are analysts that believe that generation units will be operated and maintained to 

prevent deterioration of heat rates and in some cases to lower them further 

(increase efficiency.) This type of improvement could occur at all types of units 

using fossil fuels - coal, gas, and oil-fired steam units, turbines, and combinedcycle units. 

Increasing Capacity Availability - Over the last 20 years, the industry has been 

improving the availability of units for generating electricity through the year — 

reducing the forced outages (unexpected breakdowns) and planned outages (time 

taken for "routine" repairs). The emphasis has been on improving those units that 

are the largest and/or most efficient when they operate. Reducing forced outages 

can be done through better maintenance, replacing components with more durable 

parts, and other actions. Shortening planned outages has been dealt with by some 

companies lengthening the periods between maintenance and increasing what they 

do during that time. Having the better (more efficient) units more available for 

power generation provides greater fleet-wide energy efficiency in some areas, in 

other areas this may not occur. A coal-fired unit may displace a gas-fired unit in 

the dispatch order, because it is cheaper to operate, not because it uses less energy 

(and at the same energy efficiency, a coal-fired unit will produce more carbon 

emissions). 

Increasing Total Capacity - Recently, several power plants have figured out 

ways to increase the overall capacity of their units - the amount of power that they 

can produce during operation. This practice has taken on the nickname of 

"capacity creep," where relatively small changes in equipment at generation units 

increase capacity. Again, like the example on capacity availability above, the 

power industry would be most inclined to do this where it would have the greatest 

pay-off- the bigger and more efficient units. The potential for increased energy 

efficiency is the same as in the above example. 

Improving Efficiency to Avoid an Energy Penalty - Some types of pollution 

control, such as scrubbers, use significant amount of energy. Some power 

companies have indicated that while they are conducting pollution control 

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retrofits, they would like to make other adjustments to make the units that they are 

retrofitting whole - able to produce the same net level of electricity for the same 

amount of fuel. The improvements in efficiency are initiated due to the 

installation of pollution control equipment and may not have been otherwise 

undertaken. Some power companies have indicated that if States require controls 

on their units due to the NOx SIP Call, they would like to make this type of 

improvement without triggering NSR. The trigger can occur because of higher 

SOx and PM emissions resulting at the unit. 

H