### IPM Model – Revisions to Cost a nd Performance for APC Technologies

SNCR Cost Development Methodology

FINAL

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

Prepared by

55 East Monroe Street • Ch icago, 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 

### SNCR Cost Development Methodology – Final

1 

### Establishment of Cost Basis The formulation of the SNCR cost estimating model is based upon a proprietary Sargent & Lundy LLC (S&L) in-house data base of recent (2009) quotes for both lump sum contracts and EPC. The S&L data was analyzed in detail regarding project specifics such as coal type, boiler type, and NOx reduction efficiency. The S&L in-house data includes projects that involved cyclone boilers, T-fire d and wall fired systems with multiple levels of injection. The cyclone boile r costs include rich reagent in jection (RRI). The data was the basis for the cost estimate formulations developed.

The S&L data was fitted with a least squares curve to establish the trend in $/kW as a function of gross MW. The EPA/IPM SNCR co st model parameters were adjusted to account for market changes and escalation, and then the model output was compared to the S&L data. The EPA/IPM model output fo llowed a $/kW correlation very similar to the S&L in-house data, once the adjust ments were made to the model.

The rapid rise in project cost s at the lower end of the MW range is due primarily to economies of scale. Additionally, older power plants in the 50 MW range tend to have plant sites that are more compact and ther efore difficult to accommodate the reagent storage areas and piping, injection mixing/dilu tion equipment and construction activities. The smaller power plants also tend to have older control systems which may require upgrades to accommodate the new SNCR control system.

The S&L data includes SNCR projects with variou s types of boilers, coals, sulfur levels and retrofit complexities. The data represents an average of boiler effects, such as cyclone, wall fired or CFB. The least squa res curve fits were based upon the following assumptions:

• Retrofit Factor =1

• Gross Heat Rate = 10,000

• SO 2 Rate = < 3 lb/MMBtu

• Type of Coal = PRB

• Project Execution = Multiple lump sum contracts



### Methodology Inputs To predict future retrofit costs several input variables are required. The unit size in MW and NOx levels are the major variables for the capital cost estimation followed by the type of fuel (high sulfur Bituminous). The fu el type affects the ai r pre-heater costs if sulfuric acid or ammonium bisu lfate deposition poses a problem. In general, if the level of SO 2 is above 3 lb/MMBtu, it is assumed that air heater modificati ons will be required. The unit heat rate factors into the amount of NOx generated and ultimately the size of theProject No. 12301-007 IPM Model – Revisions to Cost and Performance for APC Technologies August 20, 2010 

### SNCR Cost Development Methodology – Final

2 SNCR reagent preparation system. A retrofit factor that equates to difficulty in construction of the system must be defined. The NO x rate and removal efficiency will impact the amount of urea required and si ze of the reagent handling equipment.

The inputs that impact the variable O&M co sts are based primarily on the plant capacity factor and the removal efficiency. The NOx removal efficiency specifically affects the reagent and dilution water costs.

Outputs Total Project Costs (TPC)
The base module costs are calculated for each required module (BM). The base module costs include:

• Equipment;

• Installation;

• Buildings;

• Foundations;

• Electrical; and

• Retrofit factor.

The base module costs do not include:

• Engineering and Construction Management

• Owner's cost; and

• AFUDC.

The base modules are:

BMS = Base module SNCR cost. BMA = Base module air pre-heater cost.

BMB = Base module balance of plant costs including: piping, electrical, site upgrades, etc...

BM = BMS + BMA + BMB

The total base module cost (BM) is increased by:

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

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

• Contractor profit and fees at 10% of the BM cost.Project No. 12301-007 IPM Model – Revisions to Cost and Performance for APC Technologies August 20, 2010 

### SNCR Cost Development Methodology – Final

3 A capital, engineering, and construction cost subt otal (CECC) is established as the sum of the BM and the additional engi neering and construction fees.

Additional expenditures fo r the project are computed based on the CECC. The additional project costs include:

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

The total project cost is ba sed on a multiple lump sum co ntract approach. Should a turnkey engineering procurement constructi on (EPC) contract be executed, the 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 Owner’s home office costs. An example of the capital cost estimation is included in Table 1.

Fixed O&M (FOM) The fixed operating and maintenance cost is a function of the additi onal operations staff (FOMO) and maintenance labor and materi als (FOMM) associated with the SNCR installation. The FOM is the su m of the FOMO and the FOMM.

The following factors and assumptions underlie calculations of the FOM:

• In general, 1 additional oper ator is required for all inst allations. The FOMO is based on the number of additional operations staff required; and

• The fixed costs for maintenance materials and labor are a direct function of the base module cost (BM) at a retrofit factor of 1.0.

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

• Reagent consumption;

• Dilution water consumption.

All of the VOM costs must be adju sted for the plant capacity factor.

The reagent consumption rate is a function of unit size, NO x feed rate and removal efficiency. A utilization factor of 15% is used for units with an inlet NOx of 0.3 lb/MMBtu or lower and 25% for units with an inlet NOx greater than 0.3 lb/MMBtu. For CFB boilers a utilization factor of 25% is used. A reagent cost of $620 per ton of 100%Project No. 12301-007 IPM Model – Revisions to Cost and Performance for APC Technologies August 20, 2010 

### SNCR Cost Development Methodology – Final

4 urea is used in the model. The dilution water usage is based upon reagent consumption
rate.

The auxiliary power required for the SNCR system is not included in the VOM. The major systems that impact the power re quirements are compressed air or blower requirements for the urea injection sy stem and the reagent supply system.

The variables that contribut e to the overall VOM are:

VOMR = Variable O&M costs for urea reagent.

VOMM = Variable O&M costs for dilution water.

VOM = VOMR + VOMM.Project No. 12301-007IPM Model – Revisions toCost and Performance forAPC TechnologiesAugust 20, 2010SNCR Cost Development Methodology – Final5Table 1. Example of the Capital Cost Estimate Work Sheet (for T-fired boilers).Project No. 12301-007IPM Model – Revisions toCost and Performance forAPC TechnologiesAugust 20, 2010SNCR Cost Development Methodology – Final6Table 2. Example of the Fixed and Variable O&M Cost Estimate Work Sheet (for T-fired boilers).Project No. 12301-007IPM Model – Revisions toCost and Performance forAPC TechnologiesAugust 20, 2010SNCR Cost Development Methodology – Final7Table 3. Example of the Capital CostEstimate Work Sheet (for CFB boilers).Project No. 12301-007IPM Model – Revisions toCost and Performance forAPC TechnologiesAugust 20, 2010SNCR Cost Development Methodology – Final8Table 4. Example of the Fixed and Variable O&M Cost Estimate Work Sheet (for CFB boilers).