p. 1



# OAR Box 1828 Prepped by Ollie Stewart



## Document

Number: 

# 313 ) IV-B-1 7
Docket Number: 

# A-83-2 7

Printed 11/12/2008 11:12:59 AM Sheet 313 of 325P. 2

. . ^ 

# A-83-2 7

IV-B-1 7
MEMORANDU

M

DATE : Apri l 15 , 198 7 TO : FredPorte r an dWal t Stevenson , EPA/SD B FROM : Edwar dAu l an dSterlin g Gray , Radia nCorporatio n SUBJECT : Impac t o f New Fue l Price s o

nth e Cost s an

dCos t Effectiveness o f SO - Emissio nContro l o f Cogeneratio nSystem s

1. 0 INTRODUCTION

InAugus t 1986 , fue l pric e projection s fo r coal , oil , an dnatura l ga s 1- 3 supplie dt o industria l market s wer e revised . Thi s memo assesse s th e impact s o f thes e ne w fue l price s o

nth e previou s analyse s o f th e cos t an d cos t effectivenes s o f reducin g S0 ~ emission s fro m cogeneratio nsteam generatin g unit s (I.e. , boilers) . Th e previou s analyse s wer e presente din th e repor t A

nAnalysi s o f th e Cost s an dCos t Effectiveness o f Allowin g S0 ? 

### Emissio nCredit s fo r Cogeneratio nSystem s (Marc h1985) . Th e previou s analysi s wa s base donfue l price s projecte di n198 4 (a s discusse di nReferenc e 4) . Th e revise dfue l pric e projection s (se e Reference s 1 , 2 , an

d3 ) contai ntw

o pric e scenarios : a highoi l pric e scenari o an

da low oi l pric e scenario . Th e lo w oi l pric e scenari o wa s utilize dt o asses s th e impact s o f ne w fue l prices . Inadditio nt o lo

w oi l prices , th e ne w analysi s 1 s als o base don non-carriage , rigi dnatura l ga s prices , a s describe di nReferenc e 3 . Non-carriag e price s wer e selecte dsinc e natura l ga s wa s utilize d1nth e mode l boile r analysi s a s th e backupfue l 1nth e even t o f flu e ga s desulfurizatio n(FGD ) system malfunction . Non-carriag e price s ar e representativ e o f natura l ga s delivere dona "non-1nterrupt1le " contrac t basis , a s woul db e require di nthi s situation . A rigi dregulator y environmen t wa s assume dsinc e thi s represent s th e curren t status-quo . Inadditio nt o thes e fue l pric e changes , mino r modification s wer e mad e t o th e methodolog y

fo r calculatin g capita l an dnon-fue l operatin g an d

Progres s Center/320 0 E

. Chape l Hil l Rd./Nelso n Hwy./P.O

. Bo x13000/Researc h Triangl e Park

. N.C

. 27709/(919)541-910 0P. 3



## maintenanc e cost s fo r cogeneratio nsystems . Thes e modification s ar e discusse dinful l inAppendi xA . Thes e modification s hav e a negligibl e effect , however , onthi s assessmen t o f new fue l pric e Impacts .
2. 0 RESULT S O F ANALYSE S
Th e result s o f th e analyse s o f new fue l pric e Impact s ar e summarize din Table s 1 through6 . Thes e result s canbe compare ddirectl y wit hth e correspondin g table s inth e previou s analysis . A noveral l compariso no f th e annualize dcos t result s fro m th e previou s an drevise danalyse s show s tha t al l cost s hav e decrease dsomewhat , eve n thos e associate dwit hstandard s requirin g a percen t reduction . Th e reaso n fo r thi s decreas e 1 s tha t almos t al l levelize dfue l price s hav e decline d significantl y

betwee nth e 198 4 an

d198 6 projections . Th e effec t o f thi s decreas e ha s bee nsufficien t t o overcome th e otherwis e sligh t Increas e 1n cost s du e t o updatin g th e time basi s o f th e cos t estimates .
2. 1 LO W SULFURFUE L STANDARD S
Th e Incrementa l cost s o f standard s base donlow sulfu r fuel s relativ e t o th e regulator y

baselin e hav e decline dslightly . Th e reaso nfo r thi s chang e i s tha t th e sulfu r premium s fo r low sulfu r fuel s hav e decline d betwee nth e 198 4 an

d198 6 projections . Th e differenc e 1nannualize dcost s betwee nth e baselin e an da lo w sulfu r fue l standar d1 s merel y th e sulfu r premiu m (I.e. , th e differenc e inpric e betwee nlo w sulfu r an

dhighsulfu r fuels) . Sinc e fue l sulfu r premium s hav e declined , th e Incrementa l cost s o f lo w sulfu r fue l standard s hav e als o declined . A s a resul t o f thi s declin e inIncrementa l costs , th e cos t effectivenes s o f emissio ncontro l fo r standard s base do nlow sulfu r fuel s ha s als o decline dslightly . Dependin g onth e specifi c case s examined , th e cos t effectivenes s o f standard s base donfiring lo w sulfu r fuel s fo r cogeneratio nunit s relativ e t o th e baselin e 1 s generall y 1nth e rang e o f $10 0 t o 500/Mg ($10 0 t o 400/ton ) using th e new fue l pric e projections ; inTABLE 1
. COS TAM D COS TEFFECTIVENESS O

F S0 2 CONTRO

L FO R CONVENTIONA

L AN D COGENERATION COAL-FIRE D STEA M GEICRATIN G UNIT S I N REGIO N V * (Augus t 198 6 Pric e Projections ; Jun e 198 5 f )

Fue l Type . Averag e Cos t Stea a Generatin g Unit/Regulatory Alternativ e Annualize d Annua l n g SO./ J Costs
. Eaissions
. Effectiveness / (l b S0 2 /e1l1lo n Btu ) (tl.OOO/yr ) Mg/y r(tons/yr ) S/Mg (S/ton ) Increaenta l Cost Effectiveness, ' S/Mg (S/ton ) Conventiona l Unit
. 44 M M (15 0 alllio n Btu/hr ) RegulatoryBaseline , 1.07 6 ng/ J (2. 5 lb/alllio n Btu ) Lo wSulfu rCoal
. 51 6 ng/ J (1. 2 lb/al l Ho n Btu ) Percen t Reductio n (9 0 Percent ) 90 4 (2.10 ) 40 9 (0.95 ) 2.38 4 (5.54 ) 8.27 0 8,48 0 9,04 0 1.12 5 (1.240 )

50 8 (560 ) 22 7 (250 ) -

33 8 (307 ) 85 3 (774 ) -

- 1,97 2 (1,789 ) Cogeneratio n Unit , 5 3 M H (18 0 aillio n Btu/hr ) RegulatoryBaseline , 1,07 6 ng/ J (2. 5 lb/alllio n Btu ) Lo « Sulfu rCoal , 51 6 ng/ J (1. 2 lb/al l lio n Btu ) Percen t Reductio n (9 0 Percent ) 90 4 (2.10 ) 40 9 (0.95 ) 2,38 4 (5.54 ) 9,55 0 9.81 0 10.44 0 1.35 2 (1.490 )

60 8 (670 ) 272 (300 ) 34 7 (315 )

82 8 (751 ) 1.87 3 (1.699 )
'Base d o n a capacit yfacto ro f0.9
. b Averag e uncontrolle d SO
. eaissions
.
c Coapare d t o regulator ybaseline
. d Coapare d t o lo

wsulfu rfue l alternative
.TABLE 2
. COS TAN D COS TEFFECTIVENESS OF S0 2 CONTRO L FO R CONVENTIONA

L AN D COGENERATION COAL-FIRE D STEA M GENERATIN G UNIT S I N REGIO N VIII * (Augus t 198 6 Pric e Projec t Ion s | Jun e 198 5 S )

Fue l Type , Averag e Cos t Stea a Generatin g Unit/Regulatory Alternativ e Annualize d Annua l ng SO./ J Costs , Eaissions , Effectiveness, 1 (l b S0 2 /a1l1lo n Btu ) (Sl.OOO/yr ) Mg/y r(tons/yr ) S/Mg (S/ton ) Increaenta l Cos t Effectiveness , S/Mg (S/ton ) Conventiona l Unit , 4 4 M N (15 0 al l Ho n Btu/hr ) RegulatoryBaseline , 1,07 6 ng/ J (2. 5 lb/al l lio n Btu ) Lo wSulfu rCoal , 51 6 ng/ J (1. 2 lb/alllio n Btu ) Percen t Reductio n (9 0 Percent ) Cogeneratio n Unit , 5 3 M t (18 0 aillio n Btu/hr ) RegulatoryBaseline , 1,07 6 ng/ J (2. 5 lb/allllo n Btu ) Lo wSulfu rCoal , 51 6 ng/ J (1. 2 lb/allllo n Btu ) Percen t Reductio n (9 0 Percent ) 62 4 (1.45) e 40 9 (0.95 ) 40 9 (0.95 )

62 4 (1.45) * 40 9 (0.95 ) 40 9 (0.95 ) 6,94 0

6,99 0 7,52 0

7,93 0 8.01 0 8.61 0 77 7 (860 )

50 8 (560 ) 3 6 (40 )

93 4 (1,030 ) 60 8 (670 ) 4 5 (50 ) -

20 2 (183 ) 79 0 (717 )

— 22 7 (206 ) 76 0 (690 ) -

- 1,12 5 (1,021 )

—

- 1.06 5 (966 )
*Based o n a capacit yfacto ro f0.9
. Averag e uncontrolle d SO
. eaissions
.
c Coapare d t o regulator ybaseline
. d Coapare d t o lo

wsulfu rfue l alternative
. ^ase d on firin g D-subb1tua1nou s coa l C62 4 n g SO./

J (1.4 5 l b S0./a1111o n Btu) ] rathe rtha n E-subbltualnou s coa l [90 4 n g SO./ J (2.1 0 l b S0 2

/a1111o n Btu)]
.

X I (JxTABLE 3
. COS TAN O COS TEFFECTIVENESS O F S0 2 CONTRO L FO R CONVENTIONA

L AN D COGENERATION OIL-FIRE D STEA M GENERATIN G UNITS * (Augus t 198 6 Pric e Projections ; Jun e 198 5 S )
'".IllJ)'.!, 1

. M,.'iH» '

Stea a Generatin g Unit/Regulator yAltentativ e . Averag e Increaenta l Fue l Type , Annualize d Annua l Cost Cos t n g SO./ J Costs , Eaissions , Effectiveness, 0 Effectiveness, ' (l b S0 2 /a1l1lo n Btu ) (Sl.OOO/yr ) Mg/y r(tons/yr ) S/M g (S/ton ) S/Mg (S/ton ) Conventiona l Unit
. 44 N H (15 0 aillio n ftta/hr) RegulatoryBaseline
. 1.29 1 ng/ J (3. 0 lb/allllo n Btu ) Lo wSulfu rOil
. 34

4 ng/ J (0. 8 lb/allllo n Btu) * Percen t Reductio n (9 0 Percent ) 1.29 1 (3.0 ) 34 4 (0.8 ) 1.29 1 (3.0 ) 4.84 0

5,37 0 5.61 0 1,60 6 (1.770 )

42 9 (475 ) 12 2 (135 ) -

44 8 (406 ) 51 7 (469 ) -

- 78 3 (710 ) Cogeneratio n Unit
. 5 3 M H (18 0 aillio n Btu/hr ) RegulatoryBaseline
. 1.29 1 ng/ J (3. 0 lb/allllo n Btu ) Lo wSulfu rOil , 34

4 ng/ J (0. 8 lb/allllo n Btu) * Percen t Reductio n (9 0 Percent ) 1.29 1 (3.0 ) 344 (0.8 ) 1.29 1 (3.0 ) 5,67 0

6.31 0 6.56 0 1.93 2 (2.130 )

51 5 (570 ) 145 (160 ) -

45 3 (411 ) 49 8 (452 ) 676 (613 )
"Base d on a capacit yfacto ro f0.9
. Averag e uncontrolle d SO
. eaissions
.
c Coapare d t o regulator ybaseline
. d Ccapare d t o lo

wsulfu rfue l alternative
.
* L Les s expensive t o fir e a lo wsulfu roi l [34 4 n g SO./ J (0. 8 l b SO./allllo n Btu) ] tha n t o purchase a hig h sulfu roi l [1,29 1 n g SO./ J ( 3 l b S0 2

/a1111o n Btu) ] and Instal l a n F60 syste a f o achiev e 73 percen t reduction
.

T lTABLE 4
. COS TAN D COS TEFFECTIVENESS O

F S0 2 CONTRO

L FO R CONVENTIONA

L AN D COMBINED CYCLE STEA M GENERATING UNIT S I N REGIO N V * Fully-Fire d Coa l (Augus t 198 6 Pric e Projections ; Jun e 198 5 S )

Annua l Averag e Cos t IncTenanta 1

Cos t Stea a Generatin g Unit/Regulator y Alternativ e Fue l Type , Annualize d TMmu« i KIB V
. u U > i n g SO./ J Costs , Eaissions , Effectiveness, 0 Effectiveness. 6 (l b S0 2 /an1lo n Btu ) (Sl.OOO/yr ) Mg/y r(tons/yr ) S/M g (S/ton ) S/M g (S/ton )

<r > Conventiona l Unit . 2 9 M M (10 0 aillio nBtu/hr ) Regulator y

Baseline . 1.07 6 ng/ J(2. 5 lb/allllo nBtu ) Lo w Sulfu r Coal . 51 6 ng/ J(1. 2 lb/allllo nBtu ) Percen t Reductio n(9 0 Percent )
Cogeneratio nUnit . 4 0 M M (13 7 aillio nBtu/hr ) Regulator y

Baseline , 1,07 6 ng/ J(2. 5 lb/allllo nBtu ) Low Sulfu r Coal , 51 6 ng/ J(1. 2 lb/allllo nBtu ) Percen t Reductio n(9 0 Percent ) 90 4 (2.10 ) 40 9 (0.95 ) 2,38 4 (5.54 )

90 4 (2.10 ) 40 9 (0.95 ) 2,38 4 (5.54 ) 2.02 0 2.17 0 2.59 0

2,02 0 2.17 0 2.63 0 75 3 (830 )

33 6 (370 ) 15 4 (170 )

75 3 (830 ) 33 6 (370 ) 15 4 (170 ) -

34 5 (313 ) 94 9 (861 )

— 34 5 (313 ) 1.00 0 (908 ) -

- 2.26 9 (2,058 )

_

- 2.43 3 (2.207 )

"Base do na capacit y

facto r o f 0.9 ; ga s turbin e I s assuae dt o fir e natura l ga s an dstea a generatin g uni t I s assuae dt o fir e liste dcoal . bAverag e uncontrolle dS0 2 eaissions .

c Annua l cos t onl y

Include s cos t o f fue l fire dplu s annualize dcos t o f S0 2 contro l devic e an ddoe s no t Includ e othe r stea a generatin g uni t operatin g andaaintenanc e cost s o r annualize dcos t o f th e stea a generatin g unit . d Coapare dt o regulatory baseline . *Coapare dt o lo

w sulfu r fue l alternative .

T lTABLE 5
. COS TAN D COS TEFFECTIVENESS O F S0 2 CONTRO L FOR CONVENTIONAL AN D COMBINED CYCLE STEA M GENERATING UNIT S I N REGIO N VIII s Fully-Fire d Coa l (Augus t 198 6 Pric e Projections ; Jun e 198 5 S )

Stea a Generatin g Unit/Regulator yAlternativ e Increaenta l Cos t Averag e Fue l Type , Annualize d Annua l Cos t n g SO./ J Costs , Eaissions , Effectiveness , Effectiveness, 6 (l b SO./allllo n Btu ) (Sl,0O0/yr ) Mg/y r(tons/yr ) S/M g (S/ton ) S/M g (S/ton )
Conventiona l Unit
. 2 9 M M (10 0 aillio n Btu/hr ) Regulator yBaseline , 1,07 6 ng/ J (2. 5 lb/allllo n Btu ) Lo wSulfu rCoal , 51 6 ng/ J (1. 2 lb/allllo n Btu ) Percen t Reductio n (9 0 Percent )
Cogeneratio n Unit
. 4 0 M H (13 7 aillio n Btu/hr ) Regulator yBaseline , 1,07 6 ng/ J (2. 5 lb/allllo n Btu ) Lo wSulfu rCoal
. 51 6 ng/ J (1. 2 lb/allllo n Btu ) Percen t Reductio n (9 0 Percent ) 62 4 (1.45) * 40 9 (0.95 ) 40 9 (0.95 )

62 4 (1.45) f 40 9 (0.95 ) 40 9 (0.95 ) 1.05 0

1.08 0 1.49 0

1.05 0 1.08 0 1.52 0 51 9 (570 )

33 6 (370 ) 2 7 (30 )

51 9 (570 ) 33 6 (370 ) 2 7 (30 ) -

155 (141 ) 89 3 (810 )

— 13 3 (121 ) 94 7 (859 ) -

- 1,31 4 (1,192 )

—

- 1,41 3 (1.282 )

"Base d o n a capacit yfacto ro f0.9 ; ga s turbin e I s assuae d t o fir e natura l ga s an d stea a generatin g uni t 1 s assuae d t o fir e liste d coal
. b Averag e uncontrolle d S0 2 eaissions
.
c Annua l cos t onl yInclude s cos t o ffue l fire d plu s annualize d cos t o fS0 2 contro ) devic e an d doe s no t Includ e othe rstea a generatin g uni t operatin g an d aaintenanc e cost s o rannualize d cos t o fth e stea a generatin g unit
. d Coapare d t o regulator ybaseline
. *Cotapare d t o lowsulfu rfue l alternative
.
f Base d o n firin g D-subbltualnou s coa l [62 4 n g SO./J (1.4 5 l b SO./allllo n Btu) ] rathe rtha n E-subbltualnou s coa l [90 4 n g SO./ J (2.1 0 l b S0 2 /a1111o n Btu)]
.TABLE 6
. COS TAN O COS TEFFECTIVENESS O

F S0 2 CONTRO

L FO R CONVENTIONA

L AN D COMBINE D CYCLE OIL-FIRE D STEA M GENERATIN G UNITS * (Augus t 198 6 Pric e Projections ; Jun e 198 5 S )

Fue l Type , Averag e Cos t Stea a Generatin g Unit/Regulator y Alternativ e Annualize d Annua l n g SO./ J Costs , Eaissions
. Effectiveness, ' (l b S0 2/a1l1lo n Btu ) (Sl.OOO/yr ) Mg/y r(tons/yr ) S/Mg (S/ton ) Increaenta l Cost Effectiveness, ' S/Mg (S/ton ) Conventiona l Unit
. 2 9 M H (10 0 aillio n Btu/hr ) RegulatoryBaseline , 1,29 1 ng/ J (3. 0 lb/allllo n Btu ) Lo wSulfu r011 , 34

4 ng/ J (0. 8 lb/allllo n Btu ) Percen t Reductio n (9 0 Percent ) 1,29 1 (3.0 ) 34 4 (0.8 ) 1,29 1 (3.0 ) 2.27 0

2.63 0 2.84 0 1.07 0 (1.180 )

29 0 (320 ) 8 2 (90 ) -

45 6 (414 ) 57 9 (525 ) -

- 1,05 4 (956 )

C D Fullv-FIra n Cogeneratio n Unit , 3 8 M H (12 9 aillio n Btu/hr ) RegulatoryBaseline , 1.29 1 ng/ J (3. 0 lb/allllo n Btu ) Lo wSulfu rOil
. 34

4 ng/ J (0. 8 lb/allllo n Btu ) Percen t Reductio n (9 0 Percent ) 1.29 1 (3.0 ) 34 4 (0.8 ) 1.29 1 (3.0 ) 2.27 0

2.63 0 2.86 0 1,07 0 (1,180 )

29 0 (320 ) 8 2 (90 ) -

45 6 (414 ) 60 0 (544 ) -

- 1,15 6 (1.049 ) S»ppla—nt a rv-Flre d Cogeneratio nUnit , 9 2 M H (31 3 aillio nBtu/hr ) Regulatory

Baseline , 1.29 1 ng/ J(3. 0 lb/allllo nBtu ) Low Sulfu r Oil . 34 4 ng/ J(0. 8 lb/allllo nBtu ) Percen t Reductio n(9 0 Percent ) 1,29 1 (3.0 ) 34 4 (0.8 ) 1.29 1 (3.0 ) 2.27 0

2.63 0 3.21 0 1.07 0 (1,160 )

29 0 (320 ) 8 2 (90 ) -

45 6 (414 ) 95 5 (866 ) -

- 2,87 6 (2,609 )

"Base do na capacit y facto r o f 0.9 ; ga s turbin e I s assuae dt o fir e natura l ga s an dstea a generatin g uni t I s assuae dt o fir e liste doil . bAverag e uncontrolle dS0 2 eaissions .

c Annua l cos t onl y

Include s cos t o f fue l firedplu s annualize dcos t o f S0

_contro l devic e anddoe s no t Includ e othe r stea a generatin g uni t operatin g an

daaintenanc e cost s o r annualize dcos t o f th e stea a generating unit . ^Compare dt o regulatory baseline . 6 Coapare dt o lo

w sulfu r fue l alternative .

T l C OP.1 0



## th e previou s analysis , th e cos t effectivenes s wa s generall yi n th e rang e o f $20 0 t o 700/M g ($20 0 t o 600/ton)
. 2. 2 PERCEN T REDUCTIO NSTANDARD S Althoug hth e overal l cost s associate d wit hstandard s requirin g a percen t reductio n hav e decline d slightly , th e incrementa l cost s o f thes e standard s versu s lo wsulfu r fue l standard s hav e Increased
. Th e reaso n fo r thi s increas e i s tha t th e fue l sulfu r premiumfo r lo wsulfu r fuel s ha s decline d betwee n th e 198 4 and 198 6 projection s whil e othe r cost s hav e remaine d largel yunchanged
. Thu s th e fue l cos t saving s resultin g fro m firin g highe r sulfu r fuel s and scrubbin g hav e decreased
. Thes e fue l saving s no woffse t les s o f th e cost s associate d wit hth e scrubbe r system
. Th e sam e situatio n applie s t o th e Incrementa l cost s o f firin g hig hsulfu r fuel s and scrubbin g versu s firin g mediumsulfu r fuel s a t th e regulator ybaseline

. Th e overal l resul t o f thes e factor s i s tha t th e cos t effectivenes s o f standard s requirin g percen t reductio n ha s Increased
. Usin g th e ne wfue l prices , th e averag e cos t effectivenes s o f standard s requirin g a percen t reductio n 1 n emission s 1 s generall y1 n th e rang e o f $50 0 t o 800/M g ($50 0 t o 800/ton ) fo r stea m

generator-base d coal

- and oil-fire d cogeneratio n units ; th e cos t effectivenes s wa s generall yI n th e rang e o f $50 0 t o 700/M g ($40 0 t o 600/ton ) 1 n th e previou s analysis

. Fo r combine d cycl e coal

- an d oil-fire d cogenerato r units , th e averag e cos t effectivenes s wit hne wfue l price s i s i n th e rang e o f $60 0 t o 1000/N g ($50 0 t o 900/ton) ; i n th e previou s analysi s i t wa s i n th e rang e o f $60 0 t o 900/M g ($50 0 t o 800/ton)
. Th e Incrementa l cos t effectivenes s o f standard s requirin g a percen t reductio n 1 n Sf c emission s hav e als o Increase d ove r standard s base d o n firin g lo wsp l fu r fuels
. Base d o n th e ne wfue l prices , th e Incrementa l cos t effectiveness ? o f percen t reductio n emissio n contro l range s fro m$110 0 t o 1900/M g ($100 0 t o 1700/ton ) fo r stea mgenerator-base d coal-fire d cogeneratio n units ; 1 n th e previou s analysis , thi s valu e range d fro m$90 0 t o 1300/M g ($80 0 t o 1100/ton)
. Fo r steam generator-base d oil-fire d cogeneratio n units , th e ne wfue l price s Increas e th e Incrementa l cos trf 3 " C in o -t >

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# IP.1 2



## 4. 0 REFERENCE S

1 . Lette r fro

m Hogan , T. , Energy

an dEnvironmenta l Analysis , Inc. , t o Pahel-Short , R. , EPA/EAB . Annualize dIndustria l Coa l Prices . Augus t 29 , 1986 . 2 . Lette r fro

m Hogan , T. , Energy

an dEnvironmenta l Analysis , Inc. , t o Pahel-Short , R. , EPA/EAB . Annualize dIndustria l 01 1 Prices . Augus t 26 , 1986 . 3 . Lette r fro

m Hogan , T. , Energy

an dEnvironmenta l Analysis , Inc. , t o Pahel-Short , R. , EPA/EAB . Annualize dIndustria l Natura l Ga s Prices . Augus t 26 , 1986 . 4 . Radia nCorporation . AnAnalysi s o f th e Cost s an dCos t Effectivenes s o f Allowin g SO - Emissio nCredit s fo r Cogeneratio nSystems . Prepare dfo r U.S . Environmenta l Protectio nAgency . Researc hTriangl e Park , Nort h Carolina . Publicatio nNo . EPA-450/3-85-030 . Decembe r 1985 . 5 . Radia nCorporation . Industria l Boile r SO - Cos t Report . Prepare dfo r U.S . Environmenta l Protectio nAgency . Researc hTriangl e Park , Nort h Carolina . Publicatio nNo . EPA-450/3-85-011 . Novembe r 1984 . p . 1- 1 t o 4-7 . 6 . Economi c Indicators . Chemica l Engineering . 2 1 (16) : Augus t 18 , 1986 , p . 7 . 7 . U.S . Burea uo f Labo r Statistic s Produce r Pric e Index : Al l Industria l Commodities . Fil e 176 , Dialo g Informatio nServices , Inc . Augus t 17 , 198 5 Update .

1 1

## APPENDI X A

METHODOLOG Y FO R REVISINGMODE L COGENERATIO NSYSTE M COS T ESTIMATE S T O INCORPORAT E NE WFUE L PRICE S

Thi s Appendi xpresent s th e methodolog yuse d t o revis e th e mode l cogeneratio n syste m

cos t estimate s i n Referenc e 4 t o Incorport e ne w levelize d fue l pric e projections

. Sinc e th e ne wfue l price s ar e expresse d i n Jun e 198 5 dollars , i t wa s als o necessar yt o updat e th e tim e basi s o f othe r mode l boile r cos t estimates

. T o accomplis hthes e tasks , cogeneratio n cos t estimate s wer e update d usin g th e relationship s betwee n annualize d cost s and fue l price s containe d 1 n th e origina l estimate s o f annualize d costs
. Fue l price s Influenc e annualize d cost s i n fou r areas . Th e first , and mos t obvious , are a Involve s annua l fue l costs
. Annua l fue l cost s ar e estimate d as :

AF C - Q * C F * 876 0 ' F P (1 )
where : AF C - Annua l fue l costs , $/year , Q - Boile r hea t inpu t capacity , millio n Btu/hour , C F - Annua l capacit yutilizatio n factor , and F P - Fue l price , $/uill1o n Btu
. Thu s th e chajjger I n AF C a s a resul t o f fue l pric e change s I s give n by :

AAF C - Q ' C F * 876 0 * AF P (2 )

A- lP.1 4



## Th e secondare a o f fue l pric e impact s involve s Interes t onworkin g capita l (IWC ) associate dwit hmaintainin g a one-mont hInventory o f fuel . Thi s quantit y

1 s relate dt o AF C change s by :

IW C - 0.008 3 AF C (3 )
Th e thirdare a o f fue l pric e impact s I s malfunctio ncosts , whic honl y appl y t o mode l stea

m generatin g unit s equippe dwit hflu e ga s desulfurizatio n (FGD ) systems . Durin g period s o f FGDsyste m malfunction , th e cos t algorithm s assume tha t th e stea m generatin g uni t operato r replace s hi s norma l fue l wit hnatura l gas . Thu s th e cos t o f malfunctio nI s th e fue l pric e differenc e betwee nnatura l ga s an dth e norma l fue l an

dI s calculate d as :

MC - Q ' C F ' 876 0 ' (1.0-REL/100 ) (NGP-FP ) (4 )
wher e M C - Malfunctio ncosts , $/year , RE L - FGDsyste

m reliability , %, an

d NG P - Natura l ga s price , $/mill1o nBtu .
Therefore , th e chang e i nmalfunctio ncost s fro m th e origina l estimate s du e t o change s Innatura l ga s an dothe r fue l price s 1 s give nby :

A M C - Q * C F * 876 0 * (100-REL/100 ) (ANGP-AFP ) (5 )

Fo r sodiu

m scrubbin g FG Dsystems , a noperatin g reliabilit y o f 9 5 percen t I s assumed . Th e fina l are a o f fue l pric e Impact s 1 s N Ocontro l costs , whic happl y t o stea m generator-base dcogeneratio nsystem s only . Th e origina l cos t estimate s fo r thes e system s assume dNOemission s ar e controlle db y low exces s ai r (LEA ) contro l technology . Becaus e LE A reduce s fue l requirements ,

A- 2

## th e cos t o f applyin g th e metho d1 s actuall y realize da s a fue l savings . Th e N0 X

## contro l cost s attribute dt o fue l cost s ar e calculate das :
NC C - Q • CF * (-0.00055 ) * F P * FFA C * (UNCE

A - CTREA ) (6 )
wher e NC C = NOcontro l costs , $/year , FFAC - F-factor , dscf/millio nBtu , UNCEA - Uncontrolle dexces s air , % , an d CTREA - Controlle dexces s air , % .
Therefore , th e chang e inN0 X

## contro l cost s du e t o fue l pric e change s 1 s give nby :
ANC C - Q ' C F * (-0.00055 ) ' AF P * FFAC * (UNCEA-CTREA ) (7 )

Becaus e exhaus t ga s fro m th e ga s turbin e 1 s use da s combustio nai r fo r supplementary-fire dan dfully-fire dcombine dcycl e systems , N0 X

## contro l b y LE A 1 s no t applicabl e t o combine dcycl e unit s an d1 s no t Include dIncos t estimate s fo r thos e units . Thus , fo r combine dcycl e units , ther e ar e n o NO contro l cos t Impact s du e t o fue l pric e changes . Th e chang e intota l annualize dcost s (TAC ) resultin g fro m fue l pric e change s fo r a mode l cogeneratio nsyste m 1 s th e su

m th e factor s discusse d above . Comparison s o f previou s an dnew fue l pric e projection s fo r coal , oil , an dnatura l ga s ar e presente dInTabl e A-l . Th e fue l price s projecte d inAugus t 198 6 ar e expresse d1nJun e 198 5 dollar s compare dt o Januar y 198 3 dollar s fo r th * Jul y

198 4 projections . Th e new cos t an dcos t effectivenes s estimate s ar « base do nlo w oi l price s an

dlo w natura l ga s price s consisten t wit ha non-carriag e natura l ga s marke t an da rigi dregulator y

environment , a s discusse di nReference s 2 an d3 . Inupdatin g th e mode l cogeneratio nsyste m cos t estimate s 1 t wa s als o necessar y

t o adjus t th e time basi s fro m Januar y 198 3 t o Jun e 198 5 fo r al l othe r non-fue l costs . Thi s wa s accomplishe dusing anaverag e facto r o f

A- 3

### TABL E A-l . COMPARISO N O F 198 4 AND198 6 COAL , OIL , AN O NATURAL GA S PRIC E PROJECTION S

Fue l Typ e 

## V'^ysife

. Sulfu rConten t (l b S(ymillio n Btu ) Jul y1984 Pric e Projection 3 

### (198 3 $/m11Ho n Btu ) August 198 6 Pric e Projectio n (198 5 $/m1111o n Btu ) Regio n V

* » •0 > 

### B-blturn1nou s coa l

D-b1tum1nou s coa l '• E- b 1 tu n 1 nou s coa l H-b1tum1nou s coa l 3.O fSulfu r011 d 

### 1.6% Sulfu r011 d 

### 0.8 * Sulfu r01l d 

### Natura l gas Regio n VII I E-subbltunlnou s coa l D-subbituminou s coa l B-subbltunlnou s coa l Natura l gas <1.0 8 1.08-1.6 7 1.67-2.5 0 >5.0 0 3. 0 1. 6 0. 8 0.0 0

1.67-2.5 0 1.08-1.6 7 <1.0 8 0.0 0 3.3 2 3.1 8 3.0 8 2.5 0 4.9 4 5.2 5 5.6 3 5.8 8



### 1.2 8 1.3 9 1.4 0 4.9 1 2.7 5 2.6 4 2.5 7 2.2 4 2.9 0 3.0 9 3.3 5 3.77 c



### 1.3 5 1.3 3 1.3 7 3.14 c



### 'Source : Referenc e 4
. Source : Reference s 1-3
. 'Base d o n a non-carriag e natura l gas marke t an d rigi d regulator yenvironment , as d l Reference s 2 an d 3
. 

### scusse dI n 

# J

Price s give nar e fo r lo w oi l prices .>



## 1.03 2 base do nth e Chemica l Engineering Plan t Cos t Indexan dth e Produce r Pric e Indexfo r al l Industria l commodities . ' Th e methodology

describe dabove wa s use dt o updat e th e origina l mode l cogeneratio nsystem

cos t estimate s wher e appropriate . Intwo cases , however , th e fue l selecte dt o mee t a regulator y alternativ e wa s change ddu e t o fue l pric e changes . Inth e firs t case , th e fue l selecte dt o mee t th e low sulfu r fue l standar dfo r oil-fire dcogeneratio nwa s change dfro m a high sulfu r oi l (3. 0 l bS0 2 

## /m1ll1o nBtu ) wit hanInstalle dFGDsystem operatin g a t 7 3 percen t SO - reductio nt o a lo w sulfu r oi l (0. 8 l bSO-/m1ll1o nBtu) . Thi s chang e wa s mad e since , fo r th e new fue l prices , th e firin g o f lo w sulfu r oi l entail s lowe r annua l cost s tha nfirin g highsulfu r oi l 1 n combinatio nwit ha

nFGDsystem ; fo r th e forme r fue l price s thi s wa s no t th e case . Inth e secondcase , th e coa l selecte dfo r th e regulator y baselin e cas e (2. 5 l bS0 2 

## /m1llio nBtu ) inRegio nVII I wa s change dfro a Typ e E-subbituminou s coa l (2.1 0 l bS0 2 

## /m1ll1o nBtu ) t o Typ e D-subbituminou s coa l (1.4 5 l bS0 2 

## /mill1o nBtu) . Thi s chang e wa s mad e becaus e Typ e D-subbituminou s coa l InRegio nVII I ha s a lowe r pric e tha nTyp e E-subb1tum1nou s coal , base don198 6 fue l pric e projections , eve nthoughI t ha s a lowe r sulfu r content . Fo r thes e two cases , therefore , 1 t wa s necessar y

t o estimat e mode l cogeneratio nsyste ncost s usin g th e computerize d cos t algorithms andth e appropriat e fue l price s andupdat e factors .

A- 5