NOx MarketUpdate May 2003


### NOx

### MARKET 

## UPDATE August 2004 Overview
New forecasts have been prepared for SCR system and catalyst sales in the U.S. Page 1 

### 01'8

There is presently a lull in SCR system sales but by 2007 there should be substantial activity in retrofitting existing coal plants. The gas turbine SCR market will be quite small throughout the forecast period. The industrial boiler market will start to rise as states take the next step to reach ozone attainment. Replacement catalyst is starting to be a substantial market. Popcorn ash and other damage to catalyst is forcing some plants to replace catalyst earlierthan anticipated. Also those plants that installed SCRto meetthe 2000 acid rain rules are now scheduling catalystreplacement.
The replacement marketfor applications otherthan coal-fired boilers is so small that it is combined with the new catalyst f()recasts. 

### ConsumersRetrofittingSCR on J.H. Campbell2 

### and3
Consumers EnerbJY is installing SCRon 871 MW Unit 3 and 385 MW Unit 2 ofits lB. Campbell powerplant. The Can1pbell project is part of

### $771 million in pollution-control improvements Consumers is making at plants across Michigan. The SCR equipment already has been installed at Consumers' KearnlWeadock po\verplant near Bay City. The SCR is expected to reduce NOx by 85 percentto 0.05 lb/MMBtu. The SCR on Unit 3 should be finished in early 2006. Plans call for installing SCR on Unit 2 in 2009. 

### 450**i~IW** 

### Huntington 2 

### to RetrofitFGD, Baghollse, LowNO

.Burners .\ PacifiCorp has approved a S120 million emission control projectthat will update and improve S02' particulate and NOxcontrols on its Huntington Unit2, a450 MW coal-fired powerplant located in Emery County, Utah. PacifiCorp said once the retrofits are completed a scrubber will reduce S02 emissions by about 95 percent. A fabric filter system will reduce particulate emissions about 80 percent and low NOxburners 

### will reduce NOxby about 40 percent.


### MitsubishiHas SCR Contract for KingPlantof XcelEnergy
Mitsubishi is supplying the SCR system for the 598 MW King plant using 7.1 pitch catalyst. The guarantee for this 550 MW system includes an SO., to**SO~** conversion ofless than one percent. AMEC



### - .) is a subcontractor supplying the structural steel and other balance ofplant items. The scrubberlbaghouse award has not yet been made. 

### Argillon CatalystDoing Wellon PRB Coals atBaldwin
PRB coals may not be the problem for SCR catalysts that was anticipated. The Bald\vin 2 SCR was installed in 2002 and the SCR on Unit Iin 2003. Both use Argillon plate catalyst in units burning PRB

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### 9/25/2009NOx MarketUpdate May 2003 Page 2 of8

coal. The deactivation rate has been low. Popcorn ash has been removed by air lancing, so no catalyst has required removal. Argillon also has the GulfPower 500 MW Crist Unit 7 SCR catalyst slated for operation in 2005. 

### Stejasa Selling E\'pansion Jointsfor Precipitators andSCR Southern Co. Miller plant will be using Stejasa expansionjoints in its nc\v SCR system as will Gulf Power Crist. Santee Cooper is installing a Wheelabratorprecipitator with Stejasa expansionjoints. 

### ftiJerom SCR On(l' S73lkW
Bill Lonnberg ofHoosier Energy told Coal-Gen attendees that SCR systems including air pre-heater upgrades and I.D. fan drives \vere installed on the 2 x 500 MW Merom units for $73 million. This is only $73/kW. which is less than halfofsome ofthe installed costs we reported for Indiana and Ohio utilities last week. Bill attributes the lower costto the fact that they obtained competitive bids in 2000. This was well before the crunch.
The LurgilLentjcs system includes KWH 7.4 pitchcatalyst, Chemithon ammonia distribution system, Effox dampers. and ABB fan upgrades. The two fans were fitted with variable speed drives and the 5.000 HP motors replaced with 7,000 HP.
The NOxremoval is hovering around the anticipated 90 percent. S03 oxidation is only 0.15 percent instead ofthe anticipated one percent. The inlet temperature is 760°F. The S03 is 30 ppm entering the SCR. S03 conversion is inversely proportional with temperature. Catalyst experts tell McIlvaine that they would expect the 

### 100v conversion rates ifthe temperature were less than 700°F. but they are surprised at the Iov ..'oxidation at elevated temperatures. Ammonia slip is less than 1.5 ppm. Pressure drop is 3.1 inches w.g.. not including the popcorn ash screen. The biggest problem is the NOxanalyzer. It takes one to two full time employees to keep the sample lines cleaned on this fully extractive system. There also has been some back-end corrosion at the I.D. fan and also in the bypass damper. 

### ColbertStation Succe.uful(l' OperatingJUitsuiBabcockNOxStarSystem
The 192 MW unit has been operating its new system during the ozone season. Ammonia and natural gas are injected in grids at a temperature between 1,500°F and 2.000°F. The methane acts as an auto-catalyst for the NOx reduction. The earlier work showed that up to 90 percent removal can be achieved at higher temperatures. So this system appears to be a competitor with SCR. It has nO\\I operated halfway through a full ozone season with no surprises. It is interesting to compare NOxStar and SCR in terms oftotal emissions. S03 conversion will be negligible. So this is a plus for NOxStar. Ammonia slip may be higher. This could be a minus. With the huge retrofit SCR costs experienced by utilities with space constraints. this technology could be particularly cost effective. We will ask Mitsui Babcock for their view on the tradcoff's between the two technologies. 

### Cinergy Spending $600MillionforNO x Control
Three SCR systems were installed at the CinergylPSI Gibson station in 2002 and 2003 (Units 2, 3, and

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4). The SCR on Unit 5 began operation June 1. 2004. The SCR on Unit I is planned for service on May L 2005. The cost ofthe SCR plus certain otherNOxreduction equipment is $600 million ($1 79/kW). These investment costs were part ofthejustificationfor a rate increase issued in May by the Indiana Utility Regulatory Commission. The rate increase is 8.36 percent. Cinergy/PSI is 10 percent under the rates ofother Indiana utilities and 32 percent underthe national average. Since PSI's last base rate increase, the company has invested $1.3 billion in majorconstruction programs to serve the growing power demands ofits customers, improve its reliability and lessen its environmental impact. PSI's last base rate increase came in September 1996, for about 7.45 percent. PSI needs additional generating capacity due to an increase in the demand for electricity

- especially during peak periods such as very hot orvery cold days. Despite a slumping economy. PSI customers have broken records for electric usage multiple times since July 2001. The investment in new generating capacity also has helped PSI increase its reserve margin

- the amount ofelectricity capacity it maintains in reserve to meet unexpected customer demands for electricity. The company cannot meet projected demands reliably and effectively without additional powerplants.
To meet its customers' increasing demands for electricity reliably and cost-effectively, PSI hasjust finished repowering its 100 MW Noblesville Generating station built in 1951, converting it from coal to natural gas and tripling its power output. The cost ofthat conversion was over $200 million. Also. last year PSI purchased t\VO gas-fired peaking plants that are specially designed to operate when customer demand is at its highest. Even with these steps, PSI still needs to buy pO\ver from other companies in the summerof2004 to have adequate powerreserves. 

### SCONOxReduces Dieselami Gas Turbine NO xEmissions to Low Levels
After more than eight months ofoperation. a SolarTaurus 60 turbine. owned and operated by a Massachusetts pharmaceutical company, is performing at ultra-low NOx levels burning both natural gas and diesel fuel. The combined cycle turbine is emitting less than 2.0 ppmNO on diesel, less than 1.5 x ppmNOx on natural gas (typically under 0.8 ppm). undetectable levels ofcarbon monoxide and 90 percent reduction ofhydrocarbons.
These ultra lo\v emissions are attributed to the latestgeneration ofSCONOx' a multi-pollutant, nonammonia based emission control technology, which had previously setthe EPA Lowest Achievable Emission Rate (LAER) standard of2.0 ppmNOx for turbines burning natural gas. NO\v with the capability ofmeeting natural gas emissions levels while burning IS-ppm sulfur diesel fuel, the economic benefits ofa dual fuel power generating source is once again a reality. The opportunity for pO\ver generators to re-introduce such aproforma is the result ofan effortbetween three companies, which includes a mechanical and process design by 

### QEI Engineers ofDay10n, Ohio. a robust and efficient mechanical system supplied by Wahleo Metro Flex ofLe\viston, Maine. and the newest version ofthe EmeraChem catalytic SeONOxtechnology, known as EMxTu

• "Overthe years, and \vith each SCONOx installation, the technology has advanced in performance and reliability, however, the results coming out ofMassachusetts have far surpassed our most ambitious expectations. thanks to the committed work ofQEI, Wahlco. and EmeraChem employees," stated Thomas Girdlestone. eEO ofEmeraChem.
The SCONOxtechnology was first commercially introduced in 1996 on a 25 MW combined cycle gas

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turbine in Southern California. Since that time, the SCONOxtechnology has nvice setthe EPA LAER standard and is nov·/ operating on seven commercial pO\",ertrains ofvarious sizes. In addition to turbines, SCONOx is currently being demonstrated on mobile diesel exhaust systems in support ofthe 2007-2010 EPA diesel vehicle mandate. 

### Recent(vInstalledSCRsAveraging 88% 

### NOxReduction According to Jim Staudt ofAndoverTechnology Partners in a recent poll ofSCR operators, the operators reported that their SCRs generally met or exceeded expectations for reliability. The recentlyinstalled systems were providing on average about 88 percentreduction. When asked how much NOx reduction could be delivered reliably ifdesired, the average reported by all operators ofall units who responded was over 90 percentNOxreduction. Reliability ofspecific SCR system components and FGD systems and components \vas evaluated as \vell. The results ofthis study \\rill be presented at the upcoming Mega Symposium in Washington, DC in late August. 

### CherokeeNitrogen Co. to Supp(v TVA'sAnhydrousAmmoniaNeeds
LSB subsidiary, Cherokee Nitrogen Company, has received confirmation ofits contractto supply anhydrous ammoniato TVA. The contract provides for Cherokee to supply ammoniato TVA until December 31. 2005 and may be extended at TVA's option. The ammonia will be used by TVA in SCR systems 

### FirstEnergy/DOJSettle BeforePenalty Phase of NSR Lawsuit FirstEnergy Corp. has agreed to spend $1.1 billion to drastically cut pollution from the W.H. Sammis powerplant found to be in violation ofNSR regulations. Under the agreement FirstEnergy will reduce emissions by atleast 90 percentby 20I0 for S02 and NOx' The plan calls for switching inunediately to burning 100v-sulfurcoal and installing FGD at Sammis and for cutting emissions at several other FirstEnergy plants. This agreement is important for two reasons. First it underlines the resolve ofthe Administration to pursue past NSR violations. Second it sets a new barof90 percentrather than the 70 percent in previous consent agreements. 

### CA Recommending 0.07ppm 8-hr. OzoneStandard for State, NotFederal 0.08ppm The staffofthe Air Resources Board (ARB) and Office ofEnvironmental Health Hazard Assessment (OEIIHA) have reviewed the scientific basis for the California Ambient Air Quality Standard for ozone to determine its adequacy to protectpublic health, including the health ofinfants and children. This review is a requirement ofCalifornia Health & Safety Code section 39606.
Based on the results ofthe staffreview and their findings, the staffis reconunending thatthe California ambient air quality standard for ozone be revised inthe following ways: 1. Retain ozone as the indicator for oxidant air pollution. 2. Ozone I-hour-average Standard

- Retain the I-hour-average standard for ozone at 0.09 ppm. 3. Ozone 8-hour-average Standard

- Establish an 8-hour-average standard for ozone at 0.070 ppm. 4. Forboth the I-hour and 8-hour ozone standards. the concentrations for the standards noted above are established as "notto be exceeded." 5. In any air basin in Californiathat currently attains the ambient air quality standards for ozone. the airquality should not be degraded from present levels.

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### NOx MarketUpdate May 2003

6. The standards be visited within five years. 

### Last Two SCRsforMonroe Delayed Until2007and2009 Page 5 01'8



### The $650 million SCR addition atDetroitEdison Co.'s coal-fired Monroe has been delayed atthe project's midw'ay point. The final two SCR units at the plantwill be installed by the end of2007 and 2009, respectively. All four units \vere originally to be completed by fall.
John Austerberry, a utility spokesman. said "The schedule changed for a variety ofreasons, including an EPA decision to give utilities nationwide at least anotheryearto comply with requirements for installing NOx' 

### The agency's one-year delay allowed Detroit Edison to obtain enough credits from Michigan to postpone halfofthe high-ticket project. That has allowed the utility to refocus its efforts on cutting emissions at smallerplants by installing additional lowNOx

### burners." But, Mr. Austerberry said. the delay isn't entirely driven by changes in the national regulatory atmosphere. A soft economy has caused a slight dip in electricity demand. Plus, DetroitEdison has contended with economic variables during the recent era ofderegulation, in which consumers now have more choices for suppliers."


### EPA Designates 8-hr OzoneNAAQSNOll-attainmentAreas
UnderEPA's 8-hourozone NAAQS implementation rule, signed on April 15, 2004, an areawill be classified under subpart2 based on its 8-hourdesign value ifit has a I-hour design value at or above 0.121 ppm. All other areas \vill be covered under subpart 1. Subpart 2 areas are classified as marginal, moderate, serious, or severe based on the area's 8-hourdesign value calculated using the mostrecent three years ofdata. (See the May 2004 FGD & DeNOxNewsletter 

### for more information.)
Section 172(a)(l) provides EPA with discretion whetherto classify areas under subpart 1, and EPA is not classifying subpart 1 areas, with one exception. As noted in EPA's final rule on implementing the 8- hourozone standard (Phase 1 implementation rule). EPA is creating an "overwhelming transport classification" that\vill be available to subpart 1 areas that demonstrate they are affected by ovenvhelming transport ofozone and its precursors and demonstrate they meetthe definition ofa rural transport area in section 182(h).
See tables below for classification criteria and non-attainment areas. Table 1. Classification for 8-Hour Ozone NAAQS

8-hour Maximum period for Attainment dates in Area Class design value State plans (years after effective date of nonattainment designation for 8-hour ppm ozone NAAQS) Marginal from

...... 0.085 3 up to*

.. 0.092 !Moderate from

...... 0.092 6 up to*

.. 0.107 Serious from

...... 0.107 9 up to*'. 0.120 Severe-IS from

...... 0.120 IS up to*'. 0.127 Severe-17 from

...... 0.127 17 up 10*

.. 0.187

## IExtren~ 0.187 20



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• Bu! no! including.



### Table 2 Page 60f8

State Area Desi\!nation 8-hr Ozone Standard

AL Binningham Nonattainment. Subpart I AZ Phoenix-Mesa Nonattainmen1. Subpart 1 AR Memphis TNIAR Moderate CA i\mador and Calaveras Counties Nonattainmen1. Subpart I Butte Count\ Nonattainment. Subpart I Kern County Nonattainment. Subpart I Los Angeles County Severe 17/moderate Riverside Count\' Severe 17/seriolls Orange Count\ Severe 17 San Bernardino Count\' Severe 17/moderate Mariposa and Tuolumne Counties Nonattainmen1. Subpart I Sacramento Serious San Diego iNonattainment. Subpart I San Francisco Marginal San Joaquin Vallev Serious Sutter Count\ iNonattainment. Subpart I Ventura Count\ Moderate tNevada Count\ lNonattainlllent. Subpart I CO DenverIBoulder/Ft. Collins lNonattainment. Subpart I CT Entire state Moderate DE Entire state Moderate D.C. Entire district Moderate GA [Atlanta Marginal Macon lNonattainlllent. Subpart I Chattanooga. TN-GA lNonattainmcnt. Subpart I Murray Count\ lNonattainment. Subpart 1 IL Chicago Moderate S1. Louis MO/IL Moderate IN Chicago/Gal\ Moderate Cincinnati OH/KY/IN Nonanainment. Subpart I Evansville Nonanainment. Subpart I Fort Wayne Nonattainlllent. Subpart I Greene Count\ Nonattainment. Subpart I Indianapolis iNonattainment. Subpart I Jackson County Nonattainment. Subpart I La Porte Moderate Louisville KY/IN !Nonattainlllent. Subpart I Muncie Nonattainment. Subpart I South Bend lNonattainment. Subpart I Terre Haute Nonattainment. Subpart I 

### KY Cincinnati OWKY/IN !Nonattainment. Subpart I Clarkesville-Hopkinsville TN/KY Nonattainlllent. Subpart I Louisville KY /IN Nonattainment. Subpart 1 Huntington-Ashland WV/KY Nonattainment. Subpart I LA Baton Rouge Marginal

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### NOx Market Update May 2003 Page 7of8

ME Hancock. Knox. Lincoln and Waldo Counties t\onattainment. Subpart I Portland Marginal MD Baltimore Moderate Kent and Queen Anne Counties Moderate Washimrton Count\ Nonattainment, Subpart I Philadelphia-Wilmington-Atlantic Citv, PA/NJ/MD/DE Moderate Washington D.C. Moderate MA Entire state Moderate :\11 AlIegan County t\onattainment. Subpart I [3enton Harbor Nonattainment. Subpart I Benzie Count\ Nonattainment. Subpart I lCass Count\ Moderate Detroit-Ann Arbor Moderate Flint Nonattainment. Subpart I Grand Rapids Nonattainment. Subpart I Huron Counrv Nonattainment. Subpart I Kalamazoo-Battle Creek Nonattainment. Subpart I Lansing Nonattainment. Subpart I Mason County Nonattainment. Subpart I Muskegon l\onattainment. Subpart I MO St. Louis MO IL Moderate NV Las Vegas Nonattainment. Subpart I NH BostonlManchester/Portsmouth Moderate NJ Entire state Moderate NY AIbanv-SchenectadY

-Troy Nonattainment. Subpart I Buffalo-Niagara Falls Nonattainment, Subpart I Essex Count\ Nonattainlllent. Subpart I Jefferson Count\ Nonattainment. Subpart I New York. NYINJ. Long Island. NY/NJ/CT Moderate poughkeepsie Moderate Rochester Nonattainment. Subpart I NC Charlotte-Gastonia-Rock I-lill. NC/SC Moderate Fa\etteville Nonattainment. Subpart I Greensboro-Winston Salem-High Point Moderate Havwood and Swain Counties Nonattainment, Subpart I Hickorv-Morganton-Lenoir Nonattainment. Subpart I Raleigh-Durham-Chapel Hill Nonattainment. Subpart I RockY Mount Nonattainment. Subpart I OH Canton-MassiIlion Nonattainlllent, Subpart I Cleveland-Akron-Lorain Moderate Columbus Nonattainment Subpart I Davton-Springtield Nonattainment. Subpart I Lima lNonattainment. Subpart I Parkersburg-Marietta. WV/OH Nonattainment Subpart I Steubenville-Weirton.OH/WV Nonattainment, Subpart I Toledo Nonattainlllent. Subpart I Wheeling, WV/OH Nonattainment. Subpart I Youngstowll-Warren

-Sharon. PAlOH Nonattainment. Subpart I PA Allentown-Bethlehem-Easton Nonattainment. Subpart I Altoona Nonattainlllent. Subpart I Clearfield and Indiana COllnties Nonattainment. Subpart I Erie Nonattainlllent. Subpart I Franklin Nonattainment Subpart I



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### NOx Market Update May 2003 Page 8 of8

Greene Count\**~onattainment** Subpart I Harrisburg-Lebanon-Carlisle [Nonattainment. Subpart 1**~ohnstown** Nonattainment. Subpart I Lancaster Nonattainment, Subpart I Philadelphia-Wilmington-Atlantic City, PAINJ/MD/DE Moderate Pittsburgh-Beaver Valley Nonattainment. Subpart I Reading Nonattainment. Subpart 1 Scranton-Wilkes Barre Nonattainment. Subpart I State College Nonattainment. Subpart 1 !Tiol.?aCounty Nonattainment. Subpart 1 \'ork Nonattainrnent Subpart I RI Entire state Moderate SC Columbia Nonattainment. Subpart I Greenville-Spartanburg-Anderson Nonattainment. Subpart I Charlotte-Gastonia-Rock IIill. NC/SC Moderate TN Chattanooga. TN-GA Nonattainment. Subpart 1 Clarkesville-Hopkinsville. TN/KY Nonattainment. Subpart I Johnson Cirv-Kingsport-Bristol Nonattainment. Subpart I Knoxville Nonattainment. Subpart I Memphis TN IAR Moderate Nashville Nonattainment. Subpart I TX Beaumont-Port Arthur Marginal Dallas-Fort Worth Moderate Ilouston-Gaheston-Brazoria Moderate San Antonio Nonattainment. Subpart 1 VA Frederick County Nonattainment. Subpart 1 Fredericksburg Moderate Madison and Page Counties Nonattainment, Subpart I Norfolk-Virginia Beach-Newport News Marginal Richmond-Petersburg Moderate Roanoke Nonattainment. Subpart I Washington. DCIMDrvA Moderate WV Berkele, and Jefferson Counties Nonattainment. Subpart I Charleston Nonattainment. Subpart I Huntington-Ashland V/V/KY Nonattainment. Subpart I Parkersburg-Marictta. WV/OH Nonattainment. Subpart I Wheeling. WV/Oll Nonattainmcnt. Subpart 1 Steubenville-Weirton. Ol\/WV Nonattainment, Subpart 1 WI DoorCountv Nonattainment. Subpart 1 Kewaunee Countv Nonattainment. Subpart I Manitowoc Countv Nonattainment. Subpart 1 Milwaukee-Racine Moderate Sheboygan Moderate



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