NOx Market Update 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 earlier than anticipated. Also those plants that installed SCR to

meet the 2000 acid rain rules are now scheduling catalyst replacement.

The replacement market for applications other than coal-fired boilers is so small that it is combined with

the new catalyst f()recasts.

Consumers Retrofitting SCR on J.H. Campbell 2 and 3

Consumers EnerbJY is installing SCR on 871 MW Unit 3 and 385 MW Unit 2 of its lB. Campbell

power plant. 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\ver plant near Bay City. The SCR is expected to reduce NOx by 85 percent to 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 Retrofit FGD, Baghollse, Low NO . Burners

.\

PacifiCorp has approved a S120 million emission control project that will update and improve S02'

particulate and NOx controls on its Huntington Unit 2, a 450 MW coal-fired power plant 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 NOx burners will reduce NOx by about 40 percent.

Mitsubishi Has SCR Contractfor King Plant ofXcel Energy

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 of less than one percent. AMEC - .)

is a subcontractor supplying the structural steel and other balance of plant items. The scrubberlbaghouse

award has not yet been made.

Argillon Catalyst Doing Well on PRB Coals at Baldwin

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 I in 2003. Both use Argillon plate catalyst in units burning PRB

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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 Gulf Power 500 MW Crist Unit 7 SCR catalyst slated for

operation in 2005.

Stejasa Selling E\'pansion Jointsfor Precipitators and SCR

Southern Co. Miller plant will be using Stejasa expansion joints in its nc\v SCR system as will Gulf

Power Crist. Santee Cooper is installing a Wheelabrator precipitator with Stejasa expansion joints.

ftiJerom SCR On(l' S73lkW

Bill Lonnberg of Hoosier 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 half ofsome ofthe installed costs we reported for Indiana and Ohio

utilities last week. Bill attributes the lower cost to the fact that they obtained competitive bids in 2000.

This was well before the crunch.

The LurgilLentjcs system includes KWH 7.4 pitch catalyst, 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 NOx removal 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 if the 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 NOx analyzer. 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.

Colbert Station Succe.uful(l' Operating JUitsui Babcock NOxStar System

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 of total

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 $600 Million for NOx 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 of the SCR plus certain other NOx reduction equipment is $600 million ($1 79/kW).

These investment costs were part ofthe justification for 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 of other Indiana utilities and 32 percent under the national average. Since PSI's last base rate

increase, the company has invested $1.3 billion in major construction programs to serve the growing

power demands of its 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 or very 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 of electricity capacity it maintains

in reserve to meet unexpected customer demands for electricity. The company cannot meet projected

demands reliably and effectively without additional power plants.

To meet its customers' increasing demands for electricity reliably and cost-effectively, PSI has just

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 summer of 2004 to have adequate power reserves.

SCONOx Reduces Diesel ami Gas Turbine NOx Emissions to Low Levels

After more than eight months of operation. a Solar Taurus 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 ppm NO on diesel, less than 1.5 x

ppm NOxon natural gas (typically under 0.8 ppm). undetectable levels of carbon monoxide and 90

percent reduction of hydrocarbons.

These ultra lo\v emissions are attributed to the latest generation of SCONOx' a multi-pollutant, nonammonia based emission control technology, which had previously set the EPA Lowest Achievable

Emission Rate (LAER) standard of 2.0 ppm NOx for turbines burning natural gas. NO\v with the

capability of meeting natural gas emissions levels while burning IS-ppm sulfur diesel fuel, the economic

benefits of a dual fuel power generating source is once again a reality. The opportunity for pO\ver

generators to re-introduce such a proforma is the result of an effort between three companies, which

includes a mechanical and process design by QEI Engineers of Day10n, Ohio. a robust and efficient

mechanical system supplied by Wahleo Metro Flex ofLe\viston, Maine. and the newest version ofthe

EmeraChem catalytic SeONOx technology, known as EMxTu•

"Over the 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 of QEI, Wahlco. and EmeraChem employees," stated

Thomas Girdlestone. eEO of EmeraChem.

The SCONOx technology 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 SCONOx technology has nvice set the EPA LAER

standard and is nov·/ operating on seven commercial pO\",er trains of various 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(v Installed SCRs Averaging 88% NOx Reduction

According to Jim Staudt of Andover Technology Partners in a recent poll of SCR operators, the

operators reported that their SCRs generally met or exceeded expectations for reliability. The recentlyinstalled systems were providing on average about 88 percent reduction. When asked how much NOx

reduction could be delivered reliably if desired, the average reported by all operators of all units who

responded was over 90 percent NOx reduction. 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.

Cherokee Nitrogen Co. to Supp(v TVA's Anhydrous Ammonia Needs

LSB subsidiary, Cherokee Nitrogen Company, has received confirmation of its contract to supply

anhydrous ammonia to TVA. The contract provides for Cherokee to supply ammonia to TVA until

December 31. 2005 and may be extended at TVA's option. The ammonia will be used by TVA in SCR

systems

First Energy/DOJ Settle Before Penalty Phase ofNSR Lawsuit

FirstEnergy Corp. has agreed to spend $1.1 billion to drastically cut pollution from the W.H. Sammis

power plant found to be in violation ofNSR regulations. Under the agreement FirstEnergy will reduce

emissions by at least 90 percent by 20 I0 for S02 and NOx' The plan calls for switching inunediately to

burning 100v-sulfur coal 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 bar of 90 percent rather than the 70

percent in previous consent agreements.

CA Recommending 0.07 ppm 8-hr. Ozone Standardfor State, Not Federal 0.08 ppm

The staff ofthe Air Resources Board (ARB) and Office of Environmental Health Hazard

Assessment (OEI IHA) have reviewed the scientific basis for the California Ambient Air Quality

Standard for ozone to determine its adequacy to protect public health, including the health of infants and

children. This review is a requirement of California Health & Safety Code section 39606.

Based on the results ofthe staff review and their findings, the staff is reconunending that the California

ambient air quality standard for ozone be revised in the 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. For both the I-hour and 8-hour ozone standards. the concentrations for the standards noted above

are established as "not to be exceeded."

5. In any air basin in California that currently attains the ambient air quality standards for ozone. the

air quality should not be degraded from present levels.

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NOx Market Update May 2003

6. The standards be visited within five years.

Last Two SCRsfor Monroe Delayed Until 2007 and 2009

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The $650 million SCR addition at Detroit Edison Co.'s coal-fired Monroe has been delayed at the

project's midw'ay point. The final two SCR units at the plant will be installed by the end of 2007 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 another year to comply with requirements for installing

NO

x' The agency's one-year delay allowed Detroit Edison to obtain enough credits from Michigan to

postpone half ofthe high-ticket project. That has allowed the utility to refocus its efforts on cutting

emissions at smaller plants by installing additional low NOx 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, Detroit Edison has contended with economic variables during

the recent era of deregulation, in which consumers now have more choices for suppliers."

EPA Designates 8-hr Ozone NAAQS NOll-attainment Areas

Under EPA's 8-hour ozone NAAQS implementation rule, signed on April 15, 2004, an area will be

classified under subpart 2 based on its 8-hour design value if it 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-hour design value calculated using the most recent

three years ofdata. (See the May 2004 FGD & DeNOx Newsletter for more information.)

Section 172(a)(l) provides EPA with discretion whether to 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-

hour ozone 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 of ozone and its precursors and demonstrate they meet the definition of a 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

non attainment 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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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\ ~onattainmentSubpart 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.?a County 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 II ill. 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 TNIAR 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

Fredericks burg 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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