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Estimating SCR installation costs

02/15/2006 | Mark Marano and George Sharp, American Electric Power, and the EUCG 

Fossil Productivity Committee 

The goal of the Clean Air Interstate Rule (CAIR) signed into law almost a year ago is to reduce 

NO emissions by 60%, relative to 2003 levels, across 28 eastern states and the District of 

Columbia by 2015. Though SCR systems worth more than $4 billion are expected to be 

purchased worldwide next year, in the U.S. more than 40 GW of capacity in CAIR-affected 

states are expected to be equipped with the technology by 2010.

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This increased level of SCR installation activity comes on the heels of the 1995 NO SIP (State 

Implementation Plan) Call Rule, which motivated the installation of almost 85 GW of SCR 

installations at central station steam plants over the past decade. Many utilities will have to 

place orders this year to comply with the NO Phase I in-service deadline of 2009. Full 

implementation of CAIR will occur in 2015. One of the challenges facing utilities affected by 

CAIR and actively analyzing their cap-and-trade options is to understand the capital costs 

involved in retrofitting an SCR system.

Survey results

The EUCG, an association of 24 electric utilities representing 302 individual coal-fired units, is a 

forum through which the utilities can enhance their O&M and construction practices to 

improve their operational and cost performance.

One vehicle used by the EUCG is member surveys. One recently completed survey focused on 

SCR system installation costs and the project and design attributes that contribute to them. 

Specifically, it identified the costs of construction labor; equipment; materials; and project 

management, engineering, and construction management (PMEC). The survey addressed 11 

specific scope/design unit attributes such as the type of ammonia system used, the 

NO -removal efficiency design basis of the system, and SCR-related plant upgrades (such as 

economizer, air heater, and fans) on a $/kW basis.

Responses to the survey yielded scope, cost, and design information on 72 individual units 

totaling 41 GW (representing 39% of installed SCR systems in the U.S. by MW at the time of the 

study) owned by eight large utilities from SIP Call states located in the East and Midwest. The 

sample also reflected the distribution of installations in the U.S., so the survey results can be 

considered a valid top-level view of system costs.

Economies of scale

As Figure 1 shows, although almost three-fourths of the surveyed units have a capacity of 300 

to 900 MW, together they represent only a little over half of the total capacity studied. Overall, 

costs were reported to be in the $100 to $200/kW range for the majority of the systems 

(Figure 2), with only three reported installations exceeding $200/kW. System size (with a 644-

MW average unit size in the $100 to $150/kW range) seems to dominate; larger average 

system costs are significantly less than the next survey category (the $150 to $200/kW range, 

with a 309-MW average unit size). The data also suggest that the larger units were installed 

earlier: The average unit size retrofit before 2003 was 623 MW, versus 466 MW since 2003.

graph

Source: EUCG Inc.

1. SCR cost survey results. Survey results, categorized by plant size, covered approximately 

39% of the new selective catalytic reduction (SCR) capacity installed through early 2004.

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graph

Source: EUCG Inc.

2. What they spent. Most surveyed utilities spent between $100 and $200/kW for a selective 

catalytic reduction system.

The range of category costs by unit size ($/kW) provides insight into SCR projects’ relative 

complexities. For example, the aggregated reported costs in the defined categories (Figure 3) 

point to several conclusions:

graph

Source: EUCG Inc.

3. Cost by unit size. The cost distribution for 72 units with SCR installed shows expected 

economies of scale.

• The cost of construction labor on smaller projects exceeds the average construction 

labor cost in all categories by about 50%. The implication is that small plants will be costpenalized by their lack of economies of scale because they may be more difficult to 

retrofit.

• Construction labor costs were relatively constant for plants larger than 300 MW, with an 

average cost of just over $64/kW.

• As expected, economies of scale also affect SCR material costs, with larger units costing 

less to retrofit, on a $/kW basis, than smaller units.

• Sophisticated regression modeling techniques (multivariate analysis) generally did a 

poor job of predicting overall installed costs; too many site-specific variables impact 

construction costs.

• PMEC costs are relatively consistent regardless of unit size.

The good old days

The survey data also revealed that deviations from average installation costs correlate 

strongly with project timing, especially for those units installed after 2003 (Figure 4). The 

significantly higher construction labor costs for later projects most likely reflect increased 

project complexity—"easier" projects were already completed—but also perhaps increased 

competition for skilled labor resources as the number of SCR installation projects under way 

in the U.S. skyrocketed.

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March 18, 2016

Demand trends, prices, and policies 

drive recent electric generation 

capacity additions ›

Source: EIA, Monthly Electric Generator Inventory, and Platts Electric 

Capacity Database 

INDUSTRY NEWS

graph

Source: EUCG Inc.

4. Timing affected costs. The deviation of category costs as a function of SCR project 

completion date shows that early adopters paid less than those that lagged behind.

Interestingly, the variation in material costs was constant over the survey period, most likely 

reflecting increased competitiveness among SCR suppliers. By contrast, PMEC costs showed 

higher variability, which—as in the case of construction labor costs—reflected the greater 

complexity of later projects. Average cost variation by cost category is summarized in the 

table.

One survey, many conclusions

Although the survey results provide useful insight into expected installed costs, they also 

confirm that there is no one-size-fits-all SCR design. What the data also make clear is that sitespecific characteristics of units and plants can drive a project’s cost much higher than 

anticipated. Together, these conclusions suggest that "retrofit difficulty" is indeed relative. 

Units with a capacity of 600 to 900 MW appear to be more difficult to retrofit than those in 

other size ranges.

Variation of surveyed cost categories by unit size. 

Source: EUCG Inc. 

Because SCRs are unitized, greater economies of scale were expected from the survey results. 

Some possible explanations for the modest advantage of scale include:

• The impact of newer plants’ tighter layouts, which often necessitate much more complex 

duct installations, which raises costs).

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• Plants’ limited ability to use the most cost-effective method of equipment 

transportation. Some 41% of the units surveyed in the 600- to 900-MW range are close to 

navigable waters, versus 76% of units larger than 900 MW.

• The increasingly modular design of SCR systems, which reduces their capital costs but 

still requires them to be delivered by sea or river.

—Mark Marano is VP, financial planning–corporate planning and budgeting for AEP. 

George Sharp is a senior member of AEP Generation’s Business Planning Group. For 

more information about the EUCG, contact Pat Kovalesky, executive director, at 623-572-

4140 or visit www.eucg.org.

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