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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 equipp ed with the technology by 2010. x 

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Get POWERnews FREE! POWERnews is a weekly e-newsletter that keeps you informed about the latest developments in the electric power industry. Get the next POWERnews delivered to your inbox. This increased level of SCR installation activity comes on the heels of the 1995 NO SIP (State Implementation Plan) Call Rule, which motivate d the installation of almost 85 GW of SCR installations at central station steam plants overthe 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-trad e options is to understand the capital costs involved in retrofitting an SCR system. 

## Survey results

The EUCG, an association of 24 elec tric 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 survey s. 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 construc tion 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 sy stem, and SCR-related plant upgrades (such as economizer, air heater, and fans) on a $/kW basis. Responses to the survey yielded scope, cost, an d 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 Ca ll states located in the East and Midwest. The sample also reflected the distribution of installa tions 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-fourth s 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 repo rted installations ex ceeding $200/kW. Syst em 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. x

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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 report ed 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 sc ale because they may be more difficult to retrofit. • Construction labor costs were relatively consta nt for plants larger than 300 MW, with an

average cost of just over $64/kW. • As expected, economies of scale also affect SC R material costs, with larger units costing

less to retrofit, on a $/kW basis, than smaller units. • Sophisticated regression modeling techniqu es (multivariate anal ysis) 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 deviatio ns from average installation costs correlate strongly with project timing, especially for those units installed after 2003 (Figure 4). The significantly higher construction labor costs fo r later projects most likely reflect increased project complexity—"easier" pr ojects were already complete d—but also perhaps increased competition for skilled labor resources as the number of SCR installation projects under way in the U.S. skyrocketed. Most Read () Most Commented ()
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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 wa s constant over the surv ey period, most likely reflecting increased competitiveness among SC R 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 resu lts provide useful insight into expected installed costs, they also confirm that there is no one-size-fits-all SCR desi gn. 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

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