SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis for Rule 4694 December 15, 2005

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– 1 Final Staff Report with App endices For Revised Proposed Rule 4694 

# APPENDIX C

Cost Effectiveness Analysis for

Rule 4694 (Wine Fermentation and Storage Tanks)

December 15, 2005SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis for Rule 4694 December 15, 2005

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– 2 Final Staff Report with App endices For Revised Proposed Rule 4694 I. SUMMARY

Draft Rule 4694 (Wine Fermentation and Storage Tanks) would require operators of

wineries to reduce VOC emissions f rom red wine fermentation. As presented in Appendix B of this Draft Staff Report, annual VOC emissions from wine fermentation are estimated to range from 673 to 788 tons. Proposed exemptions in Draft Rule 4694 would result in 639 to 748 tons of VOC being subject to control requirements. Draft VOC control requirements would require operators to reduce their uncontrolled emissions by 35 percent annually. Annual achievable VOC emission reductions from wine fermentation are estimated to range from 224 to 26 2 tons, for a daily reduction in VOC emissions of 0.61 to 0.72 tons (Appendix B).

This report presents cost effectiveness estimates in terms of dollars spent per ton of VOC controlled. Three cost effectiveness scenarios are presented:

• Scenario

- 1 is a cost effectiveness analysis prepared by District staff, consistent with District procedures for determining cost effectiveness. Scenario

- 1 estimates average cost effectiveness for controlling VOC emissions from red wine at $27,000/ton

- VOC reduced and aver age cost effectiveness for controlling VOC emissions from white wine at $82,000/ton

- VOC reduced.

• Scenario

- 2 is a cost effectiveness analysis presented by the Wine Institute 1

. Scenario

- 2 estimates cost effectiveness for controlling VOC emissions from re d wine fermentation at $120,479/ton

- VOC reduced.

• Scenario

- 3 is a cost effectiveness analysis prepared by District staff after adjusting the Wine Institute’s estimate making specific assumptions about design optimization and eliminating site

- specific cos ts. Scenario

- 3 estimates average cost effectiveness for controlling VOC emissions from red wine fermentation ranges from $42,200/ton

VOC to $52,900/ton

- VOC reduced.

There are no known examples of the application of VOC emission controls to wine

ferment ation, making accurate determination of cost effectiveness difficult. Scenario

- 1 likely understates the cost of control because it assumes that tanks process the maximum number of batches possible, which is seldom achieved in practice. Senario

- 2 likely o verstates the cost of control because the estimate includes significant site

specific costs, and the control system design is not optimized. Scenario

- 3 corrects for

Scenario

- II assumptions. Staff considers Scenario

- III to represent the likely cost of

con trolling fermentation emissions.

1 Robert P. Koch

, Wine Institute, Letter to the District, July 19, 2005SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis for Rule 4694 December 15, 2005

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– 3 Final Staff Report with App endices For Revised Proposed Rule 4694 II. REQUIREMENTS OF ANAL YSIS

The California Health and Safety Code 40920.6(a) requires the San Joaquin Valley

Unified Air Pollution Control District to conduct both an absolute cost effectiveness analysis and an incremen tal cost effectiveness analysis of available emission control options before adopting each Best Available Retrofit Control Technology (BARCT) rule. The purpose of conducting a cost effectiveness analysis is to evaluate the economic reasonableness of the p ollution control measure or rule. The analysis also serves as a guideline in developing the control requirements of a rule. Absolute cost effectiveness of a control option is the added annual compliance cost in dollars per year divided by

the emission re duction achieved in tons VOC reduced per year. This report presents District staff’s analysis of the absolute cost effectiveness of Draft Rule 4694.

Incremental cost effectiveness is intended to measure the change in costs, in dollars per year, and emiss ions reductions in tons VOC reduced per year between two progressively more effective control options or technologies. Incremental cost effectiveness compares the differences in costs and the differences in emissions reductions of candidate control option s. Incremental cost effectiveness does not reveal the emission reduction potential of the control options. Unlike the absolute cost effectiveness analysis that identifies the control option with the greatest emission
reduction, incremental cost effective ness does not present any correlation between emissions reductions and cost effectiveness. Therefore, the relative values produced in the incremental cost effectiveness analysis and the absolute cost effectiveness values are not comparable and cannot be e valuated similarly.

An incremental cost effectiveness analysis would serve no useful purpose because District staff believes that the proposed provisions of Rule 4694 represents all feasible control measures and BACM that the District is mandated to adopt pursuant to the

federal and state clean air acts.

III. BACKGROUND

The need to reduce emissions from wine fermentation in the SJVAB was identified over 20 years ago. During 1988 to 1991, research specific to evaluating methods of controlling ethanol em issions during wine fermentation was conducted by California Air Resources Board (ARB), with cooperation from the Wine Institute. Three possible emission control technologies were evaluated: adsorption vapor recovery (activated carbon adsorption), c atalyt ic thermal oxidation , and wet (water) scrubbers. All three technologies demonstrated at least 90% ethanol emission reduction. Subsequently, estimates of ethanol emission reductions associated with two control technologies, vapor condensation and fermenta tion temperature control were prepared in 1993.

Theoretical control efficiencies for these two control methods were estimated to be 90% and 30% respectively.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis for Rule 4694 December 15, 2005

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– 4 Final Staff Report with App endices For Revised Proposed Rule 4694 In 1990, a demonstration program evaluating control of ethanol emissions from wine

fermenters wa s conducted at the E. & J. Gallo Winery in Fresno, California 2 . The study used a prototype emissions capture system. The design of the VOC capture system allowed fermentation emissions to vent naturally through a manway located at the top of

the tank. The VOC capture system consisted of an emissions collection hood, located above the manway, connected by ductwork to a VOC control device. The collection hood was larger than the manway and was suspended above the opening, creating an air gap between the tank and the hood. The design included a fan with a flow

- rate sufficient to pull emissions into the collection hood and force the emissions through the ductwork to the emissions control device. Based on results reported in the Gallo study,

District staff

considers it reasonable to expect similar emissions collection systems to have a capture efficiency of at least 90%. Achieving an emissions capture efficiency of 90% and an emissions destruction efficiency of 95% would result in an overall

emissions redu

ction efficiency of 86%. The Wine Institute’s report includes a conceptual design for collection system that eliminates the air gap, achieving a closed capture system. A closed capture system is expected to have a capture efficiency of

100% and would res ult in an overall emissions reduction efficiency of 95%.

General information on available control technologies is presented in the Draft Staff Report for Rule 4694, Section IV. Ethanol is the primary VOC produced during wine fermentation. Many different types of established technologies can be used to control ethanol emissions. Five types of VOC controls are:

1. Oxidation (conversion of the VOC to CO 2 );

2. Absorption (“scrubbers”, which transfer the VOC in air emissions to a liquid waste stream);

3. Ads orption (often using activated carbon, which transfers the VOC in the air onto a solid substrate);

4. Condensation (conversion of the VOC gases into liquids); and

5. Biological control systems (e.g., bio

- filters or bio

- scrubbers)

During 1988 to 1991, res earch specific to evaluating methods of controlling ethanol emissions during wine fermentation was conducted by ARB, with cooperation from the Wine Institute. Three possible emission control technologies were evaluated: adsorption vapor recovery (activate d carbon adsorption), c atalytic thermal oxidation

, and wet (water) scrubbers. All three technologies demonstrated at least 90% ethanol emission reduction. Subsequently, estimates of ethanol emission reductions associated with two control technologies, va por condensation and fermentation temperature control were prepared in 1993. Theoretical control efficiencies for these two control methods were estimated to be 90% and 30% respectively.

2 Akton Associates, A Demonstration Program, Ethanol Emissions Control from Wine Fermentation Tanks Utilizing Carbon Adsorption Technology, 1990SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis for Rule 4694 December 15, 2005

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– 5 Final Staff Report with App endices For Revised Proposed Rule 4694 IV. STORAGE TANK EMISSIO NS CONTROL TECHNOLOG Y

After fermentation, w ine is transferred a number of times between storage tanks to perform various finishing operations such as “racking” (decantation for separation of sediment), filtration, malolactic fermentation (breakdown of malic acid to lactic acid and carbon dioxide), and bottling operations. Since the bottling process is a year

- round operation, each batch of wine will have a definite residence time in storage, before bottling, which includes the time spent in performing the various post

- fermentation finishing processe s. The post

- fermentation operations result in “working losses” from the storage tanks since they require draining and filling the tanks several times. Storage before bottling generates “breathing losses” from the tanks.

Since ethanol in water constitute s an organic liquid, the US EPA “TANKS” program can be utilized to determine the estimated VOC (ethanol) emissions. However, obtaining accurate results from the TANKS program requires that the organic liquid be accurately characterized in terms of vapor p ressure of the liquid and the composition of the equilibrium vapor phase. Since ethanol and water are highly polar compounds, they

form a non

- ideal mixture, i.e., the mixture does not follow Raoult’s law. As a result, direct estimation of vapor pressure and equilibrium vapor phase concentration, based on pure component properties, is not practical and experimental data are required.

To effectively utilize TANKS to estimate VOC emissions from wine storage, experimental data supplied by the Wine Institute for the vapor pressure of ethanol over wine were used, along with the assumption that water will behave ideally (a good assumption since the liquid phase is over 95% water on a molar basis). District staff calculates an emission factor for wine storage of 0.372 lb EtOH/1000 gal wine processed, based on a “typical” San Joaquin Valley wine storage scenario.

In 2002, 337,968,011 gallons of wine was fermented in the District. Storing all of the 2002 wine fermentation in the District until bottled, would resu lt in annual storage

emissions of 62 tons of VOC. Not all wine fermented in the District is bottled in the District, thus actual storage emissions are likely lower than estimated. According to District Permit To Operate application data, there are over 4 ,000 tanks potentially used for storing bulk wine in the District. Thus, potential emissions from a single bulk wine storage tank should be negligible.

Two operational practices currently in place on bulk wine storage tanks in use at large

wineries in th e District are use of pressure

- vacuum relief valves and temperature

control 3 . District staff considers use of pressure

- relief valves, and temperature control to constitute reasonable available control technology (RACT) for bulk wine storage
tanks. Thus, there should be no significant additional costs associated with controlling VOC emissions from bulk wine storage tanks.

3 Art Caputi, The Wine Institute; Bob Calvin, Canandaigua Winery, Telephone Conversations with Daniel Barber, San Joaquin Valley Air Pollution Control Di strict, 2004.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis for Rule 4694 December 15, 2005

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– 6 Final Staff Report with App endices For Revised Proposed Rule 4694 V. WINE FERMENTAION EMI SSIONS CONTROL AND C OST OF REDUCTIONS

The previous Draft Rule 4694 (Wine Fermentation and Storage Tanks) would r equire operators of wineries to reduce VOC emissions from red wine fermentation. Operators would achieve compliance by equipping and operating their red wine fermenters with VOC control systems achieving at least 86% VOC capture and control efficiency.

D istrict staff prepared a cost of control analysis consistent with the proposed requirements and presented the information during the second workshop. That analysis shows average cost effectiveness of controlling VOC emissions from red wine is

estimated at $27,000 per ton. Average cost effectiveness of controlling VOC emissions from white wine was estimated at $82,000 per ton. The analysis is presented here as

Scenario 1.

The Wine Institute, believing that the District’s analysis understates the cost of control, engaged Eichleay Engineering to prepare a cost estimate for installing VOC controls at Gallo’s Livingston winery. The Wine Institute submitted the Eichleay report as part of their public comments to the second workshop 4 . The Eichleay report conc ludes that the estimated cost of controlling VOC emissions from wine fermentation is $120,479 per ton of ethanol controlled. A brief synopsis of the Eichleay report is presented here as

Scenario

- 2.

District staff believes that the Eichleay report signifi cantly overstates the cost of controlling fermentation emissions. The District’s analysis of the Eichleay report is presented as Scenario

- 3. After adjusting the costs presented in the Eichleay report, District staff estimates cost effectiveness ranging f rom $42,200/ton

- VOC to $52,900/ton

VOC reduced for an optimized, non

- site specific installation of this size.

Scenario

- 1

In 2003, the District contracted with Sonoma Technology, Inc. (STI) to prepare a control measure assessment for wine fermentation pr ocesses 5 . STI’s report presented cost estimates for a design based on use of an RTO to control fermenter emissions. This analysis incorporates many of the cost estimates and assumptions presented in STI’s report. A significant departure from STI’s cost analysis is that the District’s analysis is based on the concept of connecting multiple fermenters to a single RTO. STI’s assessment assumed a design of one fermentation tank per each RTO. The District’s analysis also includes additional project costs no t considered in the STI report.

4 Robert P. Koch, Wine Institute, Letter to the District, July 19, 2005

5 Control Technology Evaluation: Wineries

– Fermentation Processes, Sonoma Technology, Inc, October 21, 2003SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis for Rule 4694 December 15, 2005

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– 7 Final Staff Report with App endices For Revised Proposed Rule 4694 The following assumptions were made in this analysis:

1. This cost analysis considers red and white wine fermentations separately, because of the different emissions characteristics of the two wine types and differences in the design and operation of their respective fermenters.

2. While red wine fermenters can be used to ferment white wines, white wine fermenters are not equipped to handle the additional solids associated with producing a red wine. Thus, the analysis assu mes that a fermenter will only be

used to ferment either red or white wines.

3. Control technology is regenerative thermal oxidation (RTO). Control system design capacity with a peak fermenter exhaust flow of 9.75 acfm/1000 gallons

fermented 6

.
4. In gen eral, it will be more cost effective to vent multiple tanks to a single RTO.

5. All tanks manifolded together have the same capacity and will operate at peak flow simultaneously.

6. Only four fermenters are connected to a single RTO.

7. Connecting more tha n four tanks per RTO is technically feasible and should improve cost effectiveness.

The following assumptions were made about capital costs:

1. RTO purchase cost is based on interpolation or extrapolation of the RTO pricing data presented in the control te chnology assessment prepared by STI for system capacities under 8,000 cfm.

2. RTO pricing for capacities above 8,000 cfm is based on quotations obtained from

Air

- Clear LLC by Eichleay Engineering for the Wine Institute, and provided to the
District, March 1, 2005.

3. Allowances were included for a separator tank and pump and the allowances were adjusted for system capacity based on a capacity exponent factor.

4. Ductwork purchase cost is based on interpolation or extrapolation of the ductwork pricing data p resented in the control technology assessment prepared by STI, using calculated capacity exponent factors.

5. Structural steel supports for the new ductwork and associated foundations were estimated by including an allowance of 40 tons of medium weight ste el and four drilled pier foundations for each pair of tanks (regardless of tank size), estimated at $4,500/ton for steel and $3,000/pier for foundations.

6. No costs were included for infrastructure improvements, such as electrical supply or natural gas.

6 120% of flow reported in “Characterization of Ethanol Emissions From Wineries”, Fielder, D. and Bumala, P., July
19, 1982SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis for Rule 4694 December 15, 2005

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– 8 Final Staff Report with App endices For Revised Proposed Rule 4694 7

. Factors were applied as follows to the bare equipment and ductwork costs to arrive

at an installed direct cost:

• RTO: 1.3

• Separator/Pump: 3

• Ductwork: 6

In the case of the RTO and separator/pump, these factors are intended to cover

the material and labo r costs for site preparation, concrete, structural steel, equipment installation, electrical instrumentation, and all other bulk materials as required to physically complete and pre

- commission the facility. The factor applied

to the ductwork covers instal lation of the ductwork, supply and installation of tank nozzles, valves, connected instrumentation, and miscellaneous minor supports.

8. Sales tax was estimated at 8.25% of equipment and material costs (it was assumed that 1/3 of the installed direct cost, less equipment cost, covered bulk materials).

9. Freight was included at 1.5% of the equipment and material cost.

10. Total direct cost was estimated as the sum of the installed direct costs, sales tax, and freight.

11. Indirect construction costs were estimated at 20% of total direct cost.

12. Indirect cost includes contractor’s fee, field staff, construction equipment, temporary facilities, and indirect craft labor.

13. Engineering was estimated at 25% of the total direct cost.

14. Cost of building per mits was estimated at 2% of total direct cost.

15. Owner’s cost was included at 10% of total direct cost to cover owner’s project management, training, and commissioning costs.

16. Contingency was included at 15% of total cost to arrive at Total Installed Costs.

The following assumptions were made about annual costs:

1. Operating labor was estimated at 0.5 hour per shift at $30/hour, assuming 24 hour operation for 60 or 90 days.

2. Maintenance was estimated at 3% of the bare equipment costs.

3. Utilities we re estimated using the utility costs presented in the STI control

assessment document.

4. Overhead, insurance, and other administrative costs were included at 2% of total

installed costs.

5. Capital recovery was estimated as 0.163 x Total Installed Cost (1 0 year) per District practice.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis for Rule 4694 December 15, 2005

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– 9 Final Staff Report with App endices For Revised Proposed Rule 4694 The following assumptions were made about emissions estimates:

1. Emissions were calculated using emission factors of 6.2 lbs/1000 gallons and 2.5 lbs/1000 gallons for red and white wine respectively 7

.

2. Emission estimates were calculated for working volumes of 70% and 80% of nominal tank capacity.

3. The number of batches processed per red and white wine fermenters were estimated assuming fermentation periods of 5 and 10 days, respectively, for red

and white wines.

4. Calcu lations were based on total annual fermentation periods of 60 and 90 days.

5. An 86% capture and control efficiency of the VOC control system was assumed.

Cost Effectiveness Estimates

Two cost effectiveness scenarios were calculated for both red and whit e wines; one

scenario is based on a 60

- day fermentation period, the other is based on a 90

- day fermentation period. For both red and white wines, tank volumes ranged from 50,000 to 300,000 gallons.

Base assumptions for the analysis are summarized in Ta ble

- 1. Cost effectiveness for red wine fermentation is presented in Table

- 2. As illustrated in Table

- 2, scenario

- 1 (60

- day fermentation season), cost effectiveness ranges $59,000 to $16,000 per ton, depending on tank size. Table

- 2, scenario

- 2 (90

- day fe rmentation season) illustrates that cost effectiveness is sensitive to tank throughput. The greater the throughput, the

lower the cost effectiveness. Cost effectiveness for scenario

- 2 ranges from $39,000 to $11,000 per ton. Average cost effectiveness fo r the two red wine fermenter scenarios is $27,000 per ton.

A similar analysis for white wine fermentation is presented in Table

- 3. The analysis differs from the red wine fermenter analysis in that it uses an emissions factor of 2.5 lbs/1000 gallons, assu mes tanks are filled to 80% of capacity and a fermentation batch period of 10 days. Cost effectiveness for a 60

- day fermentation season ranged from $192,000 to $40,000 per ton. Cost effectiveness for a 90

- day fermentation ranged from $128,000 to $27,000 per ton. Average cost effectiveness for all white wine fermenter sizes and fermentation periods is $82,000/ton.

7 Emissions Inventory Procedural Manual, Section 5.1, Air Resources Board, 2005SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis for Rule 4694 December 15, 2005

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– 10 Final Staff Report with App endices For Revised Proposed Rule 4694 Table

- 1. Base Assumptions for Wine Fermentation Estimates, Scenario

- 1

Activity Assumed Value

System Capacity 9.75 acfm/1000 gallons

RTO Ba se Cost $108,500 @ 500 cfm

Duct Work Base Cost $3,500 @ 500 cfm Base Utility Cost $1,100 @ 500 cfm Base Separator Cost $5,000 @ 500 cfm Base Pump Cost $5,000 @ 500 cfm

Direct Cost Factor RTO 1.3

Direct Cost Factor Duct 6
Direct Cost Fact. Sep/Pump 3

C apital Recovery Factor 0.163

Maintenance 3.0% Of Equipment Cost Insurance, O.H., Administration 2.0% Of Total Installed Cost

Labor/Bulk Material Ratio 2 Ductwork Support Steel Cost $90,000/tank Ductwork Support Foundation $6,000/tank

Construction I ndirect Costs 20% Of Direct Costs Engineering 25% Of Direct Costs Building Permits 2.0% Of Direct Costs

Owner's Cost 10% Of Direct Costs Contingency 15% Operating Parameters

Red & White Wine EF 6.2 lb/1000 gal and 2.5 lbs/1000 gal

Control Efficien cy 86.0%SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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– 11 Final Staff Report with App endices For Revised Proposed Rule 4694 Table

- 2. Cost Effectiveness 8 For Red Wine Fermentation, Scenario

- 1 Nominal Tank Capacity (x 1000 gal) System Parameters 50 100 200 300 Design Flowrate/Tank cfm 450 899 1,799 2,698 System Flowrate cfm 1,799 3,598 7,196 10,793 Costs (x $10 00)

RTO Cost $147 $173 $204 $326

Duct Cost $24 $33 $45 $53 Separator $8 $11 $15 $17 Pump $5 $5 $5 $5

Fixed Steel Cost $360 $360 $360 $360

Fixed Concrete $24 $24 $24 $24

Labor & Bulk Materials $178 $234 $308 $393

Sales Tax $19 $23 $29 $42 Freight $3 $4 $5 $8

Total Direct Cost $769 $867 $994 $1,228

Construction Indirect Costs $154 $173 $199 $246

Direct + Indirect Cost $922 $1,041 $1,192 $1,473 Engineering $192 $217 $248 $307 Building Permits $15 $17 $20 $25

Owner's Cost $77 $87 $99 $123

Ins talled Cost W/O Contingency $1,207 $1,362 $1,560 $1,927 Contingency @ 15% $181 $204 $234 $289 Total Installed Cost (TIC) $1,388 $1,566 $1,794 $2,217

Annualized TIC $226 $255 $292 $361 Operating Cost $4 $4 $4 $4

Maintenance $6 $7 $8 $12

Utilities $4 $ 8 $16 $24

Total Direct Annual Cost $13 $19 $28 $40

O.H./Insurance/Admin

. $28 $31 $36 $44 Capital Recovery $226 $255 $292 $361

Total Indirect Annual Cost $254 $287 $328 $406

Total Annualized Cost $267 $305 $356 $445

Emission Reduction Tons/year

Scen ario

- 1 (60 days & 12 batches) 4.8 9.6 19.2 28.8

Scenario

- 2 (90 days & 18 batches) 7.2 14.4 28.8 43.2
Cost Effectiveness $/ton

Scenario

- 1 (60 days & 12 batches) $56,000 $32,000 $19,000 $15,000

Scenario

- 2 (90 days & 18 batches) $38,000 $21,000 $12,000 $1 0,000

8 Table values developed from spreadsheets. Displayed values have been rounded.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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– 12 Final Staff Report with App endices For Revised Proposed Rule 4694 Table

- 3. Cost Effectiveness 9 For White Wine Fermentation Scenario

- 1 Nominal Tank Capacity (x 1000 gal) System Parameters 50 100 200 300 Design Flowrate/Tank cfm 50 100 201 301 System Flowrate cfm 201 401 803 1,204 Costs (x $1000)

RTO Cost $87 $103 $121 $134

Duct Cost $9 $13 $17 $21 Separator $3 $5 $6 $7 Pump $5 $5 $5 $5

Fixed Steel Cost $360 $360 $360 $360

Fixed Concrete $24 $24 $24 $24

Labor & Bulk Materials $75 $99 $129 $152

Sales Tax $10 $12 $15 $17 Freight $2 $2 $3 $3

Total D irect Cost $577 $623 $681 $722

Construction Indirect Costs $115 $125 $136 $144

Direct + Indirect Cost $692 $747 $817 $866 Engineering $144 $156 $170 $180 Building Permits $12 $12 $14 $14

Owner's Cost $58 $62 $68 $72 Installed Cost W/O Contingency $9 05 $977 $1,069 $1,133 Contingency @ 15% $136 $147 $160 $170 Total Installed Cost (TIC) $1,041 $1,124 $1,229 $1,303

Annualized TIC $170 $183 $200 $212 Operating Cost $4 $4 $4 $4

Maintenance $3 $4 $4 $5

Utilities $0 $1 $2 $3

Total Direct Annual Cost $ 8 $9 $10 $12

O.H./Insurance/Admin

. $21 $22 $25 $26 Capital Recovery $170 $183 $200 $212

Total Indirect Annual Cost $190 $206 $225 $239

Total Annualized Cost $198 $214 $235 $250

Emission Reduction Tons/year

Scenario

- 1 (60 days & 6 batches) 1.03 2.06 4.13 6.19

Scenario

- 2 (90 days & 9 batches) 7.2 14.4 28.8 43.2
Cost Effectiveness $/ton

Scenario

- 1 (60 days & 6 batches) $192,000 $104,000 $57,000 $40,000

Scenario

- 2 (90 days & 9 batches) $128,000 $69,000 $38,000 $27,000

9 Table values devel oped from spreadsheets. Displayed values have been rounded.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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– 13 Final Staff Report with App endices For Revised Proposed Rule 4694 SCENARIO

- 2

The Wine Institut e contracted with Eichleay Engineering to developed total capital investment and annual operating costs associated with installation of regenerative thermal oxidizer (RTO)

- based VOC control technology on the west side red

fermentation tanks at Gallo’s Livi ngston facility. This area has 60 red wine fermenters with capacities of 50,000, 100,000, and 200,000 gallons. The cost estimate is for installation and operation of four RTO systems. The Eichleay report estimates a cost of $31,325,000 for the proposed installation and estimates cost effectiveness at $120,479/ton

- VOC on that basis. The Wine Institute submitted the Eichleay report as part of their public comments to the second workshop.

SCENARIO

- 3

District staff’s review of the Eichleay report conclude s that because of site

- specific costs and lack of design optimization, the report likely over estimates the cost of control. In brief;

· The estimate includes significant costs, which are specific to the Gallo

- Livingston facility or to Gallo facilities in particular. (Estimated Impact $6,817,000)

· The design is based on a worst

– case approach for all potential operating scenarios. No design optimization or simplification has been carried out nor have operations improvements been considered. (Estimated Impact $7,853,000)

· Capacities of the estimated capture and control systems are unnecessarily large. The District estimates that the size of the control systems could be reduced by at least 37%. (Estimated impact $1,817,000)

· Estimated operating costs have not t aken full advantage of the efficiencies of the proposed equipment and have over estimated operational labor requirements. (Estimated impact $280,000/year)

After adjusting the Wine Institute’s estimate per the considerations above, the District

estimates t hat an optimized, non

- site specific VOC capture & control system for a facility of this size could be potentially installed for approximately $14,838,000. Based on the adjusted estimate, the capacity of the 60 tanks included in the Eichleay report, and th e industry’s reported 4 to 5 turns per tank per season, the District estimates cost effectiveness ranging from $42,200/ton

- VOC to $52,900/ton

- VOC for an optimized, non

site specific installation of this size. Details of how each adjustment to the Eichleay report affects cost effectiveness is presented in Table 4.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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– 14 Final Staff Report with Appendices
For Revised Proposed Rul e 4694 Table

- 4. District Adjustments to the Eichleay Report for an Optimized Generic Winery Without Site Specific Costs

Industry Average Production

Cost Item Capital

Investment Annual Cost

Impact Cost

Effectiveness Impact Bas ed

on Gallo

Livingston

Production in

2004 Cost

Effectiveness Impact at 4

Tank Turns Per
Season Cost

Effectiveness Impact at 5 Tank

Turns Per
Season

Eichleay Estimate $31,325,000 $5,858,975 $120,481 $107,111 $85,532

District Adjustments

Site

- Specific Costs ($6,817,000) ($1,111,171) ($22,849) ($20,314) ($16,221)
Optimize and Simplify the CIP System ($7,319,000) ($1,192,997) ($24,532) ($21,810) ($17,416) Other Design Optimization ($2, 351,000) ($383,213) ($7,880) ($7,006) ($5,594)
Optimize Annual Operating Costs

---- ($280,000) ($5,758) ($5,119) ($4,088)

Subtotal District Adjustments ($16,487,000) ($2,967,381) ($61,020) ($54,248) ($43,319)

District Analysis Result for Optimized Generic Facility w/o Site

Specific Costs $14,838,000 $2,891,594 $59,461 $52,863 $42,213