### UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

REGION 10 1200 Sixth Avenue, Suite 900 Seattle, WA 98101-3140

OFFICE OF
ENVIRONMENTAL ASSESSMENT



### October 15, 2012

MEMORANDUM

SUBJECT: Revisions to Healy Unit 1 SCR Cost Effectiveness Calculations

FROM:
Zach Hedg eth, PE

Environmental Engineer, ESU, OEA

TO: Keith Rose, Environmental Scientist

State and Tribal Air Programs Unit, OAWT

Based on comments received during the public comment period on the proposed approval of the Alaska Regional Haze SIP, I have prepared revised cost effectiveness calculations for
selective catalytic reduction (SCR) as applicable to the Healy Unit 1 coal fired boiler. The

revised calculations are included as Attachment 1 to this memo and reduce the cost effectiveness to between $5,335 and $5,924/ton. This range is developed based on
specified variability in certain elements of the cost analysis, as detailed below.

As you have requested, I've also included a comprehensive table for NOx controls on Healy
1 which includes cost effectiveness numbers for the control technologies considered within
the BART analysis submitted by Alaska at 8, 10, 15, 20, and 30 year lifetimes. This table
summarizing NOx control technology cost effectiveness is included as Attachment 2 to this

memo.

The primary changes made to the SCR calculations are described below:

1. Annual Operating & Maintenance Cost - Comments were submitted stating that the
annual operating and maintenance (O&M) costs as conducted by previous analyses
do not conform to the methodology outlined in the EPA Control Cost Manual. Based
on additional review of the calculations submitted as part of Alaska's SIP, I see that the methodology used to calculate the annual O&M costs for SCR installed on Unit 1
were not performed in accordance with the Control Cost Manual. Specifically, the
previous analysis estimated annual O&M costs using an abbreviated method based on assumptions which were not clearly described and supported. Using information
contained within the various consultant reports (as cited in the attached), I calculated the annual O&M costs for SCR on Healy 1 using the Control Cost Manual

## 2 methodology.		This	reduced	the	es timate	of	annual	O&M	costs	fro m	$1,125,172	to $463,273.

2. NO X 

## Emission	Rate	–	The	design	basis for	SCR	at	Healy	1	has	been	a 75%	reduction

in	NO X 

## emissions	from	a	baseline	emissi on	rate	of	0.28	lb/MMBtu.		Thi s	is	the	origin of	the	0.07	lb/MMBtu	NO X 

## emission	rate	used	in	previous	calculations.		However,	as discussed	throughout	the	various	BART	analyses,	the	0.28	lb/MMB tu	boiler emission	rate	could	be	reduced	to	0.23	lb/MMBtu	via	optimizatio n	of	the	existing

low‐	NO X 

## burner	(LNB)	and	overfire	air	s ystem	for	$20,000	in	capital	co sts. Applying	this	low	cost	optimization	reduces	the	SCR	inlet	conce ntration	to	0.23 lb/MMBtu.		An	SCR	system,	if	designed	to	achieve	a	75%	reductio n	in	NO X 

## ,	would

achieve	an	emission	rate	of	less than	0.058	lb/MMBtu.		Based	on these considerations,	I’ve	conducted	cost	calculations	using	both	the 0.07	and	0.058 lb/MMBtu	emission	rates	in	order to	illustrate	the	impact	on	co st	effectiveness.		I consider	0.058	lb/MMBtu	to	be	a	reasonably	achievable	emission rate	based	on tiered	implementation	of	the	LNB /overfire	optimization	and	SCR as	designed.

Despite	the	information	submitted	in	the	comments,	I	do	not	agr ee	that	a	more stringent	emission	rate,	such	as that	required	for	other	projec ts	cited	in	the comments,	can	be	considered	in	th ese	cost	analyses	for	Healy	1. The	SCR	unit	sized and	quoted	for	Healy	1	was	d esigned	to	achieve	75%	NO X 

## reduction.		A	more	robust SCR	unit	would	be	required	to	ac hieve	the	lower	emission	rates cited	in	the comments,	and	would	reasonably	be expected	to	cost	more	than	th e	unit	quoted	by Fuel	Tech.		Site	specific	cost	in formation	for	a	more	efficient SCR	unit	was	not provided	by	the	commenters.

3. Expected	Equipment	Lifetime	–	Ba sed	on	information	submitted	an d	cited	within the	comments,	I	agree	that	consid eration	of	a	30‐year	control	e quipment	lifetime	is reasonable	for	SCR	on	Healy	1.		I have	revised	my	calculations to	reflect	a	30‐year

lifetime.

4. New	Induced	Draft	Fan	–	Capital costs	for	the	SCR	unit	within	t he	GVEA	cost	analysis included	a	new	1,500	horsepower	(hp)	induced	draft	fan.		This	r eflects	an	increase of	600	hp	over	the	existing	fan. GVEA	has	presented	the	fan	r eplacement	as necessary	solely	due	to	the	SCR. However,	based	on	information in	the	various consultant	reports	(as	cited	in my	calculations)	and	using	the methodology	from	the Control	Cost	Manual,	I	calculate d	an	estimated	SCR	power	usage of	approximately 130	hp.		This	includes	consideration	of	additional	system	press ure	drop	introduced by	the	SCR	unit	and	is	significa ntly	less	than	the	increase	in the	fan	power	output	of 600	hp.		This	suggests	that	the	r emaining	470	hp	of	additional power	is	required	for some	other	reason.		If	any	other project	is	planned	(made	possi ble	by	the	increased fan	size),	all	capital	costs	asso ciated	with	the	larger	fan	sho uld	be	pro‐rated proportionally	between	the	SCR	a nd	other	projects	based	on	the newly	introduced pressure	loss	to	the	system.		No explanation	has	been	provided for	why	the

## 3 installation	of	a	new	SCR	using about	130	hp	requires	a	fan	tha t	is	600	hp	more powerful.		If	fan	upgrade‐related	costs	are	attributed	proporti onately	to	the	hp	with cost	multiplied	by	a	factor	of 130/600	attributed	to	SCR,	cost effectiveness	is improved	by	approximately	$300/ton.		Since	it	is	unclear	whethe r	the	entire increase	in	fan	size	is	necessary solely	due	to	the	new	SCR	uni t,	I’ve	conducted	cost calculations	using	both	assumpti ons	in	order	to	illustrate	the impact	on	cost

effectiveness.

5. Interest	Rate	–	Based	on	informa tion	submitted	and	cited	within the	comments,	I agree	that	the	cost	analyses	sho uld	be	conducted	using	an	inter est	rate	of	7%,	and have	revised	my	calculations	accordingly.

The	cost	spreadsheet	in	Attachment	1	named	“Low”	is	based	on	as suming	an	emission	rate of	0.058	lb/MMBtu	and	pro‐rated	f an	costs.		The	cost	spreadshee t	in	Attachment	1	named “High”	is	based	on	assuming	an	em ission	rate	of	0.07	lb/MMBtu	w ith	all	fan	costs	attributed

to	the	SCR	unit.

If	you	have	any	questions	about this	memo,	please	call	me	at	3‐ 1217.

Attachments

Attachment	1	.................................................. ......................................	SCR	Cost	Effectiveness	C alculations

Attachment	2	...................................	NO X 

## Control	Technologies	Cost	Ef fectiveness	Summary	Table

C:	 Mark	Filippini,	Unit Manager,	ESU,	OEA Debra	Suzuki,	Unit	Manager,	STAPU,	OAWT Juliane	Matthews,	ORCAttachment 1 ‐ SCR Cost Effectiveness Page 1 of 2

% multiplier Cost Note

Capital Costs

SCR system purchase 13,300,000 $ Fuel Tech

New ID fan purchase 151,667 $ Stan McHugh

New fan motor switchgear 86,667 $ Flint Goodrich

Ductwork baghouse support stiffeners 350,000 $ Flint Goodrich

relocation of existing Unit 1 equipment 300,000 $ Flint Goodrich

optimize LNB & OFA 20,000 $ Enviroplan, 2010, pg 6

‐ 179

project contingency 15% 2,131,250 $ CC Manual

Total Capital Investment Cost (TCIC) 16,339,583 $

Capital Recover y

Interest rate 7%

Equipment lifetime 30
Capital cost recovery factor 0.0806 CC Manual Eq 1.34

Annual Capital cost 1,316,748 $ EPA (ZTH) ‐‐ Healy 1 SCR ‐‐ "Low"

Annual Costs ‐‐ EPA CC Manual

Annual Maintenance Cost 1.5% 245,094 $ Equation 2.46

Annual Reagent Cost 46,844 $ Equation 2.47

Reagent volume flowrate (gal/hr): 10.9 Equations 2.33 & 2.34

Reagent mass flowrate (lb/hr): 24.1 Equation 2.32

Nox inlet concentration (lb/MMBtu): 0.23 Enviroplan, 2010 pg 7 / pg 6

‐ 74

Coal sulfur content (wt. %): 0.17% CH2M Hill, 2009 pg 2

‐ 2

Flue gas temp at SCR inlet (F): 725 Fuel Tech, 2009

Ammonia slip (ppm): 2 Fuel Tech, 2009

Boiler heat input (MMBtu/hr): 340 CH2M Hill, 2009 pg 2

‐ 1

NH3:Nox typical stoichiometric ratio: 1.05 CC Manual pg 2

‐ 13

MW of NH3 (g/mole): 17.03 CC Manual pg 2

‐ 39

MW of NO2 (g/mole): 46.01 CC Manual pg 2

‐ 39

Capacity Factor (hrs/yr): 8640 Fuel Tech, 2009

Reagent cost ($/gallon): $0.50

Reagent cost ($/ton NH3): 450 $ Fuel Tech, 2009

NH3 solution concentration: 29.4% CC Manual page 2

‐ 53

NH3 solution density (lb/ft3): 56 CC Manual page 2

‐ 53

NH3 solution specific volume (gal/ft3): 7.481 CC Manual page 2

‐ 53

Annual Electricity Cost 88,719 $ Equation 2.49

SCR Power 95.8 Equation 2.48 Usage (kw): Equation

SCR Power Usage (hp): 128.4

Total pressure drop due to SCR (in w.c.): 5 Fuel Tech, 2009

Cost of power ($/kw): 0.10723 GVEA, 2009

Annual operating hours (hrs/year): 8640 Fuel Tech, 2009

Annualized Catalyst Replacement Cost 67,754 $

Catalyst replacement cost ($/ft3): 227 $ Fuel Tech, 2009 ‐‐ $8,000/m3

Operating life of catalyst (hrs): 16000 Fuel Tech, 2009
Catalyst term (Y, years): 1.9 CC Manual equation 2

‐ 53

Future Worth Factor (FWF): 0.5 CC Manual equation 2

‐ 52
Catalyst Volume (ft3): 1140.2 CC Manual equation 2

‐ 19

Nox efficiency factor: 1.122 CC Manual equation 2

‐ 20

Nox adjustment factor: 0.926 CC Manual equation 2

‐ 21

Ammonia slip adjustment factor: 1.170 CC Manual equation 2

‐ 22

Sulfur in coal adjustment factor: 0.964 CC Manual equation 2

‐ 23

Temperature adjustment factor: 1.019 CC Manual equation 2

‐ 24

Number of SCR chambers: 1

Total Annual O&M Costs 448,410 $

Total 1 765 158 $ Annual Costs 1

, 765

, 158

lb/MMBtu

0.28 0 0% 417

0.07 313 75% 104

0.058 331 79% 86

NO X Reduction 331

$/ton of NO X 5,335 $

References

1 CH2M Hill, 2009. BART Analysis for Healy Power Plant. CH2M Hill, January 2009.

2

3

4 GVEA, 2009. GVEA Comments attachments submitted to Alaska DEC, 6/15/09.

Enviroplan, 2010. Final BART Determination Report, Golden Valley Electric Association (GVEA) Best Available Retrofit (BART) Evaluation.
Enviroplan Consulting, Fairfield, NJ. Dated January 19, 2010, revised June 1, 2010. 

### Fuel	Tech,	2009. Golden Valley Electric Association, Healy Station Unit 1, Conceptual Application of Selective Catalytic

Reduction (SCR) Technology. Fuel	Tech,	Inc.		Warrenville,	Illinois.		June,	2009. Nox Reduced

tpy Nox Emissions tpy Nox Removal

Efficiency

, , / /Attachment 1 ‐ SCR Cost Effectiveness Page 2 of 2

% multiplier Cost Note

Capital Costs

SCR system purchase 13,300,000 $ Fuel Tech

New ID fan purchase 700,000 $ Stan McHugh

New fan motor switchgear 400,000 $ Flint Goodrich

Ductwork baghouse support stiffeners 350,000 $ Flint Goodrich

relocation of existing Unit 1 equipment 300,000 $ Flint Goodrich

optimize LNB & OFA 20,000 $ Enviroplan, 2010, pg 6

‐ 179

project contingency 15% 2,260,500 $ CC Manual

Total Capital Investment Cost (TCIC) 17,330,500 $

Capital Recover y

Interest rate 7%

Equipment lifetime 30
Capital cost recovery factor 0.0806 CC Manual Eq 1.34

Annual Ca p ital cost 1

, 396

, 603 $ EPA (ZTH) ‐‐ Healy 1 SCR ‐‐ "High"

Annual Capital cost 1,396,603 $

Annual Costs ‐‐ EPA CC Manual

Annual Maintenance Cost 1.5% 259,958 $ Equation 2.46

Annual Reagent Cost 44,311 $ Equation 2.47

Reagent volume flowrate (gal/hr): 10.4 Equations 2.33 & 2.34

Reagent mass flowrate (lb/hr): 22.8 Equation 2.32

Nox inlet concentration (lb/MMBtu): 0.23 Enviroplan, 2010 pg 7 / pg 6

‐ 74

Coal sulfur content (wt. %): 0.17% CH2M Hill, 2009 pg 2

‐ 2

Flue gas temp at SCR inlet (F): 725 Fuel Tech, 2009

Ammonia slip (ppm): 2 Fuel Tech, 2009

Boiler heat input (MMBtu/hr): 340 CH2M Hill, 2009 pg 2

‐ 1

NH3:Nox typical stoichiometric ratio: 1.05 CC Manual pg 2

‐ 13

MW of NH3 (g/mole): 17.03 CC Manual pg 2

‐ 39

MW of NO2 (g/mole): 46.01 CC Manual pg 2

‐ 39

Capacity Factor (hrs/yr): 8640 Fuel Tech, 2009

Reagent cost ($/gallon): $0.50

Reagent cost ($/ton NH3): 450 $ Fuel Tech, 2009

NH3 solution concentration: 29.4% CC Manual page 2

‐ 53

NH3 solution density (lb/ft3): 56 CC Manual page 2

‐ 53

NH3 solution specific volume (gal/ft3): 7.481 CC Manual page 2

‐ 53

Annual Electricity 88,393 $ Equation 2.49 Electricity Cost Equation

SCR Power Usage (kw): 95.4 Equation 2.48

SCR Power Usage (hp): 127.9

Total pressure drop due to SCR (in w.c.): 5 Fuel Tech, 2009

Cost of power ($/kw): 0.10723 GVEA, 2009

Annual operating hours (hrs/year): 8640 Fuel Tech, 2009

Annualized Catalyst Replacement Cost 65,014 $

Catalyst replacement cost ($/ft3): 227 $ Fuel Tech, 2009 ‐‐ $8,000/m3

Operating life of catalyst (hrs): 16000 Fuel Tech, 2009
Catalyst term (Y, years): 1.9 CC Manual equation 2

‐ 53

Future Worth Factor (FWF): 0.5 CC Manual equation 2

‐ 52
Catalyst Volume (ft3): 1094.1 CC Manual equation 2

‐ 19

Nox efficiency factor: 1.076 CC Manual equation 2

‐ 20

Nox adjustment factor: 0.926 CC Manual equation 2

‐ 21

Ammonia slip adjustment factor: 1.170 CC Manual equation 2

‐ 22

Sulfur in coal adjustment factor: 0.964 CC Manual equation 2

‐ 23

Temperature adjustment factor: 1.019 CC Manual equation 2

‐ 24

Number of SCR chambers: 1

Total Annual O&M Costs 457,676 $

Total Annual Costs 1,854,279 $

lb/MMBtu

0.28 0 0% 417

0.07 313 75% 104

0.07 313 75% 104

NO X Reduction 313

$/ton of NO X 5,924 $

References

1 CH2M Hill, 2009. BART Analysis for Healy Power Plant. CH2M Hill, January 2009.

2

3

4 GVEA, 2009. GVEA Comments attachments submitted to Alaska DEC, 6/15/09.



### Fuel	Tech,	2009. Golden Valley Electric Association, Healy Station Unit 1, Conceptual Application of Selective Catalytic

Reduction (SCR) Technology. Fuel	Tech,	Inc.		Warrenville,	Illinois.		June,	2009. Nox Reduced

tpy Nox Removal
Efficiency Nox Emissions tpy

Enviroplan, 2010. Final BART Determination Report, Golden Valley Electric Association (GVEA) Best Available Retrofit (BART) Evaluation.
Enviroplan Consulting, Fairfield, NJ. Dated January 19, 2010, revised June 1, 2010.

### Attachment 2 ‐ NOx Control Technologies Cost Effectiveness Summary Table

NOx Cost Effectiveness Summary Table

Technolog y 8 years 10 years 15 years 20 years 30 years Optimize LNB/OFA $45 $38 $30 $26 $22

SNCR @ 0.20 lb/MMBTU $4,606 $4,071 $3,375 $3,047 $2,752

SNCR @ 0.19 lb/MMBTU $4,090 $3,615 $2,998 $2,706 $2,444
ROFA $4,662 $4,071 $3,303 $2,940 $2,615
ROFA/Rotamix $5,711 $5,025 $4,135 $3,714 $3,337

SCR EPA Low $9,625 $8,386 $6,777 $6,016 $5,335

SCR EPA High $10,735 $9,346 $7,541 $6,689 $5,924 $/ton at Varying Equipment Life (7%)