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# 1828 Prepped by Ollie Stewart



### Document

Number: 

# 11 ) M-K-(A)-2 4 Docket Number: 

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Printed 11/12/2008 11:12:48 AM Sheet 11 of 325

### ENERG Y AN D ENVIRONMENTA L ANALYSIS , INC . 165 5 Nort h For

t Mye rDriv e Arlington

. Virgini a 2220 9 (703 ) 528-190 0P. 3

DESCRIPTIO N

O F TH E INDUSTRIA L FUE L CHOIC E ANALYSI S MODE L

Prepare dfor : U.S . ENVIRONMENTA L PROTECTIO N AGENC Y Offic e o f Ai r Qualit y Plannin g an

dStandard s Researc hTriangl e Park , Nort hCarolin a 2771 1

Prepare dby : ENERG YAN D ENVIRONMENTA L ANALYSIS , INC . 165 5 Nort hFor t Mye r Drive , Suit e 60 0 Arlington , Virgini a 2220 9

Ma y 198 5P. 4

Thi s repor t wa s furnishe dt o th e U.S . Environmenta l Protectio nAgenc y b y Energ y an dEnvironmenta l Analysis , Inc. , Arlington , Virginia , i nfulfill men t o f Contrac t Numbe r 68-02-4202 . Th e content s o f thi s repor t ar e reproduce dherei na s receive dfro m th e contractor . Th e opinions , findings , an dconclusion s expresse dar e thos e o f th e autho r an

dno t necessaril y

thos e o f th e U.S . Environmenta l Protectio nAgency . Specifi c paramete r value s an dassumption s presente dinthi s repor t ar e curren t a s o f th e publicatio ndate . Futur e IFCA M run s ma y

includ e mode l modification s recommende db y EPA . Thi s repor t present s th e mode l methodolog y an ddat a sources . A

separat e report , Industria l Fue l Choic e Analysi s Mode l User' s Manua l (Novembe r 1984) , summarize s inpu t fil e format s an dunits , outpu t tabl e feature s an dprogram operatin g instructions .P. 5

TABL E O

F CONTENT

S

Pag e 1 . INTRODUCTIO N

1- 1 1. 1 Purpos e an

d Scop e o f Mode l 1- 1 1. 2 Mode l Capabilitie s 1- 7 Reference s 1-1 1
2 . MODE L LOGI C 2- 1 2. 1 Analytica l Framewor k 2- 1 2. 2 Use r Option s • 2- 6
3 . INDUSTRIA L BOILE RPOPULATIO N CHARACTERISTIC S 3- 1 3. 1 Fossi l Fue l DemandProjection s b y Industr y

Grou p3- 1 3. 2 Categorizatio no f Fossi l Fuel s b y Functiona l Us e 3- 3 3. 3 Categorizatio no f Boile r Fossi l Fue l Us e b y Ne w an dExistin g Facilitie s 3- 7 3. 4 Classificatio no f Boile r Fue l Us e b y Siz e an d Capacit y Utilizatio nRat e 3-1 3 3. 5 Environmenta l Regulation s 3-2 0 3. 6 Pollutio nContro l Strategie s 3-2 4 Reference s 3-4 1 4 . FUE L CHOIC E DECISION S 4- 1 4. 1 Cos t Component s 4- 1 4. 2 Investmen t Decisio nApproac h4- 4 Reference s 4-1 6P. 6

LIS T O F TABLE S

Pag e 1- 1 Industria l Pollutio nContro l Equipmen t Option s inIFCA M 1- 9
3- 1 Projecte dIndustria l Energ y Conservatio nFactor s 3- 4 3- 2 Distributio no f Fossi l Fuel s Betwee nBoile r an d Proces s Hea t Use s 3- 6 3- 3 New

Industria l Boile r Size/Typ e Assumption s i nIFCA M 3-1 5 3- 4 New

Industria l Boile r Size/Capacit y Utilizatio n Rat e Distributio n3-1 7 3- 5 Curren t Industria l Boile r NSP S 3-2 2 3- 6 Industria l Boile r Pollutio nContro l Equipmen t Option s i nIFCA

M 3-2 5 3- 7 Sulfu r Dioxid e Emission s Rate s b y Coa l Typ e 3-2 7 3- 8 Averag e As hConten t By Regio n(Bituminou s Coa l Types ) 3-2 8 3- 9 Averag e As hConten t By Regio n(Subbituminou s Coa l Types ) 3-2 9 3-1 0 Averag e Hea t Conten t By Regio n(Bituminou s Coa l Types ) 3-3 0 3-1 1 Averag e Hea t Conten t By Regio n(Subbituminou s Coa l Types ) 3-3 1 3-1 2 FG D Technolog y

Constraint s i nIFCA M 3-3 2 3-1 3 PM Emission s Pollutio nContro l Technolog y Constraint s inIFCA M 3-3 5 3-1 4 N0 XEmissio nRat e Estimate s fo r New Industria l Coal-Fire dBoiler s 3-3 7 3-1 5 Uncontrolle dIndustria l Oil/Ga s Boile r SO 2 an dP M Emissio nRat e Estimate s 3-3 8 3-1 6 N0 XEmissio nRat e Estimate s fo r New Industria l Oil/Ga s Boiler s 3-3 9 3-1 7 Pollutio nContro l Complianc e Alternative s inIFCA M 3-4 0 4- 1 Financia l Paramete r Assumption s fo r New Industria l Boile r Discounte dAfter-Ta xNP V Cos t Comparison s 4-1 0 4- 2 Derivatio no f th e AFter-Ta xNP V Facto r fo r Coa l Boile r Capita l Expense s 4-1 1 4- 3 Derivatio no f th e After-Ta xNPV Facto r fo r Oil/Ga s Boile r Capita l Expense s 4-1 2 4- 4 Derivatio no f th e After-Ta xNPV Facto r fo r Annua l Non-Fue l O& M

Expense s 4-1 3 4- 5 Exampl e Calculatio no f th e After-Ta xNP V o f Annua l Fue l Expense s 4-1 4P. 7

LIS T OF FIGURE S

Pag e 1- 1 Federa l Region s o f th e Unite d State s 1- 4 1- 2 Contex t o f Curren t IFCA M Mode l Structur e 1- 5
2- 1 IFCA

M Mode l Structur e • 2- 3 2- 2 IFCA

M Use r Option s 2- 7P. 8

INTRODUCTIO N

1. 1 PURPOS E AN D SCOP E O F MODE L Th e Industria l Fue l Choic e Analysi s Mode l (IFCAM) i s a highl y disaggregate dan

ddetaile dproces s engineerin g industria l energ y deman d mode l coverin g th e consumptio no f fossi l fuel s (coal , distillat e fue l oil , residua l fue l oil , an dnatura l gas ) i nindustria l boilers . IFCA M wa s develope dt o hel pdecisio nmaker s asses s a wid e rang e o f energy , environ mental , an

dcos t impact s resultin g from polic y alternatives . IFCA M i s currentl y

bein g use db

y EP A t o projec t th e impact s o f alternativ e Federa l ai r emission s regulation s (Ne w Sourc e Performanc e Standards , NSPS ) fo r ne w industria l fossi l fuel-fire dboilers . IFCA M originall y

wa s designe dt o provid e th e U.S . Departmen t o f Energy , Energ y Informatio nAdministration' s (EIA ) Midter m Energ y Forecastin g Syste m (MEFS) * wit ha

nalternativ e sourc e o f forecast s o f industria l fossi l fue l mix . IFCA

M wa s structure dt o us e MEF S projection s o f overal l industria l energ y deman dan

dfue l price s an

dt o focu s o

nfue l choice s betwee ncoal , distillat e fue l oil , residua l fue l oil , an dnatura l gas . Th e initia l versio no f IFCAM , whic hwa s develope dfo r th e U.S . Depart men t o f Energy' s Offic e o f Polic y andEvaluation , wa s modifie dfo r EPA' s industria l fossi l fuel-fire dboile r NSP S analysi s beginnin g i n1979.* * Example s o f task s include :
• Revisin g industria l boile r an dpollutio ncontro l equipmen t cos t estimate s

*Th e curren t versio ni s no w calle dth e Intermediat e Futur e Forecastin g Syste m (IFFS) . **Th e EP A

versio no f IFCAM , whic hi s describe di nthi s report , ma y b e considere dIFCAM , Versio n2 . IFCAM , Versio n2 , wa s firs t documente dfo r EP A in1980. l



### 1- 1P. 9

t Increasin g th e numbe r an dchangin g th e characteristic s o f residua l fue l oi l an

dcoa l type s
• Increasin g th e numbe r o f an drevisin g th e technica l pollutio n contro l capabilitie s o f flu e ga s desulfurization , particulat e matte r emission s contro l equipment , an dN0 Xcombustio nmodifica tion s
• Preparin g new

mode l outpu t table s Th e initia l DO E versio no f IFCA M include dindustria l fossi l fuel-fire d boiler s an

dfossi l fuel-fire dproces s heater s (o r non-boilers) . Th e EP A versio ndiscusse di nthi s repor t include s onl y projection s o f industrial fossi l fuel-fire dboile r energ y demand , ai r emissions , an dcosts . Th e basi c approac hi nIFCA M i s t o projec t th e characteristic s o f th e industria l boile r populatio nan dt o mak e a fue l choic e decisio nfo r eac h grou po f boiler s base do nth e alternativ e wit hth e lowes t expecte dlif e cycl e cost s (includin g capita l an dannua l operating , maintenance , andfue l expenses) . Th e majo r industria l boile r characteristic s include :

• Ne w o r existin g uni t
• Siz e (MMBtu/h r hea t input ) t Averag e capacit y

utilizatio nrate *
• Loca l an

dFedera l sulfu r dioxid e (SO2) , particulat e matte r (PM) , an dnitroge noxid e (N0 X ) emission s standard s Ke y inpu t assumption s include :

• Projecte dfue l price s an dtota l industria l energ y deman d
• Projecte dindustrial productio ngrowt hrate s by industr y

grou p
• Boile r an

dpollutio ncontro l equipmen t cos t estimate s • Loca l an

dFedera l ai r emission s regulation s t Expecte ddistributio no f new industria l boile r location s • Bas e yea r boile r populatio ncharacteristic s an dretiremen t methodolog y • Ne w boile r siz e an

dcapacit y

utilizatio nrat e distributio n • Th e lif e cycl e cos t compariso nalgorithm s

•Expecte dannua l fue l consumption/(desig nfirin g rat e time s 8,76 0 hour s pe r year) .



### 1- 2P.1 0

Majo r mode l output s include :

• Projecte demission s o f SO2 , PM , N0 X , an dPMi o t Projecte dindustria l boile r fossi l fue l deman db y fue l typ e (coal , distillat e fue l oil , residua l fue l oil , an dnatura l gas )
• Projecte dtota l capita l an dannua l operating , maintenance , an d fue l expense s Mode l output s ar e availabl e b y Federa l regio n(se e Figur e 1-1) . Figur e 1- 2 provide s a framewor k t o conside r th e rol e o f othe r factor s outsid e th e scop e o f th e curren t IFCA M mode l structure . Th e figur e show s th e relationship s between :

• Overal l economic trend s
• U.S . energ y

market s t Industria l energ y

demand
• Curren t IFCA

M scop e Startin g a t th e to po f Figur e 1-2 , th e overal l econom y represent s critica l trend s in"macroeconomic " variables . Severa l macroeconomi c model s hav e bee ndevelope dwhic hforecas t growt hinth e aggregat e demandan dsuppl y fo r fina l goods . Majo r mode l output s includ e Gros s Nationa l Produc t (GNP) , privat e secto r investment , governmen t spending , production , persona l consump tio nexpenditures , an dothe r economic parameters . Thes e model s generat e forecast s o f industria l activit y (i.e. , projection s o f th e Federa l Reserv e Boar dIndustria l Productio nIndice s o r valu e adde ddata ) b y typ e o f industria l grou ptha t affec t th e leve l o f deman dfo r energ y service s inth e industria l sector . Othe r macroeconomi c variable s ar e use dt o forecas t energ y deman d inothe r sector s (i.e. , disposabl e income fo r th e residentia l an d commercia l sectors) . Th e macroeconomi c model s thu s provid e ke y economic "drivers " o f energ y demand , suc ha s industria l productio ngrowth . Thes e "drivers " the nserv e a s ke y input s int o a mode l o f th e U.S . energ y market s t o determin e energ y deman dinth e energy-usin g sector s o f th e economy . Th e "Energ y Markets " essentiall y

involv e th e interpla y o f deman dan

dsuppl y fo r alternativ e source s o f energ y

(e.g. , oil , coal) , resultin g inth e determinatio no f th e pric e an dleve l o f us e o f variou s energ y forms .



### 1- 3

### FIGUR E 1- 1 

# Federa l Region s o

f th e Unite d State s

, o 9

HA»AI I "

REGIO N NAME S 1 . Ne wEnglan d 2 . Ne wYork/Ne wJerse

y 3 . Middl e Atlanti c 4 . Sout h Atlanti c 5 . Midwes

t 6 . Southwes t 7 . Centra l 8 . Nort h Centra l 9 . Wes t 10 . Northwes

tP.1 2



### FIGUR E 1- 2 

# Context o f Curren t IFCA M Mode l Structur e

ECONOM Y MACROECONOMI C GROWT H INTERINDUSTR YTRANSACTION S

Economi c Activity 

# ll

INDUSTRIA L PRODUCTIO N

ENERG Y DEMAN D

RESIDENTIA L COMMERCIA L

TRANSPORTATIO N 

## D (

_ 

## Q D D [ ELCCTW C JTJ-TIE S (3UANT;l : T Y 7



## ENERG Y PRICE S

Industria l Energ y Deman d Fossil/Othe r Energ y Deman d

•Econometri c Forecas t FOSSI L

_ _ENERG Y 

### JvJKMANjp * ENERG Y MARKET S

1- 5P.1 3

I nturn , th e energ y

marke t trend s provid e th e cost s o f energ y bac k t o ' th e macroeconomi c framework , throug hsuc hvariable s a s th e Consume r Pric e Inde xan dcost s o f energ y

input s t o th e industria l sectors . Thes e energ y cos t impact s can , inturn , alte r macroeconomi c trends . Fo r example , th e worl doi l pric e shock s result s inmajo r cos t increase s whic hintur naffecte d industria l productio ngrowth , consume r behavio r an drea l income . Industria l energ y

demand , depicte da t th e bottom o f Figur e 1-2 , i s a n importan t elemen t o f th e energ y market . W

e hav e focuse dseparatel y o n industria l energ y

demandbecause :

• IFCA M ha s no t bee nuse d a s a portio no f a "genera l equilibrium " system whic hsimultaneousl y reflect s th e interaction s betwee nth e econom y an denerg y

market s
• IFCA M i s no t a complet e energ y deman dmode l Logically , a

nindustria l deman d mode l addresse s th e followin g issues :

• Th e relationshi pbetwee nindustria l productio nan dth e overal l leve l o f energ y

input s require dt o perform variou s industria l proces s operation s
• Energ y

deman dinal l industria l use s (e.g. , boilers , proces s heat , feedstock ) t Th e mi xo f energ y

source s selecte dt o provid e th e ful l rang e o f energ y service s Th e majo r (exogenous ) input s t o a complete energ y deman d mode l ar e industria l productio ngrowt htrend s an dth e price s o f variou s form s o f energy . IFCA M i s no t a complete energ y mode l becaus e i t cover s onl y a portio n o f th e scop e o f a

nindustria l deman dmodel . Specifically , i t doe s no t addres s inan y detail :

• Th e relationshi pbetwee noveral l industria l productio nan denerg y deman d(e.g. , conservation , proces s efficienc y trends )
• Th e deman dfo r energ y innon-boile r industria l uses *
• Th e deman dfo r energ y form s othe r tha nconventiona l fossi l fuel s (oil, gas , coal )

*Th e initia l versio no f IFCAM , develope dfo r th e U.S . Departmen t o f Energy , 2 doe s includ e a proces s hea t sector .



### 1- 61. 2 MODE L CAPABILITIE S IFCA M i s a proces s engineering/simpl e accountin g industria l boile r fue l choic e model . Thi s modelin g techniqu e simulate s th e effect s o f specifi c policie s ontechnica l alternative s throug hth e applicatio no f direc t engineer in g informatio na t a disaggregate dlevel . Othe r type s o f model s include :

• Econometri c (mathematica l equation s solve dsimultaneousl y wit h coefficient s estimate dstatisticall y from historica l data )
• Optimizatio n(derivatio no f "best " solution s b y mean s o f algebrai c procedure s suc ha s linea r programming ) t Simulatio no r system dynamic s (mathematica l equation s solve d recursivel y

wit hcoefficient s estimate dfro m modeler' s experienc e an dintuition ) Th e mode l structur e o f IFCA M ha s bee ndesigne dt o evaluat e alternativ e fue l pric e projections , governmen t energ y an denvironmenta l polic y proposals , th e cost s associate dwit hfirin g alternativ e fuel s an dothe r ke y

mode l para meters . Th e fue l choic e decisio ncriterio ni nIFCA M i s a compariso no f after-tax , discounte dcas hflows . Therefore , a variet y o f ta xcredit s an

d propose dchange s i nth e ta xtreatmen t o f capita l tha t provid e incentive s t o inves t incoal-relate dequipmen t ca nb e analyze dusin g th e model . Energ y regulator y

policie s tha t targe t specifi c type s o f industria l energ y use s t o bur ncoa l (includin g new boiler s an

dexistin g boiler s designe d t o fir e coal ) ar e modeled . Economi c feasibilit y o f complyin g wit hth e Powerplan t an

dIndustria l Fue l Us e Ac t (FUA ) i s a noptio ninIFCA

M tha t determine s whethe r o r no t th e cos t o f usin g coa l substantiall y exceed s th e cos t o f burnin g importe doil . Environmenta l regulator y policie s tha t coul daffec t fue l choic e decision s als o ca nb e considere di nIFCAM . Thes e regulation s ca naffec t fue l choic e b

y alterin g th e relativ e cost s o f burnin g alternativ e fuels . Regulation s relatin g t o PM , SO2 , an dN0 Xemission s from fuel-burnin g source s includ e Stat e an

dloca l regulation s an dFedera l NSPS . IFCA M i s capabl e o f modelin g alternativ e industria l boile r NSPS . IFCA M ca nsimulat e th e us e o f variou s type s o f flu e ga s desulfurizatio n(FGO ) system s (som

e wit hcombine dS02/particulat e matte r emission s control) , variou s type s o f post-combustio nparticulat e matte r emission s control , an d tw o type s o f combustio nmodification s t o contro l N0 Xemissions .



### 1- 7P.1 5

Severa l type s o f alternativ e specification s o f SO 2 emission s contro l fo r new industria l residua l fue l oi l o r coal-fire dboiler s ca nb e analyzed . Fo r example , th e regulatio nca nvar y by boile r siz e an

dca nb e specifie d as :

• A ceilin g emissio nrat e (l bo f pollutant/MMBt u o f fue l burned ) t A recommende dpercentag e remova l (e.g. , 9 0 percen t remova l o f uncontrolle dSO 2 emissions )
• A recommende dpercentag e remova l an da "floor " emission s rat e (e.g. , 9 0 percen t remova l bu t no lowe r tha n25 8 ng/0 , 0. 6 lb/MMBtu )
• A minimu m percentag e remova l t o b e applie di f th e recommende d percentag e remova l result s incontrolle d emissio nrate s lowe r tha nth e "floor " IFCA M ca nsimulat e th e impac t o f alternativ e fue l pric e projection s on industria l fue l mix . Regiona l fue l price s fo r distillat e fue l oil , residua l fue l oi l (fou r sulfu r classes) , natura l gas , an dcoa l (nin e types ) ar e considere dinth e model . Th e fue l choic e decisio ni s sensitiv e t o non-fue l cost s o f burnin g alternat e fuels . Whil e th e bes t availabl e cos t dat a ar e used , th e mode l ca nevaluat e th e impac t o f an y alternativ e cos t estimates . Inadditio nt o thes e set s o f factors , man y othe r ke y

variable s affec t fue l use . Th e mode l i s designed , fo r example , t o evaluat e th e effect s o f varyin g industria l productio ngrowt hrates , an dt o alte r th e distributio n o f siz e an

doperatin g characteristic s o f ne w boilers . IFCAM' s fue l choic e decision s ar e a functio no f technica l a s wel l a s economi c an

dregulator y

factors . IFCA

M evaluate s fue l switchin g i nexistin g boiler s an

dfue l typ e selectio ninnew boilers . IFCA

M select s fro

m a wid e rang e o f fue l qualit y option s (multipl e residua l fue l oi l an dcoa l types ) an dalternativ e pollutio ncontro l strategies . Tabl e 1- 1 list s alternativ e boile r pollutio ncontro l technologie s inIFCAM . Mode l result s hav e bee npublishe dinsevera l report s an d presente din 3 severa l briefing s fo r EP A sinc e 1979 . Mode l inpu t assumptions , methodology , an dresult s hav e bee nreviewe d b y EP A staf f an

drepresentative s fro m othe r



### 1- 8P.1 6

TABL E 1-1 . INDUSTRIAL POLLUTIO N CONTRO L EQUIPMEN T OPTION S I

N IFCA M

Pollutan t Technolog y
SO 2 Flu e ga s desulfurizatio n Dua l alkal i Lime spra y

drying 3 Sodiu m once-throug h P M Singl e mechanica l collecto r Dua l mechanica l collecto r Sid e strea

m separato r Electrostati c precipitato r Fabri c filte r NO xCombustio nmodificatio n Low exces s ai r Stage dcombustio nai r

a Combine d SO2/P M

emission s contro l system ; include s a fabri c filter .



### 1- 9P.1 7

Federa l governmen t agencie s (i.e. , th e U.S . Departmen t o f Energy) . In ' addition , EEA

ha s maintaine da docke t fo r IFCA M assumptions , results , an d dat a source s (i nsuppor t o f th e industria l fossi l fuel-fire dboile r NSP S analysis ) whic hha s bee nmad e availabl e t o th e publi c by EPA .

1-1 0P.1 8

REFERENCE S

1 . Industria l Fue l Choic e Analysi s Mode l - Mode l Documentation . Energ y an dEnvironmenta l Analysis , Inc . Arlington , Virginia . Prepare dfo r th e U.S . Environmenta l Protectio nAgency , Offic e o f Ai r Qualit y Plannin g an dStandards . June 1980 . 2 . Industria l Fue l Choic e Analysi s Model . Volum e I - Primar y Mode l Documentatio nan

dVolum e I I - Appendice s t o Mode l Documentation . Energ y an dEnvironmenta l Analysis , Inc . Arlington , Virginia . Prepare dfo r th e U.S . Departmen t o f Energy , Offic e o f Polic y an dEvaluation . Januar y 1980 . Exampl e applications : t Kincel , K. , F . Murphy , an d H . Walton . A

nEvaluatio no f Energ y Relate dTa xan

dTa xCredi t Programs . U.S . Departmen t o f Energy , Energ y Informatio nAdministration . DOE/EIA-0102/8 . Jul y 1978 . • Mead , D. , F . Murphy , an dW . Montgomery . Analysi s o f Propose dU.S . Departmen t o f Energ y

Regulation s Implementin g th e Powerplan t an d Industria l Fue l Us e Act . U.S . Departmen t o f Energy , Energ y Informatio nAdministration . DOE/EIA-0102/21 . Novembe r 1978 . t Annua l Repor t t o Congres s 1978 . U.S . Departmen t o f Energy , Energ y Informatio nAdministration . DOE/EIA-0173/3 . p . 391 . t Analysi s o f Ke y

Economi c Tes t Parameter s inth e Powerplan t an d Industria l Fue l Us e Act . Energ y an dEnvironmenta l Analysis , Inc. , Arlington , Virginia . Draf t repor t prepare dfo r th e U.S . Departmen t o f Energy , Offic e o f Polic y an dEvaluation . Januar y 1979 . • Technica l Staf f Analysi s inRespons e t o Notic e o f Propose d Rulemakin g o nPhas e I I o f Incrementa l Pricing . U.S . Departmen t o f Energy , Offic e o f Polic y an dEvaluation . Prepare dfo r th e Federa l Energ y Regulator y

Commission . Februar y 1980 .

1-1 1P.1 9

• Technica l an

dEconomi c Feasibilit y o f Alternativ e Fue l Us e in ' Proces s Heater s an

dSmal l Boilers . Energ y an dEnvironmenta l Analysis , Inc . Arlington , Virginia . DOE/EIA-10547-01 . Prepare d fo r th e U.S . Departmen t o f Energy , Energ y Informatio nAdministration . Februar y 1980 . • A nAnalysi s o f th e Potentia l fo r Coa l Us e inth e Industria l Sector . Energ y an dEnvironmenta l Analysis , Inc . Arlington , Virginia . Prepare dfo r th e President' s Commissio nonCoal . Marc h1980 . 3 . Recen t examples :

• Projecte dImpact s o f Alternativ e Sulfu r Dioxid e New Sourc e Performanc e Standard s fo r Industria l Fossi l Fuel-Fire dBoilers . Energ y an dEnvironmenta l Analysis , Inc . Arlington , Virginia . Prepare dfo r th e U.S . Environmenta l Protectio nAgency , Offic e o f Ai r Qualit y

Plannin g an

dStandards . Marc h1985 . • Projecte dEnvironmental , Cos t an dEnerg y

Impact s o f Alternativ e SO 2 NSP S fo r Industria l Fossi l Fuel-Fire dBoilers . Energ y an d Environmenta l Analysis , Inc . Arlington , Virginia . Prepare dfo r th e U.S . Environmenta l Protectio nAgency , Offic e o f Ai r Qualit y Plannin g an

dStandards . Octobe r 10 , 1983 ; Januar y 6 , 1984 ; Jul y 27 , 1984 . • Projecte dEnvironmental , Cos t an dEnerg y Impact s o f th e Recommende d Particulat e Matte r an dNitroge nOxid e New Sourc e Performanc e Standard s fo r Industria l Fossi l Fuel-Fire dBoilers . Energ y an d Environmenta l Analysis , Inc . Arlington , Virginia . Prepare dfo r th e U.S . Environmenta l Protectio nAgency , Offic e o f Ai r Qualit y Plannin g an

dStandards . Januar y 1984 .

1-1 2P.2 0

2 . MODE L LOGI C

Th e analytica l approac hinIFCA M i s summarize di nSectio n2.1 . Majo r mode l step s ar e presente dan dke y mode l inpu t requirement s ar e identified . Mode l methodolog y

an ddat a source s ar e describe di nfurthe r detai l i nSection s 3 an d4 . Use r option s ar e identifie di nSectio n2.2 . Thi s sectio nfocuse s on mode l inpu t requirement s relate dt o severa l exogenou s assumptions :

• Alternativ e NSP S t Tota l projecte dindustria l fossi l fue l deman d § Industria l productio ngrowt hb y industr y

grou p
• Forecast s o f industria l fue l price s 2. 1 ANALYTICA L FRAMEWOR K 2.1. 1 Summar y

o f Approac h IFCA M focuse s onboile r fue l choic e decision s betwee ncoal , oil , an d natura l gas . Th e mode l determine s fue l choice s fo r boiler s i neac ho f th e 1 0 Federa l region s usin g projecte dindustria l fue l price s an dtota l fossi l fue l deman dtha t primaril y hav e bee ngenerate db y th e U.S . Departmen t o f Energ y (DOE) . IFCA

M doe s no t conside r "feedstock " energ y use s suc ha s metallurgica l coa l (use dinth e ironan dstee l industr y

t o produc e coke ) o r raw material s derive dfro m petroleu

m o r natura l ga s inth e chemica l industry . A very disaggregat e representatio no f industria l energ y use s i s incorporate di nIFCAM . Energ y us e i s disaggregate dint o nin e industria l subsector s havin g differen t growt hrate s an dregiona l dispersions . Eac ho f thes e industria l subsector s i s furthe r divide dint o boile r an dproces s hea t applications . Industria l boile r energ y us e i s disaggregate dt o fue l typ e utilize db y new an dexistin g boiler s o f differen t size s an dannua l capacit y

utilizatio n rates . New

an dexistin g boiler s ar e classifie donth e basi s o f th e typ e o f fue l the y

wer e designe dt o fir e an dwhethe r the y

ca nb e retrofitte dt o fir e alternativ e fuels . Eigh t siz e classe s ar e delineate dfo r boilers . Ther e ar e fiv e capacit y

utilizatio nrat e categorie s fo r boilers .



### 2- 1P.2 1

Th e fina l leve l o f disaggregatio nincorporate s regiona l detail . Industria l boile r fue l us e i s divide damon g Ai r Qualit y Contro l Region s (AQCR's) . Sinc e suc ha larg e numbe r o f region s ar e considere db y IFCAM , th e mode l ca nportra y th e variabilit y

i nth e environmenta l contro l cost s o f usin g th e variou s fuel s t o fir e boiler s locate dthroughou t th e country . Curren t modelin g capabilitie s fo r pollutio ncontro l system s includ e onl y conventiona l technologies . Th e mid-ter m tim e horizo no f IFCA M preclude s significan t marke t penetratio no f man y o f th e advance dtechnologie s stil l inth e developmenta l stage . Base donth e characteristic s o f eac hboile r (size , operatin g rate , pollutio ncontro l requirements , etc.) , capita l an dnonfue l operatin g cost s ar e generate dfo r th e option s o f choosin g oil , gas , o r coal . Th e fue l typ e associate dwit hth e lowes t after-ta xne t presen t valu e (includin g expecte d fue l expenses ) o f th e tota l cos t o f generatin g steam ove r th e investmen t perio di s selected . Th e mode l generate s energy , environmental , an dcos t impacts . Output s includ e regiona l industria l boile r fossi l energ y demand s by

fue l type , ai r emissions , soli dwast e disposa l an dliqui dwast e treatmen t requirements , energ y consumptio nassociate dwit hth e operatio no f pollutio ncontro l equipment , deman dfo r new pollutio ncontro l equipmen t an dboiler s by

siz e an dtype , an

dtota l cost s (capital , annua l operating , maintenanc e andfue l expenses ) o f usin g fossi l energ y t o generat e steam . 2.1. 2 Mode l Logi c Figur e 2- 1 outline s th e mode l structur e an didentifie s ke y

input s an

d majo r analytica l steps . Input s 1 , 2 , and3 - Energ y Deman dan

dIndustria l Production : Th e leve l o f industria l fossi l fue l deman dan dnin e industria l productio ngrowt h rate s by regio nar e critica l input s t o IFCAM . Althoug hsuc hinput s ca nb e derive dfrom

man y sources , inth e pas t the y hav e bee ntake nfrom DO E projecte dregiona l energ y us e an dth e macroeconomi c mode l tha t drive s th e DO E modelin g framework . Mode l Ste p# 1 - Characteriz e Industria l Energ y Use : Thi s initia l ste p break s dow

nth e projecte dfossi l fue l us e by industria l sector , ne w an d existin g facilities , typ e o f combusto r (e.g. , boile r versu s proces s heater) , siz e o f boiler , an

da variet y

o f othe r classifications . Thes e factors , discusse dbelow , ar e significan t becaus e they :



### 2- 2r o

i c o Inpu t 2

Industria l Production ^ Growt h Rate s Inpu t 1 Industria l Fossi l Fue l Us e i n 197 4

CHARACTERIZ E FUE L CONSUMPTIO N

Inpu t 3 Inpu t 6 Environmenta l Regulation s Inpu t 8 Energ y Polic y
Inpu t 4 Geographi c Distributio n o f Boiler s



### X CREAT E AN D SIT E INDIVIDUA L COMBUSTOR S Inpu t 7 Regiona l Fue l Price s

IDENTIF Y ENVIRONMENTA L REQUIREMENT S EVALUAT E ECONOMIC S O F FUE L CHOIC E AGGREGAT E MODE L RESULTS

Inpu t 5 Inpu t 9

Boile r Size/Capacit y Utilizatio n Distributio n Financia l Parameter s Inpu t 1 0

Capita l an d O& M Cos t Dat a

Projecte d Industria l Fossi l Fue l Deman d Legen d ^Inputs } Mode l

Ste p

FIGUR E 2- 1 

# IFCA M Mode l Structur

e

r oP.2 3

• Alte r th e cost s o f usin g alternat e fuel s (e.g. , fue l cost s var y ' accordin g t o industria l location )
• Determin e th e economic s o f fue l choic e (considerin g suc hfactor s a s th e boiler' s capacit y utilizatio nrate ) t Distinguis helement s o f energ y us e specificall y

targete dby

energ y polic y measure s (e.g. , new boiler s abov e a cutof f size ) Input s 4 an

d5 - Geographi c an

dBoile r Size/Capacit y Utilizatio n Distributions : Th e geographi c an dboile r size/capacit y utilizatio n distribution s ar e base donhistorica l data . Mode l Ste p# 2 - Creat e an dSit e Individua l Combustors : Energ y use s from Ste p# 1 ar e disaggregate dint o classe s o f individua l boiler s prio r t o furthe r analysis . Boiler s the nar e site di nAQCR' s accordin g t o historica l pattern s o f industria l location . Inpu t 6 - Environmenta l Regulations : A fil e o f Stat e an

dFedera l ai r emission s regulation s applicabl e t o boiler s i s a nimportan t inpu t t o determin e baselin e cost s an demissions . Th e fil e contain s curren t regulation s tha t var y by boile r size , fue l type , an dAQCR . Mode l Ste p# 3 - Identif y Environmenta l Regulation s an dPollutio nContro l Strategies : Emissio nlimit s fo r SO2 , PM , an dN0 Xapplicabl e t o individua l boiler s ar e assigne dbase donStat e an dFedera l regulations . Environmenta l regulation s ma y

increas e th e capital , operating , an dfue l cost s o f a boile r b y increasin g th e environmenta l contro l require do r qualit y o f fue l burned . Complianc e option s ar e identifie dfo r eac hfue l type . Input s 7 , 8 , an

d9 - Fue l Prices , Energ y Policy , an

dFinancia l Parameters : Specification s fo r a particula r mode l runan dprojectio nyea r ar e incorporate d a t thi s step . Specification s includ e th e fue l pric e scenario , financia l parameters , an

denerg y regulator y

policies . Fue l pric e variation s ar e use di nIFCA M t o mode l fue l taxes , natura l ga s wellhea dpric e deregulation , o r variation s i npric e trajectories . Fue l price s ca nb e varie dfo r distillat e fue l oil , residua l fue l oi l (fou r sulfu r classes) , coa l (nin e coa l types) , an dnatura l gas . Th e pric e o f eac hfue l typ e ca nvar y

by region . Investmen t incentive s considere dhav e focuse dprimaril y ondifferentia l depreciatio nmethod s fo r coal- , oil- , o r gas-fire dunit s an donincrease d investmen t ta xcredit s (ITC's ) fo r coal-derive dfue l firing . Th e impact s o f differen t depreciatio nmethod s an dinvestmen t incentive s ar e handle d withi nth e scop e o f th e fue l choic e decisio nlogi c i nIFCAM . 2- 4P.2 4

Th e coa l conversio nregulator y program

establishe dunde r th e FU A target s boiler s whos e rate dcapacit y i s greate r tha n2 9 M W (10 0 MMBtu/hr ) hea t input . A neconomi c tes t compare s th e tota l cos t (capital , annua l O& M an dfuel ) o f burnin g coa l t o th e tota l cos t o f burnin g importe doi l t o simulat e legislativ e provision s relate dt o economi c exemptions . Thi s procedur e project s th e leve l o f increase dcoa l us e unde r th e program , excludin g any implementatio n problems . Th e coa l conversio neconomi c tes t optio ninIFCA M i s no t currentl y utilize di nevaluatin g alternativ e NSPS' s fo r industria l boiler s fo r EPA . Inpu t 1 0 - Capita l an dO& M Cos t Data : Capita l an dO& M cos t dat a relativ e t o th e rang e o f boile r an dpollutio ncontro l equipmen t modele di nIFCA M ar e derive dfrom

numerou s sources . Engineerin g cos t dat a ar e revise do na nas neede dbasi s whe ncurren t estimate s ar e refine do r new estimate s becom e available . Mode l Ste p# 4 - Evaluat e Economic s o f Fue l Choice : Base donth e characteristic s o f eac hboile r (size , operatin g rate , pollutio ncontro l requirements , etc.) , capita l an dnon-fue l operatin g cost s ar e estimate dfo r th e option s o f choosin g oil , gas , o r coal . Th e fue l typ e associate dwit h th e lowes t after-ta xne t presen t valu e (includin g capita l an dannua l O& M an dfue l expenses ) o f th e cos t o f generatin g stea m ove r th e investmen t perio d the ni s selected . Th e cos t component s ca nb e divide dint o thre e majo r subsets : polic y inputs , standar dmode l assumptions , an dke y mode l variables . Polic y input s ar e depreciatio nlif e an dmethod , ITC , an

dfue l prices . Standar dmode l assumption s ar e constructio nperio dan dcorporat e ta xrate . Thes e element s d o no t var y

b y boile r characteristic s an drepresen t standar dinvestmen t assumptions . Ke y

mode l variable s - - capita l costs , investmen t period , discoun t rate , annua l fue l consumptio nb y capacit y

utilizatio nrat e an d size , an doperatio nan

dmaintenanc e (O&M ) cost s - - al l var y wit hfactor s considere dinth e mode l (e.g. , new o r existin g classificatio no r environmenta l regulation) . 2.1. 3 Mode l Outpu t Feature s A significan t amoun t o f outpu t detai l i s store dina compute r fil e from eac hIFCA

M run . Thi s fil e contain s informatio nfo r eac hindustria l fossi l fuel-fire dboile r i nth e population , including :



### 2- 5P.2 5

•
•
•
•
•
•
•
•
•
• t

eac h res u 

### 2. 2

•
• Siz e (desig nfirin g rate ) ' ' 1 Annua l capacit y

utilizatio nrat e Federa l regio n• Industr y grou p • SI P
_ Projecte d annua l fue l consumptio nb y fue l typ e | Average annua l controlle d ai r emissio nrate s (SO2 , PM , N0 X ) Pollutio ncontro l equipmen t (se e Tabl e 1-1 ) I Capital , O&M , an

d fue l cost s Liqui d an

d soli d wast e disposa l volume s M Annua l energ y

requirement s t o operat e pollutio ncontro l equipmen t Th e mode l outpu t table s spa nabou t 12 0 page s o f compute r print-ou t fo r • IFCA M run . A

compute r program

i s als o availabl e whic hcompare s mode l It s side-by-sid e fro

m differen t IFCA

M runs . • USE ROPTION S Th e IFCA M use r option s ca nb e classifie d i ntw o groups : • Alternativ e Ne

w Sourc e Performanc e Standard s (NSPS ) an d "Energ y scenario " specifications . fl Alternativ e NSP S refer s t o alternativ e Federa l ai r emission s standard s fo r 

## so 2 

## , oil , PM , an

d N0 Xemission s fro

m th e combustio no f coal , distillat e fue l 8 residua l fue l oi l an

d natura l ga s i

nne w industria l boilers . Energ y scenari o specification s ar e exogenou s regiona l projection s of : • §

•
•



### ar e Industria l fossi l fue l price s Tota l industria l fossi l fue l deman d • Industria l productio nactivity . Figur e 2- 2 summarize s th e majo r IFCA M use r options . "Use r options " 1 define d t o b e frequen t use r modification s t o a subse t o f th e mode l inpu t files . v • 2.2 .

• t

•
• 1 Alternativ e NSP S Ther e ar e eigh t industria l boile r siz e classe s inIFCAM : • 3- 9 M W (10-3 0 MMBtu/hr) , 9-1 5 M W (30-5 0 MMBtu/hr) , • 15-2 2 M W (50-7 5 MMBtu/hr) , • 22-2 9 M W (75-10 0 MMBtu/hr) , •

2- 6 |P.2 6



### FIGUR E 2- 2 

# IFCAM Use

r Option s

Industria l .Productio n Forecas t

NSP S Industria l Energ y Deman d Forecas t



# IFCA M Industria l Fue l Pric e Forecas t



## OUTPU T



## •Fue l Mi x
•Emission s
•Cost s

2- 7P.2 7

• 29-4 4 M

W (100-15 0 MMBtu/hr) , • 44-5 8 M

W (150-20 0 MMBtu/hr) , • 58-7 3 M

W (200-25 0 MMBtu/hr) , • Greate r tha n7 3 M

W (greate r tha n25 0 MMBtu/hr) . Mode l user s ma y

specif y

emission s ceiling s b y boile r siz e category , annua l capacit y utilizatio nrat e (les s tha no r greate r tha n3 0 percent) , pollutan t (SO2 , PM , an

dN0 X ) an

dfue l typ e (natura l gas , distillat e fue l oil , residua l fue l oil , an

dcoal ) interm s o f pound s o f emission s pe r millio nBt uo f fue l consumption . Mandator y

scrubbin g ca nals o b e require dfo r new residua l fue l oi l an d coa l boiler s b

y siz e class . Th e SO 2 emission s percentag e remova l requiremen t ca nb e fixe d(constan t fo r al l fue l type s regardles s o f sulfu r content ) o r variabl e (functio no f th e sulfu r conten t o f th e fuel , suc ha s th e curren t electri c utilit y

NSPS) . Th e emission s standards , whe nexpresse da s a nemission s ceilin g (lb/MMBtu) , limi t complianc e alternatives . Fo r example , a mechanica l collecto r i s assume dno t t o b e abl e t o compl y wit ha ver y

lo w (i.e. , 0.0 5 lb/MMBtu ) coa l PM

emissio nregulation . A very lo w (i.e. , 0. 2 lb/MMBtu ) coa l SO 2 emission s ceilin g wil l restric t coa l complianc e option s t o scrubbin g lo w sulfu r coals . Th e alternativ e NSP S assumption s appl y onl y t o new industria l boilers . The y d o no t appl y

t o existin g industria l boilers . "New " industria l boiler s ar e define dt o b e unit s installe dafte r 1985 . 2.2. 2 Industria l Fossi l Fue l Pric e Forecas t Projecte ddelivere dindustria l fue l price s ar e require d fo r th e followin g fue l types :

• Natura l ga s
• Distillat e fue l oi l
• Residua l fue l oi l

- 3. 0 percen t sulfu r

- 1. 6 percen t sulfu r

- 0. 8 percen t sulfu r

- 0. 3 percen t sulfu r



### 2- 8P.2 8

1 • Coa l (l bS02/MMBtu )

- bituminou s les s tha n1.0 8

- bituminou s 1.08-1.6 7

- bituminou s 1.67-2.5 0

- bituminou s 2.50-3.3 3

- bituminou s 3.33-5.0 0

- bituminou s greate r tha n5.0 0

- subbituminou s les s tha n1.0 8

- subbituminou s 1.08-1.6 7

- subbituminou s 1.67-2.5 0 Fue l price s ar e require dyear-by-yea r (1985-200 5 at a minimum ) an db y Federa l regio ni nconstan t 197 8 $/MMBtu . 2.2. 3 Industria l Fossi l Fue l Deman dForecas t Tota l projecte dindustria l fossi l fue l deman di s a nexogenou s parameter . IFCA M i s a fue l choic e mode l calibrate d t o a nexogenou s forecas t o f tota l industria l fossi l fue l demand . IFCA M ha s no t bee nuse da s a portio no f a "genera l equilibrium " system whic hsimultaneousl y reflect s th e interaction s betwee nth e econom

y an denerg y markets . IFCA

M doe s no t addres s th e relation shi pbetwee noveral l industria l productio nan denerg y demand . "Tota l industria l fossi l fue l demand " i s define dt o includ e onl y th e su m of :

• Natura l ga s (excludin g leas e an dplan t ga s an

dtransmissio nan

d distributio nlosses) , • Distillat e an

dresidua l fue l oil , an d
• Coa l (excludin g metallurgica l coal) . Projection s ar e require db y Federa l regio nfo r th e beginnin g an den do f th e simulatio nperio d(e.g. , 198 5 an d1990) . Th e unit s ar e trillio nBtu . Thi s fil e include s projecte dindustria l fossi l fue l combustio ni nproces s heater s a s wel l a s inboilers . Thi s fil e provide s IFCA M wit ha nexpectatio no f th e tota l ne t increas e intota l industria l fossi l fue l deman ddurin g th e simulatio nperiod . IFCA M estimate s how

muc ho f thi s ne t increas e wil l b e burne db y boiler s an

dho w muc hwil l b e consume dinproces s heater s b y region .



### 2- 9P.2 9

2.2. 4 Industria l Productio nForecas t Projection s o f industria l productio nactivit y ar e require db

y Federa l regio nan

dindustr y

group . Ther e ar e nin e industr y group s i nIFCAM :

• Foo d
• Textile s
• Pape r
• Chemical s
• Petroleu

m refinin g
• Stone , cla y

an dglas s
• Stee l
• Aluminu

m
• Othe r (miscellaneou s manufacturing , agriculture , construction , an dmining) . Thi s forecas t i s use dt o disaggregat e th e projection s o f tota l industria l energ y

deman db

y industr y

group . Th e industria l productio n forecas t shoul db e consisten t wit hth e macroeconomi c assumption s use dt o deriv e th e forecas t o f tota l industria l energ y demand . Th e industria l productio nforecas t serve s t o allo w mode l user s t o assume tha t th e distributio no f tota l fossi l fue l deman dby industr y

grou p withi na regio nwil l no t necessaril y remai nconstan t inth e future . I t als o permit s th e mode l use r t o assume that , fo r a specifi c industr y group , expecte dindustria l productio nactivit y wil l increas e o r declin e a t differen t rate s b y region . Thi s allocatio nb

y industr y

grou pinIFCA

M i s important . I t i s assume d tha t th e boiler/proces s heate r distributio no f tota l industria l fossi l fue l deman di s uniqu e fo r eac hindustry . Sinc e th e industr y mi xi s permitte dt o chang e ove r time , tota l projecte dboile r fossi l fue l deman d ma y increas e a t a differen t rat e tha ntota l projecte dproces s heate r fossi l fue l demand . Inaddition , i t i s als o assume d tha t th e distributio no f new industria l boile r size s an

dannua l capacit y

utilizatio nrate s i s uniqu e fo r eac hindustr y group .

2-1 0P.3 0

3 . INDUSTRIA L BOILE RPOPULATIO N CHARACTERISTIC S

Ther e ar e two majo r part s t o IFCAM :

• Projec t th e distributio no f industria l fossi l fuel-fire dboile r characteristic s
• Selec t th e lowest-cos t fue l typ e fo r eac huniqu e se t o f characteristic s Th e majo r industria l boile r populatio ncharacteristic s ar e discusse d i nthi s section . Th e fue l choic e decisio ncriteri a ar e summarize di n Sectio n4 . Th e characteristic s discusse dinthi s sectio ninclude : Industr y grou p Functiona l us e (boiler s versu s proces s heaters ) New o r existin g statu s Siz e (desig nfirin g rate ) an dannua l capacit y

utilizatio nrat e Fuel-firin g capabilit y Loca l ai r emission s regulation s Pollutio ncontro l complianc e alternative s 3. 1 FOSSI L FUE L DEMAND PROJECTION S BYINDUSTRYGROU P 3.1. 1 Significanc e fo r Modelin g IFCA M project s th e mi xo f fossi l fuel s give nexogenou s forecast s o f tota l industria l fossi l fue l demand , fue l price s an dindustria l productio n activity . Th e projecte dne t increas e i ntota l industria l fossi l fue l deman d i s a nimportan t inpu t paramete r becaus e i t directl y affect s th e projecte d numbe r o f new

combustor s i nIFCAM . I f there i s no projecte dne t increas e i ntota l industria l fossi l fue l deman d(du e t o expecte dconservation) , new unit s wil l b e create donl y t o replac e expecte dretirement s (no t t o expan d productio ncapacity) . I f th e expecte dne t increas e i s significant , IFCA M wil l estimat e how

muc ho f thi s ne t increas e wil l b e burne db y boiler s versu s



### 3- 1P.3 1

proces s heaters . Therefore , th e numbe r o f ne w industria l boiler s i s a functio no f th e expecte dretirement s an d replacement s o f existin g boiler s an dth e estimate dincreas e intota l industria l boile r fossi l fue l demand . Industria l energ y

consumptio ncharacteristic s var y b y industry

group . Therefore , th e firs t ste pi s t o allocat e th e industria l fossi l fue l deman d forecas t by

industry

group . 3.1. 2 Allocatio no f Projecte dIndustria l Fossi l Fue l Deman dB y Industr y Grou p Energ y

deman dprojection s depen donrate s o f productio ngrowth , th e introductio no f new

technologie s (suc ha s continuou s castin g instee l whic h reduce s energ y

consumptio npe r to no f stee l processed) , shift s inth e produc t mi xwithi nany

specifi c industr y

(a s towar dmor e highl y processed , mor e energy-intensiv e froze nfoods) , fue l costs , opportunitie s t o instal l energ y recover y equipment , an

dcapita l availabl e fo r energ y savin g measures . Busines s cycl e fluctuation s als o affec t energ y consumptio npe r uni t o f product . InDOE' s Intermediat e Futur e Forecastin g System (IFFS) , industria l energ y deman di s drive nb

y industria l outpu t growt hrate s an dprice s fo r energy , labor , capital , an dra w material s whic har e inpu t int o econometri c equation s base donhistorica l relationships . IFCA M wa s specifie dt o b e consisten t wit hth e regiona l tota l industria l fossi l fue l deman dprojection s generate db

y IFFS . Inorde r t o classif y regiona l fossi l fue l us e b y th e nin e industria l sector s use dinIFCAM , th e followin g step s wer e taken :

• Regiona l industria l productio ngrowt hrate s fo r th e nin e sector s wer e take nfro

m th e same macroeconomi c mode l outpu t use dinth e IFF S run
• Th e industria l productio ngrowt hrate s wer e adjuste dfo r a n expecte dreductio ninenerg y us e pe r uni t o f outpu t by industr y (conservatio neffect )
• Baselin e fossi l fue l consumptio ndat a i s multiplie db y th e adjuste dindustry/regio nproductio ngrowt hrate s t o deriv e preliminar y

tota l projecte dfossi l fue l consumptio nb y regio nan

d industr y
• Th e preliminar y

fossi l fue l consumptio nestimate s ineac hregio n ar e the nnormalize dt o b e consisten t wit hth e IFF S regiona l projection s o f tota l industria l fossi l fue l deman d



### 3- 2P.3 2

I t i s possibl e fo r tota l expecte dfossi l fue l consumptio ninsome industr y an dregio nt o decrease . Examples : 1 ) i f th e conservatio nfacto r (reductio ni nenerg y

us e pe r uni t o f production ) i s large r tha nth e industria l productio ngrowt hrate , 2 ) i f th e industria l productio ngrowt h rat e i s negative , o r 3 ) i f th e su m (acros s industr y

group s withi na region ) o f th e preliminar y

projecte dfossi l fue l deman destimate s ar e substantiall y highe r tha nth e IFF S regiona l tota l projecte dfossi l fue l deman dan dth e preliminar y

industr y

estimate s mus t b e reduce d(normalized) . Tabl e 3- 1 present s th e industria l energ y conservatio nfactor s use din IFCAM . 3. 2 CATEGORIZATIO N

O F FOSSI L FUEL S B

YFUNCTIONA L US E 3.2. 1 Significanc e fo r Modelin g Classifyin g fossi l fuel s b y functiona l us e i s critica l becaus e th e technica l an

deconomi c issue s o f fue l substitutio nvar y accordin g t o specifi c proces s applications . T o categoriz e fossi l fuel s b y functiona l use , projecte denerg y consumptio nfo r eac hregio nan dindustr y

i s spli t int o two functiona l us e classes : boiler s an dproces s heaters . Boiler s us e fossi l fuel s t o produc e proces s steam , ho t water , an dinternall y

generate d electricity . Boiler s consum e mor e oi l an dga s tha nan

y othe r singl e industria l consumptio nprocess . Proces s hea t application s includ e furnaces , ovens , kilns , an

dheater s an

dexclud e al l boile r an dfeedstoc k uses . 3.2. 2 Allocatio no f Projecte dFossi l Fue l Us e Amon g Boile r an dNonboile r Categorie s B y

Industr y Fo r eac hregio nan

dindustry , projecte dtota l fossi l fue l consumptio n i s spli t betwee ntwo classes : boiler s an dproces s heaters . Th e breakdown i s base don197 4 dat a fro m th e ECDB . Currently , coa l i s use dprimaril y in boilers ; cemen t kiln s ar e th e exception . Fo r mos t o f th e industrie s shown , th e differenc e inboiler/nonboile r split s betwee noi l an dga s us e i s slight . Whe ndifference s exist , ther e ar e n o obviou s technica l o r economi c reason s fo r a particula r industr y t o prefe r oi l t o gas , o r vic e versa . Th e discrepancie s betwee nth e functiona l us e split s fo r eac hfue l ar e smalle r tha nth e leve l o f probabl e erro r associate dwit hECD B functiona l us e data . Consequently , th e spli t betwee nth e two majo r functiona l use s i s base don th e su m o f historica l coal , oil , an dga s consumptio nineac hindustry . Th e focu s ontota l fossi l fuel s (rathe r tha noncoal , oil , an dga s separately )



### 3- 3P.3 3

TABL E 3-1
. PROJECTE D INDUSTRIA L ENERG Y CONSERVATIO NFACTORS 3 "

Industr yIS8~5 " 1990 , 199 5
0.95 9 0.75 9 0.78 8 0.76 5 0.91 4 0.78 9 0.75 8 0.75 9 Foo d Textile s Pape r Chemical s Petroleu m 

### SC G Refinin g

Primar yMetal s Othe r Ind u str y 0.94 9 0.84 4 0.87 1 0.84 2 0.92 4 0.82 7 0.82 5 0.84 4



### a Energ yConservatio n i n th e Manufacturin g Sector , 1954-1990
. Energ yan d Environmenta l Analysis , Inc . Arlington , Virginia
. Novembe r 1974
. Prepare d fo r th e Counci l o n Environmenta l Quality
. Publishe d b yth e Federa l Energ yAdministratio n Projec t Independenc e Blueprin t Interagenc y Tas k Forc e o n Conservation
. Energ yconsumptio n pe r uni t o f output : 197 5 = 1.0
. Al l industr yestimate
.



### 3- 4P.3 4

seem s warrante dsinc e th e rati o o f coa l t o oi l t o ga s inth e futur e i s expecte dt o diffe r substantiall y from historica l patterns . Consequently , th e classificatio nby functiona l us e an

dnew/existin g combustor s i s mad e firs t onl y

fo r tota l fossi l fuels , leavin g th e specifi c allocatio no f fossi l fue l demand s by

fue l typ e t o a late r ste pi nth e classificatio nprocess . Nationa l functiona l us e share s fo r fossi l fuel s by industr y

ar e show

n inTabl e 3-2 . Base donfue l use , majo r industr y group s generall y

ca nb e disaggregate dint o predominantl y boile r o r nonboile r industries . Th e industrie s predominantl y usin g boiler s ar e Food , Textiles , an dPaper , whil e nonboile r industrie s ar e Petroleu m Refining , SCG , an

dSteel . Aluminum , Chemicals , an

d"Other " industrie s us e approximatel y a nequa l mi xo f boile r an dproces s hea t fuel . Th e boile r industrie s canb e classifie dfurthe r a s industrie s usin g smal l boiler s (e.g. , Foo dan dTextiles ) o r industrie s usin g larg e boiler s (e.g. , Pape r an

dChemica l Manufacturing) . Inth e Foo dindustry , proces s steam i s use dprimaril y

fo r washin g an

dsterilizin g containers , cooking , evaporating , spac e heating , an delectricit y

generation . Th e Textil e industr y relie s heavil y

onpurchase delectricit y t o driv e th e machiner y i n th e plants ; fue l oi l an dnatura l ga s ar e use dpredominantl y i nthi s industr y i nboilers . Inthi s industry , proces s steam als o i s use dfo r fabri c preparation , dyeing , an dfinishin g operation s a s wel l a s spac e heating . Very littl e electricit y

i s generate di ntextil e mills . Th e larger-boile r industries , Pape r an dChemica l Manufacturing , us e a significan t portio no f tota l steam deman dt o generat e electricity . I n Chemica l Manufacturing , proces s steam deman di s use dt o stri pawa y unreacte d feed , a s dilutio nsteam , an dt o driv e steam

compressors . Th e proces s fue l use s ar e primaril y

i ncrackin g furnaces . Proces s steam inth e Pape r industr y i s use dt o generat e electricit y an di nth e pulpin g an

dbleachin g processes . Som e system s als o us e steam i ndebarking . Proces s use s o f scarc e fuel s inth e Petroleu m Refinin g industr y

ar e in tubestil l heater s o r furnaces . I nStee l manufacture , blas t furnaces , soakin g pits , rehea t furnaces , an dhea t treatin g application s ar e th e primar y proces s uses . SC Gfue l us e i s dominate dby cemen t productio nwhic huse s proces s hea t i ncemen t kilns . Glas s productio ncomprise s th e othe r significan t portio no f SCG , wit hglas s furnace s a s th e primar y energ y user .



### 3- 5P.3 5

TABL E 3-2
. DISTRIBUTIO NO F FOSSI L FUEL S BETWEE NBOILE R AN D PROCES S HEA

T USES 3 (percentag e o f tota l fossi l fue l demand )

Industr y Boile r Proces s hea t

Foo d Textile s Pape r Chemical s Petroleu m

Refinin g Stone , Clay , an d Glas s Stee l Aluminu m Othe r 

### 7 4 8 0 

### -8 1 6 5 2 5

3 3 5 5 4 4 2 6 2 0 1 9 3 5 7 5 9 9 6 7 4 5 5 6

a EE Aestimate s base d on the End-Us e Energ yConsumptio n Dat a Bas e (197 4 data)
. Include s coal , natura l gas , an d fue l oil
. b , Les s tha

n 1 percent .



### 3- 6P.3 6

Aluminum i s a larg e electricit y produce r an

dth e bul k o f th e boile r us e intha t industr y

i s consume dt o self-generat e electricity . Th e res t o f th e fuel , roughl y

half , i s consume dindirec t hea t applications . 3. 3 CATEGORIZATIO N

O F BOILE RFOSSI L FUE L US E BYNE W AN D EXISTIN GFACILITIE S 3.3. 1 Significanc e fo r Modelin g Th e new/existin g distinctio ni s importan t i nan y proces s engineerin g analysi s o f fue l choic e decision s sinc e th e technica l capability , th e natur e o f th e investmen t decision , energ y an denvironmenta l policies , an dth e cost s o f usin g alternat e fuel s diffe r fo r existin g unit s an dne w facilities . Existin g boiler s ca nb e retrofitte dt o bur noi l o r gas ; the y ca nb e converte dt o coa l eithe r by reconvertin g unit s originall y designe dt o fir e coa l o r b

y acceleratin g replacemen t o f existin g unit s tha t neve r fire dcoa l wit hne w coal-fire dboilers ; conversio nt o any othe r fue l involve s retrofittin g th e bo'iler . Retrofitting , fo r coa l use , oil/natura l ga s boiler s tha t neve r wer e designe dt o bur ncoa l i s impractica l fo r two reasons . First , boile r capacit y

mus t b e downrate dsubstantiall y (2 0 t o 6 0 percen t les s tha n origina l desig ncapacity ) an dsecond , necessar y

modification s t o existin g 2 equipmen t ma y

b e physicall y

impossible . Th e primar y

constrain t t o boile r modificatio ni s combustio nvolume . Significantl y

mor e combustio nvolum e i s require dfo r burnin g coa l tha nfo r burnin g oi l o r ga s t o insur e tha t th e flu e ga s temperatur e a t th e entranc e t o th e boile r convectiv e sectio ni s belo w coal' s ash-softenin g point . Coa l firin g als o require s additiona l burnou t time t o permi t mor e hea t absorptio n i nth e radian t (waterwall ) section . I f i t i s physicall y impossibl e o r economicall y

impractica l t o enlarg e th e furnac e area , boile r capacit y mus t b e downrate dsubstantially . Othe r boile r constraint s t o coa l conversio nar e convectiv e sectio nan d ai r preheate r redesig nan dth e additio no f sootblower s an dfans . Du e t o thes e technica l problems , convertin g existin g unit s no t originall y designe d t o bur ncoa l t o coa l firin g i s assume dt o b e infeasibl e unles s th e boile r i s replaced . Th e purpos e o f th e Powerplan t an dIndustria l Fue l Us e Ac t (FUA ) i s t o reduc e oi l an

dnatura l ga s consumptio ni nAmerica nindustrie s an dutilitie s by promotin g th e us e o f coa l an dothe r "alternative " fuels . FU A give s DO E th e authorit y

t o prohibi t o r limi t th e us e o f oi l an dnatura l ga s incertai n



### 3- 7P.3 7

ne w an dexistin g industria l boilers . FU A provision s ar e differen t fo r new an dexistin g boiler s an dthi s i s a

nexampl e o f th e significanc e o f th e new / existin g distinctio nwit hrespec t t o energ y regulations . A nobviou s exampl e relate dt o environmenta l regulation s i s th e Federa l NSP S whic hgovern s emission s from new o r modifie dstationar y sources . Th e NSP S ar e designe dt o reflec t th e degre e o f emissio ncontro l achievabl e throug h th e applicatio no f th e bes t system o f emissio nreductio nwhic hEPA , havin g take nint o accoun t th e cos t o f control , determine s t o b e demonstrate d adequately . Th e Federa l NSP S i s th e same throughou t th e country . Th e nationa l impact s o f NSP S ar e a functio no f th e projecte dmi xo f ne w an d existin g facilities . Du e t o varyin g technica l problem s associate dwit hconvertin g existin g combustor s t o fir e coal , th e investmen t decision s an dassociate dcost s o f fue l substitutio ndiffe r amon g combustors . Th e followin g fou r classe s o f combustor s eac hinvolv e differen t technica l problems , costs , an dinvestmen t decisions :

• Existin g coal-capabl e units : Thes e combustor s currentl y ar e firin g oi l o r ga s bu t originall y wer e designe dt o us e coal . Mino r capita l investmen t i s neede dt o refurbis hcoal-relate d equipmen t alread y

availabl e inorde r t o retur nt o coa l use . Pollutio ncontro l equipmen t ma y b e neede da s well , dependin g on environmenta l regulations . • Existin g unit s designe dt o fir e onl y oi l and/o r ga s tha t ca nb e retrofitted : Fo r thes e combustors , i t i s cheape r t o retrofi t an existin g uni t t o fir e coa l rathe r tha nt o entirel y replac e th e combusto r wit ha ne w

coal-fire dunit . Th e element s o f th e invest men t decisio nfo r conversio nt o oi l o r ga s ar e simila r t o thos e fo r th e existin g coal-capabl e combustor . • Existin g unit s designe dt o fir e onl y oi l and/o r ga s tha t canno t b e retrofitte deconomically : Fo r thi s clas s o f combustors , i t i s mor e economi c t o replac e a nexistin g uni t wit ha new coal-fire d uni t tha nt o retrofi t th e facilit y t o fir e coal . • Ne w facilities : Fo r new combustors , th e cost s o f new unit s fo r eac hfue l typ e ar e compared , includin g tota l capita l investment s an doperatin g an

dfue l costs .



### 3-

8P.3 8

i 3.3. 2 Approac ht o Allocatio no f Fue l Us e Amon g New/Existin g Facilitie s Becaus e projecte dfossi l energ y deman dinan

y futur e yea r i s a

n exogenou s inpu t t o th e IFCA M model , th e spli t betwee nenerg y us e inne

w facilitie s an

dexistin g facilitie s wil l b e determine dby th e exogenou s growt h rat e intota l fossi l fue l deman dplu s th e retiremen t rat e o f existin g facilities . Retiremen t o f energ y

us e i nexistin g combustor s ca noccu r throug h reduce dcapacit y

utilizatio no r action s tha t reduc e fue l us e t o essentiall y zero , suc ha s actua l scrappag e o r a shif t t o standby status . Th e decisio n t o retir e a combusto r i s determine dby man y parameters . Ove r time , equipmen t wil l deteriorat e an

drequir e replacement . Maintenanc e cost s tendt o increas e and , dependin g onth e typ e o f combustor , fue l us e efficienc y (e.g. , fo r a boiler , fue l inpu t inBt upe r poun do f steam generated ) ma y

decline . Essentiall y

random factors , suc ha s th e phaseou t o f a nuneconomi c plan t o r par t o f a

nol dplant' s production , als o ca ncaus e a combusto r t o retire . Inaddition , th e technica l fue l us e efficienc y an dcos t o f new

combustor s wil l affec t retiremen t rates . Fue l costs , conservatio npotential , th e availabilit y

o f capital , an

dothe r investmen t demand s al l influenc e retire men t rates . Logically , th e decisio nt o replac e combustor s depend s onth e economic s o f plant - an dcorporate-specifi c situations . I na previou s study , EEA use dth e concep t o f vintagin g plu s deca y 3 factor s t o estimat e retiremen t o r capita l turnove r rates . Thi s approac h indicate dretiremen t rate s (percen t o f annua l energ y us e retired ) fo r boiler s rangin g from

two t o thre e percent . Th e curren t boile r retiremen t methodolog y i nIFCA

M i s t o estimat e a

n annua l capita l turnove r rate . Th e curren t annua l retiremen t rat e estimat e i s 0.6 2 percen t o f projecte dindustria l boile r fue l demand . Thi s estimat e i s base dona

nABM A representative' s subjectiv e estimat e tha t 1 5 percen t o f ABM A dat a onnew

industria l watertub e boile r sale s capacit y represent s replacemen t boilers . No estimat e fo r boile r retirement s withou t replacement s i s available . Fiftee npercen t o f th e 1965-197 6 averag e annua l ABM A new industria l watertub e boile r capacit y sale s data * i s 8,02 8 MMBtu/hr.* * Assumin g tha t

•Domesti c order s fo r manufacturin g industrie s only . **Assumin g 1,25 0 Btu/l bsteam . 3- 9P.3 9

th e averag e industria l boile r capacit y utilizatio nrat e i s 5 5 percent , f th e * leve l o f retiremen t an dreplacemen t o f annua l watertub e boile r fue l deman d i s 8,02 8 MMBtu/h r x0.5 5 x8,76 0 hours/yea r = 38.6 8 trillio nBtu/year . Thi s leve l o f retirement s represent s 0.6 2 percen t o f th e EEA estimat e o f fossi l fue l consumptio ni nindustria l boiler s in197 6 (6.2 5 quadrillio nBtu) . Thi s retiremen t rat e i s applie dt o tota l industria l boile r fossi l fue l deman d- - smal l firetub e boiler s a s wel l a s watertub e boiler s - - i nIFCAM . Thi s analysi s assume s tha t a constan t percentag e o f th e curren t capita l stoc k i s retire devery period . A s a result , tota l retiremen t i s a functio n no t onl y o f th e retiremen t rat e selected , bu t als o o f th e rat e o f growt ho f th e capita l stock . Thi s approac hma y overstat e retirement s durin g period s o f hig hgrowt han

dunderstat e retirement s durin g period s o f lo w growth . Th e calculatio nprocedur e o f th e tota l retiremen t o f existin g boiler s betwee n198 5 an

d199 0 i s a s follows . First , tota l boile r fossi l fue l deman d i n198 5 an

di n1990 i s estimated . Second , tota l boile r fossi l fue l deman d i never y yea r betwee n198 5 an d199 0 i s estimate dby calculatin g th e compoun d averag e annua l growt hrate . Third , th e retiremen t rat e i s applie dt o th e tota l estimate dboile r fossi l fue l consumptio nin1986 , 1987 , ... , 199 0 i n orde r t o determin e th e tota l amoun t o f boile r fossi l fue l deman dt o b e retire di nth e 1985-199 0 period . Th e "boile r records " o r inventor y i nIFCA

M ar e no t individua l unit s bu t group s o r classe s o f boilers . Eac hgrou pi s define dby locatio n(1 0 Federa l regions) , fue l type , siz e clas s (8) , capacit y utilizatio nclas s (5) , industr y

grou p(9) , new/existin g status , an dai r emissio nregulation . IFCA M project s tota l boile r fue l deman dina futur e year , multiplie s thi s valu e b y (1.0062) a - 1 (wher e a = forecas t yea r - bas e year) , an dsubtract s thi s fue l deman dproportionall y from eac hgrou po f boiler s whic hexiste din th e bas e yea r (currentl y 1974) . Boiler s installe dafte r 197 4 ar e no t retired . I t i s assume di nIFCA M tha t th e loadfacto r i s constan t ove r th e lif e o f th e uni t ona

nannua l basis . Tha t is , changin g steam requirement s ar e me t b y retirin g existin g unit s an daddin g enoug hnew

unit s t o mee t th e tota l projecte dstea

m deman drequirements . IFCA M model s eac hboile r fue l choic e decisio nindependently . Cost s a t a plan t (a s a whole ) ar e no t minimized . Fue l choic e decision s ar e mad e a s i f eac hboile r i s th e onl y boile r a t eac hplant . IFCA M i s no t a steam

plan t plannin g optimizatio nmodel . Therefore , th e curren t boile r inventor y i n
3-1 0P.4 0

IFCA M i s no t characterize dby plan t siz e o r typ e o f plant . IFCA M doe s no t hav e th e capabilit y

t o predic t futur e steam requirement s a t specifi c plants , an dIFCA M doe s no t mak e a

nintegrate ddecisio nt o minimiz e tota l steam plan t costs . Th e curren t retiremen t methodolog y i nIFCA

M doe s no t explicitl y tak e int o accoun t th e ag e o f equipmen t o r th e economic s o f continuin g t o us e ol d equipmen t versu s replacin g i t wit hnew equipment . I naddition , th e IFCA M approac hdoe s no t mode l retirement s withou t replacements , and , a s a result , ma y understat e th e retiremen t rate . Furthermore , th e IFCA M approac hassume s tha t boile r capacit y

utilizatio nrate s ar e constan t an dtha t annua l increase s o r decrease s i nstea

m deman dcanno t b e me t t o some exten t b y changin g th e capacit y utilizatio nrat e o f th e existin g inventory . On e facto r wort hemphasizin g i s tha t EEA' s approac ht o estimatin g retiremen t rate s doe s no t conside r th e effec t o f risin g fue l cost s o r energ y polic y onth e overal l efficienc y o f energ y

us e inexistin g combustors . Fo r example , taxe s onfue l us e affectin g existin g combustor s wil l conserv e energ y becaus e highe r fue l cost s wil l promot e effort s t o increas e th e efficienc y o f existin g units ; thi s energ y conservation , however , wil l no t b e capture d b y retiremen t rate s base donhistorica l trends . Th e failur e o f IFCA M t o conside r th e impac t o f energ y polic y o r fue l price s onoveral l energ y efficienc y

i nexistin g unit s wil l tendt o bia s fue l mi xresult s awa y from coal . Thi s bia s occur s becaus e th e projecte dyea r fossi l energ y deman d (exogenou s t o IFCAM ) doe s includ e th e effec t o f highe r fue l prices , fo r example , onoveral l fue l us e efficiency . Sinc e IFCA M ignore s thi s conserva tio neffec t i ndeterminin g norma l retiremen t rates , conservatio nbenefit s com e entirel y

ou t o f fue l us e i nne w combustors . 3.3. 3 Alternative s Th e ag e o f th e uni t ma y b e significan t i f i t ca nb e establishe dtha t a maximu m expecte dusefu l lif e ca nb e determine d(e.g. , 3 0 o r 4 0 years) . Al l unit s the nwoul db e retire donc e thei r "age " exceede dth e appropriat e maximu m usefu l lif e estimate . However , lo w usag e rates , conscientiou s O& M practices , an drefurbishmen t opportunitie s ma y exten dth e usefu l life . I naddition , thi s approac hdoe s no t addres s th e situatio nwher e th e uni t i s retire d prematurel y

(an dno t resold ) du e t o a plan t closing , energ y conservation , o r reduce dproductio nrates .

3-1 1P.4 1

I t i s feasibl e tha t a neconomi c framewor k coul db e develope dwhic h woul dcompar e th e increasin g O& M cost s o f existin g boiler s wit hth e cos t o f a new boile r (levelize dcapita l plu s O&M) . O& M cost s o f existin g equipmen t ma y b e expecte dt o increas e becaus e o f declinin g efficiency , part s replacement , an dincrease dmaintenanc e expenses . Th e uni t coul db e replace dwhe nth e averag e cos t o f a new uni t i s les s tha nth e averag e futur e O& M cost s o f th e existin g unit . However , i t i s difficul t t o collec t dat a o nO& M cost s fo r a singl e combustor . Plan t manager s ar e usuall y unabl e t o allocat e o r trac k al l labo r an dmaterial s cost s combusto r b y combustor . A s a result , long-term time serie s dat a fo r a

nindividua l uni t ar e no t available , an destimate s o f increasin g O& M

cost s ove r time fo r ol dunit s canno t b e made . I f i t i s assume dtha t O& M cost s d o no t increas e i nrea l term s ove r time , a neconomi c framewor k stil l coul db e developed . A nexistin g uni t woul dneve r b e replace dwit ha new uni t tha t ha s th e sam e fue l typ e inthi s analysi s becaus e th e O& M cost s woul db e identica l an dth e levelize dcapita l cost s o f th e new

uni t woul dpreclud e th e new uni t from

bein g th e lo

w cos t alternative . Therefore , thi s approac hdoe s no t focu s onretiremen t bu t on "earl y replacement " wit ha new fue l type . I nfact , th e new fue l typ e woul d alway s b e coal . I t i s unlikel y tha t a plan t manage r woul dreplac e a coa l boile r wit ha ne

w gas/oi l boiler ; th e lowe r non-fue l O& M cost s associate d wit hburnin g ga s o r oi l woul dno t likel y offse t th e capita l cos t o f a new gas/oi l boile r an

dth e highe r fue l bills . "Earl y replacements " (o r accelerate dretirements ) ar e no t norma l retirements . The y

ar e a relativel y

expensiv e fuel-switching , retrofi t optio n fo r coa l firing . The y depen dt o a larg e exten t incapita l availabilit y — capita l investe dt o ear na retur nb y reducin g futur e tota l O& M an dfue l costs . The y

ca nb e considere da s discretionar y investment s becaus e the y d o no t necessaril y

(or primarily ) improv e o r expan dproductio ncapacity . Earl y replacement s ma y

benefi t th e compan y b y savin g premiu

m (an dexpensive ) fuel s fo r premiu

m use s an

dswitchin g a portio no f energ y purchase s t o fuel s wit h a relativel y

bette r suppl y

an dpric e outloo k (i.e. , coal) . Inaddition , a n economi c framewor k fo r earl y replacement s doe s no t addres s th e situatio n wher e boiler s ar e scrappe do r place do nstand-by . Plan t manager s matc hboile r capacit y wit hseasona l an

ddail y stea m loadcurves . The y

ma y provid e fo r some measur e o f redundan t boile r capacit y

3-1 2P.4 2

s o tha t th e plan t ca noperat e a t partia l o r ful l productio ncapacit y i nth e even t o f a

nunexpecte dboile r shutdown . I t i s no t possibl e t o optimiz e boile r configuration s a t a specifi c plan t withou t dat a o nfutur e steam load curves . However , i t ma y b e possibl e t o develo pa fe w generi c plan t type s an dsimulat e th e retiremen t strateg y fo r each . Th e proble m the nwoul db e how t o assig nth e existin g boile r populatio nt o on e o f th e generi c plan t types . Ideally , th e retiremen t methodolog y woul db e a dynami c functio no f th e boile r age , efficiency , expectatio no f fue l cost s ove r th e remainin g lif e o f th e unit , non-fue l O& M costs , pollutio ncontro l requirement s fo r existin g an dnew units , capita l availability , expectation s o f futur e plan t increasin g o r decreasin g steam

requirements , an

dpossibl y

cogeneratio nwit ha new unit . However , dat a onindustria l boile r retirement s an dassociate dparamete r value s d o no t exist . Th e ABM A an dDO E collec t dat a onnew boile r orders , bu t th e dat a d o no t distinguis hbetwee nreplacement s o f retire dunits , increase dsteam

capacit y

a t existin g plants , andnew plants . Thi s dat a bas e als o doe s no t includ e dat a onexistin g boiler s whic har e scrapped , loadreduce dan

dplace donstand-by , o r loadfacto r increase dt o mee t new steam deman drequirements . Boile r owner s coul db e interviewe dt o discus s thi s issue . Specifically , boile r owner s coul db e aske dhow the y mak e retiremen t decision s an dho w man y boiler s hav e bee nretired . Th e reason s fo r retiremen t ma y b e numerous , somewha t subjectiv e o r plant-specific , an ddifficul t t o quantif y ineconomi c o r financia l terms . I t ma y als o b e difficul t fo r a curren t plan t manage r t o documen t activitie s (i.e. , retiremen t decisions ) whic hhappene dyear s ago . Th e informatio ncollecte dma y b e anecdota l wit hn o basi s fo r assignin g existin g plant s t o on e o f thes e "cas e studies " o r predictin g ho w thes e retiremen t variable s wil l var y i nth e future . 3. 4 CLASSIFICATIO N

O F BOILE RFUE L US E BYSIZ E AN D CAPACIT YUTILIZATIO N RAT E 3.4. 1 Significanc e fo r Modelin g Th e siz e an

dcapacit y

utilizatio nrat e o f a boile r greatl y affec t fue l choic e decisions . Boile r siz e i s importan t fo r severa l reasons . First , boile r cost s ar e characterize dby economie s o f scal e an dthes e directl y affec t th e economic s o f fue l choic e decisions . Second , pollutio ncontro l

3-1 3P.4 3

strategies , ofte ninvolvin g substantia l capita l an doperatin g costs , var y by size . Third , environmenta l regulations , bot hStat e an dFederal , ofte n specif y level s o f ai r pollutio ncontro l by boile r size . Fourth , recen t Federa l energ y

ta xpolicies , investmen t incentives , an dregulator y

proposal s hav e targete dindustria l boiler s o f specifi c siz e ranges . T o captur e thes e implication s o f boile r siz e onfue l choic e decisions , IFCA M disaggregate s boile r fue l deman dint o severa l siz e categories . Th e capacit y

utilizatio nrat e o f a boile r i s als o a critica l paramete r i nth e economic s o f fue l choic e decisions . A capacit y

utilizatio nrat e represent s th e tota l Bt uactuall y burne dina boile r durin g a yea r divide d b y th e maximum

Bt utha t coul db e burned , assumin g a fixe ddesig nfirin g rat e o f th e boile r an d8,76 0 hour s o f operatio npe r year . A hig hcapacit y utilizatio nrat e give s certai ncapita l intensiv e technologie s (wit hlarg e economie s o f scale ) a competitiv e edge . A s show ni nTabl e 3-3 , i t i s assume dtha t new non-coa l industria l watertub e boiler s hav e dual-fue l (oil/gas ) firin g capability , residua l fue l oil/natura l ga s o r distillat e fue l oil/natura l gas . Al l new coal-fire d boiler s large r tha n7 3 M W (25 0 MMBtu/hr ) ar e assume dt o b e pulverize dcoa l units . Ne w

industria l coal-fire dboiler s betwee n2 9 M W (10 0 MMBtu/hr ) an

d 7 3 M W (25 0 MMBtu/hr ) ar e assume dt o b e a mi xo f pulverize dcoa l an dspreade r stoke r units . Thes e two method s o f coa l combustio nhav e differen t costs , flu e ga s flo w

rate s an

duncontrolle dPM

an dN0 Xemissio nrates . Ne w industria l coa l boiler s betwee n1 5 M W (5 0 MMBtu/hr ) an

d2 9 M W (10 0 MMBtu/hr ) ar e assume dt o b e spreade r stoke r units . Ne w industria l coal-fire dboiler s smalle r tha n1 5 M

W (5 0 MMBtu/hr ) ar e assume dt o b e underfee dstokers . Ther e ar e eigh t boile r size s (se e Tabl e 3-3 ) an dfiv e boile r capacit y utilizatio nrat e classe s (25 , 45 , 55 , 65 , an d7 5 percent ) i nIFCAM . 3.4. 2 Ne w

Industria l Boiler s Th e specifi c boile r size/capacit y utilizatio nrat e combinatio nfo r individua l new

industria l boiler s i s derive db y applyin g a frequenc y distributio nt o th e tota l projecte dleve l o f fossi l fue l deman di nnew boilers . Thi s distributio ni s base donhistorica l dat a an di s assume dt o remai nconstan t ove r time an dno t t o vary

b y region . Th e curren t distributio ni nIFCA M ha s bee nderive dfrom thre e sources : 4 ABM A industria l watertub e boile r sale s data , a PEDC o report , an dNEDS . Th e NED S dat a wer e use dt o develo pa preliminar y distributio no f boile r

3-1 4P.4 4

TABL E 3-3
. NE W INDUSTRIA L BOILE R SIZE/TYP E ASSUMPTION S INIFCA M

Boile r siz e category , M W (MMBtu/hr ) hea t inpu t Representativ e Rang e 

### 3- 9 (10-30 )
9-1 5 (30-50 )
15-2 2 (50-75 )
22-2 9 (75-100 ) 29-4 4 (100-150 )

44-5 8 (150-200 )

58-7 3 (200-250 )



### >7 3 (>250 ) siz e



### 6 (20 ) 

### 1 2 (40 ) 

### 1 8 (62 ) 

### 2 6 (87 ) 

### 3 7 (125 )



### 5 1 (175 )



### 6 6 (225 )



### 9 5 (325 ) Coa l

Package , water
tube , underfee d stoke r Package , water
tube , underfee d stoke r Field-erected , watertube , spreade r stoke r Field-erected , watertube , spreade r stoke r Field-erected , watertube , spreade r stoke r o r pulverize d coa l Field-erected , watertube , spreade r stoke r o r pulverize d coa l Field-erected , watertube , spreade r stoke r o r pulverize d coa l Field-erected , watertube , pulverize d coa l Typ e

Residua l oil / natura l ga s Package , firetub e Package , watertub e Package , watertub e Package , watertub e Package , watertub e

Package , watertub e

Tw o package , watertube 0

Tw o package , watertub e Distillat e oil /

natura l ga s Package , firetub e Package , watertub e Package , watertub e Package , watertub e Package , watertub e

Package , watertub e

Tw o package , watertube 0

Tw o package , watertube 0

Firetube s ar e single-fue l fired
. Watertube s ar e dual-fue l fired
. 3 Ami x i s assume d i n thi s siz e class
. 'Eac h one-hal f o f th e "representativ e size " i n th e secon d column
.

3-1 5P.4 5

fue l consumptio nby

siz e category , capacit y utilizatio nclass , an dindustr y

' group . Thi s preliminar y distributio nwa s normalize dt o correspon dt o PEDC o estimate s o f th e nationa l distributio no f industria l firetub e versu s watertub e boile r capacit y

i n1977 . Thi s distributio nwa s furthe r normalize dt o 1965 - 198 0 ABM A industria l watertub e boile r sale s data . Therefore , th e watertub e boile r siz e distributio ni s base dprimaril y onABM A data . Th e mi xo f ne w firetub e an

dwatertub e industria l boiler s i s base dprimaril y o nPEDC o estimates . Th e capacit y utilizatio ndistributio nfo r eac hsiz e clas s i n eac hindustr y

grou pi s base dprimaril y o nNED S data . Thi s procedur e wa s followe dbecaus e o f th e dat a limitation s o f eac h dat a source . NED S include s industr y group , size , an

dcapacit y

utilizatio n rat e informatio nfo r th e existin g boile r inventor y bu t doe s no t hav e complet e coverag e fo r smal l boilers . Th e PEDC o estimate s do no t includ e dat a o n industr y grou po r capacit y

utilizatio nrate . Th e ABM A dat a d o no t includ e informatio no ncapacit y utilizatio nrate . A uniqu e distributio nha s bee ndevelope dfo r eac hindustr y group . Thi s distributio ni s presente di nTabl e 3-4 . 3..4. 3 Existin g Industria l Boiler s Aggregat e dat a o nlarg e existin g unit s hav e bee ncollecte dfrom th e MFB I file . Coal , oil , an dga s consumptio ninboiler s greate r tha n2 9 M W (9 9 MMBtu/hr ) an

dexistin g i n197 4 hav e bee nidentifie dby locatio n(AQCR) , firin g capabilit y

by fue l type , industry , siz e class , an dcapacit y

utiliza tio nrat e class . Fossi l fue l consumptio ninsmalle r existin g unit s i s no t covere dby

th e MFB I file , an

dNED S dat a doe s no t includ e 197 4 dat a fo r al l combustors . Therefore , fue l consumptio ninsmalle r unit s wa s estimate dby fue l type , region , an dindustr y

a s a residua l - - aggregat e ECD B fue l consump tio ninindustria l boiler s les s aggregat e MFB I fue l consumptio ni nlarg e industria l boilers . Th e siz e an dcapacit y

utilizatio nrat e classe s fo r thes e smal l existin g industria l boiler s ar e base do nNED S data . Th e capacit y

utilizatio nrat e i s assume dt o remai nconstan t ove r time . Increasin g deman dfo r boile r fue l ove r tim e i s assume dt o b e me t b y buildin g new units , no t increasin g th e capacit y utilizatio nrate s o f th e existin g inventory .

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0 )P.4 7

TABL E 3-4
. NE W INDUSTRIA L BOILE R SIZE/CAPACIT Y UTILIZATIO NRAT E DISTRIBUTION 3 (cont'd )

Industr y grou p
Chemical s (cont'd )

Textile s

Petroleu

m Refining Boi l e r siz e Capacit y

M W (MMBtu/hr ) utilizatio n


### 1 8 1 8 1 8 2 6 2 6 3 7 3 7 5 1 5 1 6 6 6 6 9 5 9 5 9 5 9 5 

### 6 6 1 2 1 2 1 2 1 8 1 8 2 6 3 7 3 7 5 1 

### 6 1 2 1 2 1 8 1 8 2 6 3 7 5 1 5 1 9 5 9 5 

### (6 2 (62 1 

### (6 2 (8 7 (87 ; (12 5 (12 5 (175 , (17 5 (225 ; (22 5 (325 1 (32 5 (32 5 (325 1 (20 ; 

### (2 0 (40 1 

### (40 ; (40 ; (62 ; (62 ^ (87 ; (125 ; 

### (125 ; (175 ; (20 ; (40 ] (40 ; 

### (62 ; (62 ; 

### (87 ; (125 ; (175 ; (175 ; (325 ) 

### (325 ; .2 5 .6 5 .7 5 .2 5 .6 5 .45 ) .7 5



### .4 5 .7 5 .4 5 .7 5 .2 5 .4 5 .6 5 .7 5 .2 5 .7 5 .2 5 .45 .7 5 .2 5 .7 5 .2 5 .2 5 .6 5 .4 5 .2 5 .6 5 .7 5 .4 5 .7 5 .7 5 .7 5 .4 5 .7 5 .2 5 .7 5 Frequenc y
.029 4 .021 4 .033 4 .016 0 .048 8 .065 4 .087 2 .068 4 .087 2 .062 5 .064 0 .037 0 .037 0 .075 3 .150 7 .103 1 .051 3 .095 5 .042 4 .070 2 .079 2 .104 4 .101 8 .107 4 .128 5 .116 2 .037 5 .041 6 .100 0 .042 7 .071 6 .097 2 .059 8 .085 5 .165 5 .084 4 .214 2

Energ yand Environmenta l Analysis , Inc .

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0 0P.4 9

3. 5 ENVIRONMENTA L REGULATION S 3.5. 1 Significanc e fo r Modelin g Environmenta l regulation s pla y animportan t rol e i ndeterminin g industria l fue l choice . Fo r example , ai r emissio nregulation s alte r relativ e capita l an

dfue l cost s an

dma y preclud e th e us e o f certai nfuel s i nboilers . Specifi c environmenta l regulation s ca nvar y accordin g t o geographi c location , boile r siz e an dtype , an

dfue l type . Bot hFedera l and Stat e environmenta l regulation s influenc e fue l choice . Th e impac t o f environmenta l regulation s i s modele di nIFCA M i na three-ste pprocess . First , eac hboile r i s assigne dt o anAi r Qualit y Contro l Regio n(AQCR ) base donhistorica l locatio npattern s o f industria l energ y consumption . Second , th e specifi c ai r emissio nlimit s applicabl e t o eac hboile r ar e identified . Next , th e pollutio ncontro l equipmen t an dth e fue l qualit y

require dt o mee t emissio nlimit s ar e specified . 3.5. 2 Assignmen t o f Boiler s t o AQCR' s Th e environmenta l regulation s tha t apply , t o any typ e o f boile r ca n var y significantl y

from on e AQC Rt o th e next . Whil e NSP S provision s appl y equall y i nal l part s o f al l regions , SI P provision s ofte nvar y amon g AQCR' s and , i nsome cases , amon g area s withi nAQCR's . Withi neac hregion , new boiler s ar e locate drandoml y by AQC Raccordin g t o historica l patterns . Withi neac hregio nan dfue l type , a cumulativ e distributio nfunctio nwa s develope dfo r th e leve l o f fue l us e i neac hAQCR . Th e distributio no f fue l us e amon g AQCR' s i s base dona 197 5 workin g pape r tha t use dEP A

emissio ninventor y

dat a (includin g fue l use) . I f AQC R# 1 consume dthre e time s a s muc hfue l a s AQC R# 2 consumed , the neac hnew boile r (i neac hindustry , size/capacit y utilizatio nclass ) i s thre e time s mor e likel y t o sit e i nAQC R# 1 tha ni nAQC R#2 . Withi na Federa l region , n o attemp t wa s mad e t o mode l change s in industria l locatio npatterns . Suc htrend s ar e extremel y difficul t t o identif y an dprojec t an

dcertainl y

wer e beyon dth e scop e o f thi s effort . Consequently , Stat e an dloca l environmenta l regulation s implicitl y ar e assume dno t t o influenc e industria l locatio npatterns . 3.5. 3 Assignmen t o f Environmenta l Regulation s t o Individua l Boiler s Th e fue l use dt o fir e a boile r i s influence dby environmenta l regula tion s governin g ai r pollutio nemissions , amon g othe r factors . A variet y o f

3-2 0P.5 0

Environmenta l regulation s ma y appl y t o any boile r dependin g upo ntype , size , location , an

dth e fue l fire dby

th e unit . Th e environmenta l regulation s t o whic ha boile r i s subjec t hel pdetermin e th e applicabl e pollutio ncontro l equipmen t a s wel l a s it s fue l choice . Th e regulation s use dinIFCA M ar e Federa l an

dStat e ai r pollutio ncontro l standard s resultin g fro m th e 197 0 an

d197 7 Clea nAi r Act (CAA) Amendments . Thi s ac t gav e th e EP A th e authorit y

t o establis hNationa l Ambien t Ai r Qualit y Standard s (NAAQS ) tha t woul dprotec t th e healt han dwelfar e o f th e population . Industria l source s ar e subjec t t o Stat e Implementatio nPla n(SIP ) environmenta l regulation s adopte dt o insur e complianc e wit hambien t standards . SIP' s ar e develope dby

eac hStat e t o implemen t an dmaintai nNAAQ S withi nit s geographica l area . Th e CA

A als o gav e EP A

th e authorit y

t o promulgat e NSPS , nationa l standard s governin g th e ai r emission s from specifi c categorie s o f newl y constructe dsources . NSP S ar e technology-define dFedera l standards ; combustor s subjec t t o NSP S mus t us e th e bes t availabl e emissio ncontro l technologie s (BACT) . Curren t NSP S provision s appl y t o boiler s commencin g on-lin e statu s afte r 197 1 tha t hav e firin g rate s abov e 7 3 M W (25 0 MMBtu/h r hea t input) . Fo r any uni t o f thi s type , th e curren t NSP S i s th e bindin g regulatio nunles s th e applicabl e SI P fo r any give nuni t i s mor e stringen t

- - henc e bindin g - - tha nth e NSPS . Th e curren t NSP S fo r industria l fossi l fuel-fire dboiler s i s unde r scrutin y by EP A t o determin e th e nee dfor , an d exten t of , revision s t o th e regulation . Stat e an dFedera l regulation s ca nvar y by fue l type . Regulation s applicabl e t o boiler s tha t fir e on e o f th e followin g fuel s ar e considere d i nIFCAM : coal , residua l fue l oil , distillat e fue l oil , andnatura l gas . Regulation s limitin g SO2 , PM , an dN0 Xemission s ar e assume dt o appl y t o coal - an dresidua l oil-fire dboilers . I nIFCAM , distillat e oil - an dnatura l gas-fire dboiler s ar e subjec t onl y t o N0 Xemission s regulation s sinc e unit s firin g thes e fuel s emi t insignifican t level s o f SO 2 an dPM . Ne w Boiler s Subjec t t o NSP S Al l boiler s installe dafte r 197 4 wit hfirin g rate s greate r tha n7 3 M W (25 0 MMBtu/h r heat 1 input ) currentl y ar e subjec t t o NSP S provisions . Coal- , oil- , an dnatura l gas-fire dunit s ar e subjec t t o th e NSP S ai r emission s limitation s presente di nTabl e 3-5 . IFCA M applie s thes e limitation s t o ne w unit s tha t ar e no t subjec t t o mor e stringen t SIP's .

3-2 1P.5 1

TABL E 3-5
. CURREN T INDUSTRIA L BOILE R NSPS 3

Boile r siz e Fue l typ e M

W (MMBtu/hr ) SO 2 P M NO x
Natura l ga s > 7 3 (

> 250 ) - - 8 6 ng/ J (0. 2 lb/MMBtu ) Fue l oi l > 7 3 (

> 250 ) 34 0 ng/ J 4 3 ng/ J 8 6 ng/ J

(0. 8 lb/MMBtu ) (0. 1 lb/MMBtu ) (0. 2 lb/MMBtu ) Coa l > 7 3 (

» 250 ) 52 0 ng/ J 4 3 ng/ J 30 0 ng/ J

(1. 2 lb/MMBtu ) (0. 1 lb/MMBtu ) (0. 7 lb/MMBtu )

3 4 0 CF R 60 , Subpar t D .

3-2 2P.5 2

Fo r new unit s tha t com e on-lin e afte r 1985 , IFCA M ca nevaluat e severa l regulator y

alternatives . Fo r example , IFCA M ca nevaluat e th e effec t o f expandin g th e siz e applicabilit y o f th e regulatio nt o includ e new unit s smalle r tha n7 3 M

W (25 0 MMBtu/h r hea t input) . IFCA M ca nals o evaluat e th e effect s o f a pollutan t percentag e reductio nrequiremen t o r a chang e in stringenc y

fro m th e curren t NSPS . Fo r example , th e regulatio nfo r controllin g SO 2 emission s from

residua l fue l oi l o r coal-fire dboiler s ca nvar y b y boile r siz e an dca nb e specifie da s th e following :

• A ceilin g emissio nrat e (poundo f pollutant/MMBt u o f fue l burned )
• A recommende dpercentag e remova l (e.g. , 9 0 percen t remova l o f uncontrolle dSO 2 emissions )
• A recommende dpercentag e remova l an da "floor " emissio nrat e (e.g. , 9 0 percen t remova l bu t n o lowe r tha n25 8 ng/J , 0. 6 lb/MMBtu )
• A minimum percentag e remova l t o b e applie di f th e recommende d percentag e remova l result s i ncontrolle demissio nrate s les s tha n th e "floor " Boiler s Subjec t t o SIP' s Al l existin g boiler s an dnew boiler s wit hfirin g rate s lowe r tha n7 3 M W (25 0 MMBtu/h r hea t input ) ar e subjec t t o SIP's. * Large r new boiler s subjec t t o SIP' s mor e stringen t tha nth e curren t NSP S als o mus t abid e wit h SI P regulations . SI P limit s onSO2 , PM , an dN0 Xemission s var y substantiall y withi nan

damon g States , bot hinth e severit y o f th e standard s an di nth e wa y the y ar e expressed . Som e State s specif y standard s onl y

i nterm s o f ambien t conditions . Mos t States , however , specif y standard s i na variet y o f form s includin g pound s o f pollutan t pe r energ y releas e o f th e fue l (lb / MMBtu) , pound s o f pollutan t emitte dpe r 1,00 0 pound s o f steam , o r pollutan t conten t o f th e fuel , b y weight , i npercentag e terms . I nman y States , SI P requirement s als o var y b y fue l typ e an

dboile r size . A se t o f regulation s reflectin g th e diversit y o f SI P requirement s ha s bee ncompile dfo r us e inIFCAM . Thes e SIP' s ar e identifie db y AQC Ran d boile r fue l typ e (coa l o r residua l fue l oil ) an dar e specifie da s pound s o f pollutan t emitte dpe r millio nBt uo f fue l burned . Sinc e a numbe r o f AQCR' s

*Smal l new

boiler s ma y

b e subjec t t o a

nalternativ e NSP S whic hi s mor e stringen t tha nth e applicabl e SI P standard .

3-2 3P.5 3

contai nportion s o f two , three , o r fou r States , averag e SIP' s ar e calculated ' fo r interstat e AQCR's . Eac hState' s SI P regulatio ni s weighte dby th e fue l consumptio nwithi nth e State' s geographica l portio no f th e AQCR , an dthes e weighte dSIP' s ar e average dt o estimat e on e interstat e regulation . SI P value s als o ar e approximate dfo r state s i nwhic hSI P regulation s var y b y cit y o r county , averagin g period , form o f specification , o r boile r siz e clas s applicability . SIP' s inIFCA

M ar e classifie damon g thre e boile r siz e categories : les s tha n10 0 MMBtu/hr , 100-25 0 MMBtu/hr , an dgreate r tha n25 0 MMBtu/hr . Fo r eac hsiz e class , th e regulatio ninth e SI P fil e i s expresse das : E = a( X) + c , wher e Xi s th e boile r firin g rat e (MMBtu/h r hea t input ) an d E i s expresse di nterm s o f lb/MMBtu . Thi s form permit s estimatin g th e applicabl e regulatio nfo r a specifi c boile r siz e instea do f usin g a naverag e value . Th e SI P fil e inIFCA M i s curren t a s o f Jul y 198 0 fo r PM

an dN0 X emission s an

di s curren t a s o f Marc h198 3 fo r SO 2 emissions . 3. 6 POLLUTIO N

CONTRO L STRATEGIE S T o compl y

wit hai r emissio nregulations , boile r owner s asses s contro l strategie s base dupo navailabl e fuel s an dpollutio ncontro l equipment . Th e contro l strateg y

employe dby

boile r owner s depend s upo nth e amoun t o f emissio n reductio nrequire dt o mee t applicabl e regulations . Boile r owner s ca nchoos e t o bur na fue l grad e whos e uncontrolle demission s rate s ar e withi nth e limit s establishe dby

th e standard s o r a particula r fue l grad e i ncombinatio nwit h pollutio ncontro l equipmen t a s thei r contro l strategy . Man y ai r emissio ncontro l standard s necessitat e th e us e o f pollutio n contro l technologies . Severa l option s ar e availabl e i nIFCA M (se e Tabl e 3-6) . 3.6. 1 Coal-Fire dBoiler s Contro l strategie s inIFCA M fo r industria l coal-fire dboiler s includ e th e us e o f on e o f nin e coals , thre e type s o f FG D equipment , fiv e type s o f particulat e matte r emission s collectio nequipment , an dtwo type s o f N0 X combustio nmodification . Combustio no f a boiler' s complianc e coa l typ e represent s a contro l strateg y whe nth e coal-fire duncontrolle dpollutan t emission s ar e lowe r tha nth e leve l allowe dby emissio nregulations . Fuel s associate dwit h allowabl e emissio nrate s withou t th e applicatio no f pollutio ncontro l equipmen t ar e referre dt o a s complianc e fuels .

3-2 4TABL E 3-6 . INDUSTRIA L BOILE RPOLLUTIO N CONTRO L EQUIPMEN T OPTION S I

N IFCA M

Pollutan t Technolog y
SO 2 Flu e ga s desulfurizatio n Dua l alkal i Lim e spra y

drying 3 Sodiu m once-throug h P M Singl e mechanica l collecto r Dua l mechanica l collecto r Sid e strea

m separato r Electrostati c precipitato r Fabri c filte r N0 XCombustio nmodificatio n Low exces s ai r Stage dcombustio nai r
Combine dSO2/P M

emission s contro l system ; include s a fabri c filter .

3-2 5P.5 5

Table s 3- 7 t o 3-1 1 summariz e th e ke y characteristic s o f industrial ' coa l type s i nIFCAM . Thi s wid e arra y o f coa l grade s ha s bee ninclude din IFCA M fo r two reasons . First , th e rang e o f coa l grade s i nIFCA M reflect s th e wid e rang e o f grade s available . Second , sinc e SI P regulation s fo r SO 2 emission s contro l var y significantl y

i nstringenc y

from on e are a t o th e next , th e availabilit y o f numerou s potentia l complianc e coal s i nIFCA M shoul d leadt o a reasonabl e portraya l o f complianc e costs . Variabilit y

i nSO 2 emissio nrate s exist s whe nburnin g coa l withou t a scrubber . Thi s variabilit y i s du e t o man y

factors , includin g th e lac k o f uniformit y

i ncoa l seam s (geologica l o r natura l factors) , a s wel l a s coa l mining , processing , cleaning , tranportatio nan dstorag e practice s whic hma y resul t i nsome degre e o f "blending " o r mixing . EP A ha s adopte da 30-da y averagin g perio dfo r determinin g complianc e wit hSO 2 NSP S from

coa l combustion . EP A believe s tha t thi s i s long enoug h t o minimiz e variabilit y (variabilit y

decline s a s th e averagin g perio d increases) , inorde r t o yiel dresult s tha t ar e representativ e o f rea l performance , bu t whic hi s als o shor t enoug ht o permi t timel y enforcemen t o f complianc e wit hstandard s afte r a sourc e begin s operation . EP A ha s estimate da rati o o f abou t 1.2 0 betwee nth e onc e i na 10-yea r maximum expecte d30-da y

rollin g averag e SO 2 NSP S emissio nceilin g an dth e p long-term

(i.e. , annual ) averag e emissio nrate . Thi s rati o i s use din IFCA M t o determin e complianc e coa l types . I f th e annua l averag e emissio n rat e (se e Tabl e 3-7 ) time s 1.2 0 i s les s tha nth e 30-da y rollin g averag e SO 2 NSP S emissio nceiling , the nth e coa l typ e i s a complianc e coa l type . On e typ e o f availabl e equipmen t t o contro l SO 2 emission s i s flu e ga s desulfurizatio n(FGD) , o r scrubbers . Th e type s o f FG D system s i nIFCA M ar e dua l alkali , sodiu

m once-through , an

dlime spra y

dryin g (includin g a fabri c filter) . Th e scrubbe r cos t estimate s ar e uniqu e fo r eac hcoa l typ e an dSO 2 emissio nregulation . Limit s onSO 2 emission s contro l efficienc y fo r eac h FG D syste m

ar e presente di nTabl e 3-12 . Variabilit y

i nSO 2 emission s als o exist s whe nburnin g coa l wit ha scrubber . I t ha s als o bee nasserte dtha t th e variabilit y o f FG D outle t

Q emission s ca nb e highe r tha nth e variabilit y o f th e inle t emissions . EP A ha s estimate dtha t thi s variabilit y facto r i s 1.30 . I f scrubbin g i s require donal l new coal-fire dboiler s o r i f a coa l typ e i s no t i ncomplianc e (and , therefore , a scrubbe r i s required ) wit ha

3-2 6P.5 6

TABL E 3-7
. SULFU R DIOXID E EMISSIO NRATE S BY COA L TYPE 3

Coa l Typ e
Bituminou s

Subbituminou s 

### Ra n ng/ J
<46 4 464-71 8 718-1,07 5 1,075-1,43 2 1,432-2,15 0 >2,15 0 <46 4 464-71 8 718-1,07 5 

### g

e (lb/MMBtu )
(< 1 (1.08

- (1.67

- (2.50

- (3.33

- " (> 5 (< 1 (1.08

- (1.67

- 08 ) -1.67 ) -2.50 ) -3.33 ) -5.00 ) 00 ) 08 ) -1.67 ) -2.50 ) ng/ J

40 8 59 3 89 4 1,22 5 1,78 4 2,38 2 40 8 59 3 89 4 Averag e

(lb/MMBtu )
(0.95 ) (1.38 ) (2.08 ) (2.85 ) (4.15 ) (5.54 ) (0.95 ) (1.38 ) (2.08 )

IC F Incorporated
. Averag e annua l (no t 30-day , rolling-average ) values
.

3-2 7TABL E 3-8
. AVERAG E AS H CONTEN T B Y REGIO N(BITUMINOU S COA L TYPES) ' (percentage , moist )

C O I r o C O Reg

i


### 1
. 2
. 3
. 4
. 5 . 6
. 7 . 8
. 9
. 

### 10
. o n
Ne w Englan d Ne w York/Ne

w Jerse y Middl e Atlanti c Sout h Atlanti c Midwes t Southwes t Centra l Nort h Centra l Wes t Northwes t <1.0 8
11. 9 11. 9 11. 8 11. 7 11. 0 12. 1 10. 0 10. 0 11. 3 10. 0 1.08-1.6 7

11. 9 11. 9 12. 4 12. 3 11. 0 11. 8 12. 4 10. 0 11. 3 10. 0 l

b S0 < 1.67-2.5 0
13. 0 11. 4 12. 6 12. 3 10. 5 15. 0 12. 4 10. 0 16. 3 10. 0 ? /MMBt u

2.50-3.3 3
13. 0 13. 0 12. 2 11. 9 10. 9 11. 8 11. 1

-

-

- 3.33-5.0 0

13. 0 13. 0 13. 0 11. 9 12. 2 12. 2 11. 1

-

-

- >5.0 0

13. 0 13. 0 13. 0 11. 8 12. 0 12. 3 11. 1

-

-

-
IC F Incorporated
.P.5 8

TABL E 3-9
. AVERAG E AS H CONTEN T BY REGIO N

(SUBBITUMINOU S COA L TYPES) 3 (percentage , moist )

Reg i


### 1
. 2
. 3
. 4
. 5 . 6
. 7 . 8
. 9
. 10
. o n

New Englan

d Ne w York/Ne w Jerse y Middl e Atlanti c Sout h Atlanti c Midwes t Southwes t Centra l Nort h Centra l Wes t Northwes t <1.0 8

-

-

- 

### 6. 9 7. 3 6. 0 8. 4 7. 3 10. 0 l b S0 2 /MMBt u

1.08-1.6 7

-

-

-

- 

### 6. 9 7. 3 6. 0 6. 9 7. 3 10. 0 

### 1.67-2.5 0

-

-

-

- 

### 6. 9 7. 3 6. 0 6. 9 7. 3 10. 0

IC F Incorporated
.

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6S dTABL E 3-11
. AVERAG E HEA T CONTEN T BY REGIO N (SUBBITUMINOU S COA L TYPES) 3 J/ g (MMBtu/shor t ton ) P.6 0

Regio n <1.0 8 l b S0 2 /MMBt u 1.08-1.6 7 1.67-2.5 0
1
. Ne w Englan d
2
. Ne w York/Ne wJerse y
3
. Middl e Atlanti c
4
. Sout h Atlanti c


### 5 . 6
. 7 . 8
. 9
. 0
. Midwes t
Southwes t

Centra l

Nort h Centra l

Wes t
Northwes t 20.5 3 (17.65 ) 19.9 3 (17.14 ) 19.7 7 (17.00 ) 20.4 0 (17.54 ) 21.5 2 (18.50 ) 22.1 0 (19.00 ) 20.5 3

(17.65 ) 19.9 3 (17.14 ) 19.7 7 (17.00 ) 20.0 5 (17.24 ) 21.5 2 (18.50 ) 22.1 0 (19.00 ) 20.5 3

(17.65 ) 19.9 3 (17.14 ) 19.7 7 (17.00 ) 20.0 5 (17.24 ) 21.5 2 (18.50 ) 22.1 0 (19.00 )
IC F Incorporated
.

3-3 1P.6 1

TABL E 3-12 . FGD TECHNOLOG YCONSTRAINT S I N IFCAM 3

Technolog y Limit s

Dua l alkal i
Lime spra y

dryin g

Sodiu m once-throug h 9 0 percen t remova l o f uncontrolle d SO 2 emission s fo r al l coa l type s 9 0 percen t remova l o f uncontrolle d SO 2 emission s fo r lo

w sulfu r coa l type s (les s tha n1.6 7 l bS02/MMBt u annua l average) ; no t applicabl e t o highe r sulfu r coa l type s regardles s o f th e require d sulfu r remova l rat e 9 0 percen t remova l o f uncontrolle d SO 2 emission s fo r al l coa l type s
U.S . Environmenta l Protectio nAgency . '30-day , rolling-averag e basis .

3-3 2P.6 2

SI P o r a nalternativ e Federa l SO 2 emission s standard , th e annua l averag e controlle d SO 2 emission s rat e i s calculate d a s follows :

• Exampl e 1

- Uncontrolle d annua l averag e emissio nrat e i s 5.5 4 l bSO2 / MMBt u

- Ninet y

percen t SO 2 emission s remova l require d (30-day , rolling-average ) 5.5 4 x(l-0.9)/1. 3 = 0.42 6 l bS0 2 /MMBt u (annua l average ) controlle d emissio nrat e

• Exampl e 2

- Uncontrolle d annua l averag e emissio nrat e i s 2.8 5 l bSO2 / MMBt u

- Sevent y

t o ninet y

percen t SO 2 emission s remova l require d wit ha 0. 6 lbS02/MMBt u (30-day , rolling-average ) emission s "floor. " 2.8 5 x(1-0.9 ) = 0.285 . Sinc e 0.28 5 i s les s tha n 0.6 , percentag e remova l rat e wil l b e les s tha n9 0 percent . (2.8 5 - 0.6)/2.8 5 = 0.789 , o r 78. 9 percent . Sinc e 78. 9 percen t i s greate r tha n7 0 percent , 0.6/1. 3 = 0.461 5 l bSO2 / MMBt u (annua l average ) controlle d emissio nrate .
• Exampl e 3 :

- Uncontrolle d annua l averag e emissio nrat e i s 0.9 5 lbSO2 / MMBt u

- Sevent y

t o ninet y

percen t SO 2 emission s remova l require d wit ha 0. 6 l

bS02/MMBt u (30-day , rolling-average ) emission s "floor. " 0.9 5 x(1-0.9 ) = 0.095 . Sinc e 0.09 5 i s les s than 0.6 , percentag e remova l rat e wil l b e les s tha n9 0 percent . (0.9 5 - 0.6)/0.9 5 = 0.368 , o r 36. 8 percent . Minimu m SO 2 remova l rat e i s 7 0 percent . 0.9 5 ( 1 - 0.7 ) = 0.285 . 0.285/1. 3 = 0.21 9 lbS02/MMBt u (annua l average ) controlle d emissio nrate . I f th e applicabl e regulatio nrequire s SO 2 emissio nreduction s i ncoal fire d boiler s (a s inth e thre e example s show nabove) , the nth e leve l o f SO 2 emission s i s adjuste d a s follows :

3-3 3P.6 3

Adjuste dSO 2 emission s rat e = ( RxS ) + (1-R ) xA wher e S = estimate dcontrolle dannua l averag e SO 2 emissio nrat e R= scrubbe r reliabilit y facto r (fraction) * A = uncontrolle dSO 2 emission s rat e fro m natura l ga s combustio n(backu pfuel ) Thi s calculatio nassume s a reliabilit y facto r fo r scrubber s an da lo w sulfu r fue l standby

optio ninth e even t o f pollutio ncontro l equipmen t malfunction . Uncontrolle dPM

emissio nrat e estimate s ar e a functio no f th e as hconten t an dheatin g valu e o f th e coa l an dth e typ e o f combustion :

• Underfee dstoker , flyas h= 2 5 percen t o f th e tota l as hconten t o f th e coa l
• Spreade r stoker , flyas h= 6 5 percen t o f th e tota l as hconten t o f th e coa l
• Pulverize dcoal , flyas h= 8 0 percen t o f th e tota l as hconten t o f th e coa l Th e balanc e i s bottom ash . Seve nPM emission s contro l technologie s ar e availabl e inIFCA M fo r industria l coal-fire dboilers . Technica l limit s o npollutio ncontro l efficienc y

fo r eac har e liste dinTabl e 3-13 . Th e controlle dPM

emissio nrat e estimate s fo r new industria l coal fire dboiler s ar e estimate dt o b e equa l t o "B " time s th e applicabl e PM emissio nregulation . Th e factor , B , varie s b y contro l technology :

• Singl e mechanica l collector : B = 1. 5
• Dua l mechanica l collector : B = 1. 2
• Sid e stream

separator : B = 0. 8
• Electrostati c precipitator : B = 0. 6 Fo r a fabri c filter , th e controlle dPM emissio nrat e estimat e i s a constant , 0. 6 x2 1 ng/ J (0.0 5 lb/MMBtu ) = 1 3 ng/ J (0.0 3 lb/MMBtu) .

*0.9 5 fo r dua l alkal i an dsodiu m once-throug hFG D systems ; 0.9 0 fo r lim e spra y dryin g scrubbers .

3-3 4P.6 4

TABL E 3-13
. P M EMISSION S POLLUTIO NCONTRO L TECHNOLOG Y

CONSTRAINT S INIFCAM 3

Technolog y Minimu mP M emissio n standar d Singl e mechanica l collecto r Stoker/bituminou s Stoker/subbituminou s Pulverized/al l Dua l mechanica l collecto r Stoker/bituminou s Stoker/subbituminou s Pulverized/al l Sid e strea m

separato r Stoker/bituminou s Stoker/subbituminou s Pulverized/al l Electrostati c precipitato r Fabri c filte r Lim e spra ydryin g FGD Dua l alkal i FGD/singl e mechanica l collecto r Hig h sulfu r coa l (>3. 5 l b S0 2 /MMBtu ) Othe r coa l type s (<3. 5 l b S0 2 /MMBtu ) 17 2 ng/ J (0.4 0 lb/MMBtu ) 34 4 ng/ J (0.8 0 lb/MMBtu ) 43 0 ng/ J (1.0 0 lb/MMBtu )
12 9 ng/ J (0.3 0 lb/MMBtu ) 25 8 ng/ J (0.6 0 lb/MMBtu ) 34 4 ng/ J (0.8 0 lb/MMBtu )
6 4 ng/ J (0.1 5 lb/MMBtu ) 12 9 ng/ J (0.3 0 lb/MMBtu ) 17 2 ng/ J (0.4 0 lb/MMBtu ) 2 1 ng/ J (0.0 5 lb/MMBtu ) 2 1 ng/ J (0.0 5 lb/MMBtu ) 2 1 ng/ J (0.0 5 lb/MMBtu )

12 9 ng/ J (0.3 0 lb/MMBtu ) 4 2 ng/ J (0.1 0 lb/MMBtu )
U.S . Environmenta l Protectio n Agency , 'include s a fabri c filter
.

3-3 5P.6 5

N0 Xemission s contro l strategie s inIFCA M includ e two type s o f combustio nmodifications : lo w exces s ai r an

dstage dcombustio nair . Tabl e 3-1 4 summarize s th e expecte dN0 Xemissio nreductions . 3.6. 2 Oil/Ga s Boiler s Contro l strategie s inIFCA M fo r industria l residua l fue l oil-fire d boiler s includ e th e us e o f a complianc e oi l type , a dua l alkal i o r sodiu m once-throug hFG D system , a nelectrostati c precipitato r fo r particulat e emission s control , an dlo w exces s ai r an

dstage dcombustio nai r fo r N0 X emission s control . Low exces s ai r i s th e onl y pollutio ncontro l technolog y i nIFCA M fo r contro l o f natura l ga s an ddistillat e fue l oi l emission s sinc e boiler s firin g thes e fuel s emi t insignifican t level s o f SO 2 an dPM (se e Tabl e 3-15) . Tabl e 3-1 6 summarize s th e potentia l N0 Xemissio nreductio n estimate s inIFCA

M fo r new

industria l boiler s burnin g natura l ga s o r fue l oil . 3.6. 3 Summar y Tabl e 3-1 7 present s a nexampl e o f th e numbe r o f pollutio ncontro l complianc e alternative s inIFCAM . Uncontrolle dai r emissio nrate s (se e Table s 3-7 , 3-14 , 3-15 , an d3-16) , SIP's , applicabl e NSP S (se e Tabl e 3-5) , an dpollutio ncontro l equipmen t technica l capabilitie s (se e Table s 3-12 , 3-13 , 3-14 , an

d3-16 ) ar e compare dan dfeasibl e alternative s ar e identified . Tabl e 3-1 7 show s tha t a s man y a s fiv e pollutio ncontro l strategie s ar e availabl e fo r a singl e fue l type . Conside r mediu m sulfu r bituminou s coa l inthi s example . Pollutio ncontro l alternative s include :

• DA/SM C an

dSCA
• D A FGD , ESP , an

dSCA
• D A FGD , FF , an

dSCA
• NaT H FGD , ESP , an dSCA
• NaT H FGD , FF , an

dSCA Th e numbe r o f pollutio ncontro l alternative s i s no t constant . I t varie s wit hth e boile r size , fue l type , an denvironmenta l regulations . Th e exampl e show

ninTabl e 3-1 7 indicate s tha t IFCA M compare s cost s fo r a larg e numbe r o f fue l type/pollutio ncontro l equipmen t configurations .

3-3 6P.6 6

TABL E 3-14
. N O EMISSIO NRAT E ESTIMATE S FO R

NE W INDUSTRIA L COAL-FIRE D BOILERS 6

Uncontrolle d emissio n rat e Controlle d

emissio n rat e Contro l ng/ J (lb/MMBtu ) ng/ J (lb/MMBtu ) technolog y
Underfee d stoke r 17 2 Spreade r stoke r 27 5 Pulverize d coa l 38 7 (0.40 ) (0.64 ) (0.90 ) 

### 13 8

21 5 24 9 (0.32 )

(0.50 ) (0.58 ) Lo wexces s ai r

Lo wexces s ai r Stage d combustio n ai r
U.S . Environmenta l Protectio n Agency .

3-3 7P.6 7

TABL E 3-15
. UNCONTROLLE D INDUSTRIA L OIL/GA S BOILE R SO

- AN D PM EMISSIO NRAT E ESTIMATE S L

Fue l typ e
Natura l ga s Distillat e fue l oi l Residua l fue l oi l 3. 0 percen t S 1. 6 percen t S 0. 8 percen t S 0. 3 percen t S ng/ J (lb/MMBtu )



## so 2 0.2 6 (0.0006 ) 21 9 (0.51 )
138 0 (3.21 ) 73 5 (1.71 ) 34 4 (0.80 ) 13 8 (0.32 ) 

### P M
4 (0.01 ) 6 (0.0144 )
9 9 (0.23 ) 5 6 (0.13 ) 3 4 (0.08 ) 1 7 (0.04 )

3-3 8TABL E 3-16
. NO vEMISSIO NRAT E ESTIMATE S FOR NE W INDUSTRIA L OIL/GA S BOILERS ' A

Fue l type

Natura l ga s Boile r

» M W
<4 4 44-7 3 >7 3 <4 4 44-7 3 Distillat e <4 4 c o fue l oi l 44-7 3 c o >7 3

<4 4 44-7 3 Residua l 3.0 % S 1.6 % S 0.8 % S 0.3 % S fue l oi l

(0.44 % N ) (0.23 % N ) (0.12 % N ) (0.04 % N ) siz e clas s

(MMBtu/hr )
(<150 ) (150-250 ) (>250 ) (<150 ) (150-250 ) (<150 ) (150-250 ) (>250 ) (<150 ) (150-250 ) 

### al l al l al l al l Annua l

capacit y utiliza

tio n rat e (percent )
>6 5 >4 5 al l <6 5 <4 5 >6 5 >4 5 al l <6 5 <4 5 

### al l al l al l al l Prehea t

temperature s
400° F 400° F 400° F 100° F 100° F 400° F 400° F 400° F 100° F 100° F
400° F 400° F 40 0 ° F 400° F Uncontrolle d

annua l averag e N

O emissio n rat e ng/ J (lb/MMBtu )

11 2 11 2 11 2 6 4 6 4 10 7 10 7 10 7 7 7 7 7


### 19 6 13 1 9 7 7 5 (0.26 ) (0.26 ) (0.26 ) (0.15 ) (0.15 ) (0.25 ) (0.25 ) (0.25 ) (0.18 ) (0.18 )
(0.455 ) (0.305 ) (0.225 ) (0.175 ) Controlle d

annua l averag e N

O emissio n x rat e ng/ J (lb/MMBtu )
8 2 8 2 8 2 5 2 5 2 7 5 7 5 7 5 5 2 5 2


### 10 5 9 5 8 4 6 2 (0.19 ) (0.19 ) (0.19 ) (0.12 ) (0.12 ) (0.175 ) (0.175 ) (0.175 ) (0.12 ) (0.12 )
(0.245 ) (0.22 ) (0.195 ) (0.145 ) N

O contro l A technolog

y

Lo w exces s ai r Low exces s ai r Lo w exces s ai r Low exces s ai r Low exces s ai r Lo w exces s ai r Lo w exces s ai r Lo w exces s ai r Lo w exces s ai r Lo w exces s ai r
Stage d combustio n a 1 r Stage d combustio n a I r Lo w exces s ai r Lo w exces s ai r
U.S . Environmenta l Protectio n Agency .P.6 9

TABL E 3-17
. POLLUTIO NCONTRO L COMPLIANC E ALTERNATIVE S INIFCA M a t

Fue l typ e Pollutio n contro l equipmen t

Natura l ga s Distillat e fue l oi l Residua l fue l oi l 3.0 % S 1.6 % S 0.8 % S 0.3 % S Coal , bituminou s (l b S0 2 /MMBtu ) < 1.0 8 1.08-1.67 ° 1.67-2.5 0 2.50-3.3 3 3.33-5.0 0 > 5.0 0 Coal , subbituminou s (l b S02/MMBtu ) < 1.0 8 1.08-1.67 ° 1.67-2.5 0 Lo wexces s ai r Lo wexces s ai r
N.A. k N.A. b Lo wexces s ai r Non e require d

ES P o r FF ; SC A LS D FGD ; D

Ao r NaT H FG D wit h F F o r ESP ; DA/SMC ; SC A D Ao r NaT H FG D wit h F F o r ESP ; DA/SMC ; SC A D Ao r NaT H FG D wit h F F o r ESP ; DA/SMC ; SC A DAo r NaT H FG D wit h F F o r ESP ; SC A D Ao r NaT H FG D wit h F F o r ESP ; SC A

ES P o r FF * SC A LS D FGD ; DAo r NaT H FG D wit h F F o r ESP ; DA/SMC ; SC A D Ao r NaT H FD G wit h F F o r ESP ; DA/SMC ; SC A
ES P - electrostati c precipitato r F F - fabri c filte r SM C - singl e mechanica l collecto r SC A- stage d combustio n ai r LS D - lim e spra ydryin g

DA- dua l alkal i NaT H - sodiumonce-throug h

Assume s a ne wboile r large r tha n 7 3 MW (25 0 MMBtu/hr ) subjec t t o th e curren t NSP S (se e Tabl e 3-5)
. 5 No t applicable
. No t i n complianc e wit h th e curren t N0 XNSPS , 8 6 ng/ J (0. 2 lb/MMBtu)
. Se e Table s 3- 5 an d 3-16
. 'Se e Tabl e 3-7
. Th e annua l averag e SO 2 emissio n rat e fo r thi s coa l type , 59 3 ng/ J (1.3 8 lb/MMBtu) , exceed s th e curren t NSP S an d scrubber s ar e required
.

3-4 0P.7 0

REFERENCE S

1 . Energ y

Consumptio nDat a Base . Energ y an dEnvironmenta l Analysis , Inc . Arlington , Virginia . Prepare dfo r th e Federa l Energ y Administration . Jun e 1977 . End-Us e Energ y

Consumptio nDat a Base : Serie s 1 Tables . U.S . Departmen t o f Energy , Energ y

Informatio nAdministration . DOE/EIA-0014 . Jun e 1978 . 2 . Bell , A.W. , an

dB.P . Breen . Convertin g Ga s Boiler s t o Oi l an dCoal . Chemica l Engineering . 83(9):93-101 . Apri l 26 , 1976 . Burke , J.M. , an

dM.D . Matson . Industria l Boiler s Fue l Switchin g Methods , Costs , an

dEnvironmenta l Impacts . Radia nCorp . Austin , Texas . EPA 450/3-78-123 . Prepare dfo r th e Offic e o f Ai r Qualit y Plannin g an

d Standards , U.S . Environmenta l Protectio nAgency . Decembe r 1978 . Bogot , A. , an

dR.C . Sherrill . Principa l Aspect s o f Convertin g Steam Generator s Bac k t o Coa l Firing . Combustio nEngineering , Inc . Windsor , Connecticut . Publicatio nNo . TIS-4588 . Presente da t th e NCA/BC RCoa l Conferenc e an

dExp o II . Louisville . Octobe r 21-23 , 1975 . Cross , F.L . Pragmati c Approac ht o Industria l Boile r Conversio nt o Coal . Presente da t th e Fift hEnerg y Technolog y

Conference . Washington , D.C . Februar y 27-Marc h1 , 1978 . Feeley , F.G . Energ y

Conversio nProblem s fro m th e Industria l User s Viewpoint . 0 1 inCorp . Presente dat th e Fourt hEnerg y Technolog y Conference . Washington , D.C . Marc h14-16 , 1977 . Llinares , V . Usin g Coa l fo r Steam an dPowe r Generatio ninIndustria l Boilers . Combustio nEngineering , Inc . Publicatio nNo . TIS-5405 . Presente da t th e Manufacturin g Chemist s Associatio nEnerg y Seminar . Washington , D.C . Septembe r 28-29 , 1977 .

3-4 1P.7 1

Marshall , R.W . Boile r Conversio n - An Effectiv e Pollutio n Control. ' ' Iro n and Stee l Engineer
. 50:59-64
. Januar y1973
. Schweiger , R.G . Shoul d Yo u Conver t t o Coal ? Power . 120:38-41
. Jul y 1976
. Siebold , P.F. , an

d R.D . Bessette . Lates t Equipmen t an d Desig n fo r Ne w Coal-Fire d Plant s an d th e Conversio n o f Existin g Plant s t o Coa l Firing
. Rile yStoke r Corp . Worchester , Massachusetts
. Presente d a t th e Industria l Fue l Conference
. Purdu e U. , Lafayette
. Octobe r 6-7 , 1976
. Als o presente d a t th e Kentuck yIndustria l Coa l Conference
. Apri l 26-27 , 1978
. 3
. Industria l Secto r Technolog yUs e Mode l (ISTUM) : Industria l Energ yUs e i n th e Unite d States , 1974-2000
. Energ yand Environmenta l Analysis , Inc . Arlington , Virginia
. DOE/FE/2344-1
. Prepare d fo r th e U.S . Departmen t o f Energy . Octobe r 1979
. pp . IV-10 1 t o IV-11 4 an d VI-2 6 t o VI-33
. 4
. Devitt , T. , P . Spaite , an d L . Gibbs
. Populatio n and Characteristic s o f Industrial/Commercia l Boiler s i n th e U.S . PEDC o Environmental , Inc . Cincinnati , Ohio
. EPA-600/7-79-178a
. Prepare d fo r th e U.S . Environ

menta l Protectio n Agency . Augus t 1979
. p . 462
. 5 . Fossi l Fue l Deman d fo r Stationar y- Sourc e Combustio n and Othe r Selecte d Dat a fo r Eac h Stat e and Ai r Qualit yContro l Region
. Th e Mitr e Corp . Apri l 1975
. Fue l mi x b yAQC R i s base d upo n 197 1 dat a fro ma Battell e Columbu s studyperforme d fo r EPA . 6
. Summar yo f Regulator yAnalysi s Ne wSourc e Performanc e Standards : Industrial-Commercial-Institutiona l Stea m Generatin g Unit s o f Greate r Tha n 10 0 Millio n Btu/h r Hea t Input . U.S . Environmenta l Protectio n Agency , Offic e o f Ai r Qualit yPlannin g and Standards
. Draft
. Marc h 1985
. 7 . Referenc e 6 , pp . 41 , 42
. 8
. Referenc e 6 , pp . 51 , 52
. 9
. AStatistica l Stud yo f Coa l Sulfu r Variabilit yan d Relate d Factors . Foste r Associates , Inc . Washington , D.C . Prepare d fo r th e U.S . Environmenta l Protectio n Agency . Draft
. Jul y27 , 1979
. p . ix
.

3-4 2P.7 2

FUE L CHOIC E DECISION S

Thi s sectio nsummarize s th e fue l choic e decisio ncriteri a inIFCAM . Give nth e industria l boile r characteristic s reviewe dinSectio n3 , cos t estimate s ar e generate dan dcompare dfo r eac hboile r inth e population . Th e fue l typ e wit hth e lowes t expecte dlif e cycl e cost s i s selected . Thi s sectio ni s organize di ntwo parts . First , capita l an dannua l non-fuel operatin g an dmaintenanc e (O&M ) an dfue l cost s ar e discussed . Second , th e fue l choic e decisio nframewor k i s described . 4. 1 COS T COMPONENT S 4.1. 1 Capita l an

dAnnua l Non-Fue l O& M Cost s Th e majo r component s o f new industria l boile r capita l cost s are : t Equipmen t

- Boile r

- Auxiliar y

equipmen t suc ha s instrumentation , pumps , fue l handling , wast e disposal , wate r treatmen t

- Pollutio ncontro l

- Monitorin g t Direc t installatio n • Indirec t installatio n

- Engineerin g

- Constructio nfee s

- Start-u p

• Lan d
• Othe r

- Interes t durin g constructio n

- Contingencie s

- Workin g capita l



### 4- 1P.7 3

Th e annua l non-fue l O& M cos t component s are :

• Labo r
• Materials , supplies , an dspar e part s
• Chemical s
• Utilitie s (i.e. , electricit y an dwater ) t Steam
• Soli dwast e disposa l an dwate r treatmen t
• Overhea d t Genera l an

dadministrativ e costs , loca l propert y taxes , an

d insuranc e
• Interes t o

nworkin g capita l
• Monitoring , reporting , an dmalfunctio nexpense s Th e capita l an

dannua l non-fue l O& M cos t estimate s ar e generi c intha t the y do no t var y

wit hrespec t t o specia l site-specifi c conditions . The y ar e assume dt o b e representativ e o f budge t estimate s use dfo r plannin g purposes . I t i s als o assume dtha t thes e cost s wil l no t increas e inrea l term s ove r time o r var y b y region . Th e capita l an

dannua l non-fue l O& M cos t estimate s fo r new industria l coal-fire dboiler s ar e uniqu e fo r eac hcoa l typ e (the cos t estimate s ar e a functio no f th e heatin g valu e o f th e coa l type ) an dtyp e o f combustio n (underfee dstoker , spreade r stoker , o r pulverize dcoal) . Th e capita l an d annua l non-fue l O& M

cos t estimate s fo r new oil/ga s watertub e boiler s (excludin g pollutio ncontro l equipment ) d o no t var y substantiall y

b y fue l typ e (natura l ga s o r residua l fue l oil ) becaus e thes e unit s ar e assume dt o hav e dual-fue l firin g capability . Th e FG D syste m

cos t estimate s ar e a functio nof :

• Th e boile r flu e ga s flow rat e an

dfue l firin g rat e • Th e sulfu r conten t an dheatin g valu e o f th e fue l typ e • Th e require dSO 2 emission s remova l efficienc y Thes e cos t estimate s indicat e tha t th e scrubbe r cost s hav e economie s o f scal e relate dt o th e sulfu r conten t o f th e fue l an dth e require dSO 2 emission s remova l efficiency . Wit hrespec t t o scrubbe r capita l costs , however , EP A i s assumin g tha t th e cos t estimate s use dinIFCA M shoul db e base do

nhig h sulfu r fue l type s wit hhig h(9 0 percent ) SO 2 emission s remova l efficiencies . Thi s assumptio nreflect s industr y practic e o f designin g FG D system s t o achiev e



### 4- 2'9 0 percen t SO 2 emission s reductio ni norde r t o provid e maximu m fue l firin g flexibilit y

eve nthoug hth e scrubbe r ma y b e operate da t lowe r efficiency . Th e scrubbe r O& M

cos t estimate s do reflec t economie s o f scal e associate d wit hth e sulfu r conten t o f th e coa l an dth e actua l operatin g efficiency . Th e minimu

m scrubbe r operatin g efficienc y rat e i s 5 0 percen t SO 2 emission s reduction . Al l o f th e boile r flu e ga s i s scrubbe d(regardles s o f th e scrubbe r operatin g efficiency) ; i t i s no t assume dtha t a portio no f th e boile r flu e ga s bypasse s th e scrubbe r whe nth e scrubbe r i s inoperation . Th e cos t estimate s fo r particulat e matte r emission s contro l equipmen t d o no t vary

significantl y

by coa l typ e o r PM

emission s regulation . Boile r efficienc y

i s improve dwit hth e us e o f lo w exces s ai r ( a N0 X emission s contro l technique ) becaus e les s ai r i s heate dt o flu e ga s temperatures . Thi s i s reflectedinth e lo w exces s ai r O& M

cos t estimate s expresse da s a negativ e expens e (boile r fue l inpu t savings) . Thes e boile r an

dpollutio ncontro l equipmen t cos t estimate s hav e bee n develope dby

severa l EP A

contractors . Cos t estimate s wer e develope dfo r severa l mode l boilers . Cos t algorithm s wer e develope dbase donthes e generi c poin t estimates . Radia nCorporatio n(Researc hTriangl e Park , NC ) i s currentl y responsibl e fo r documentin g an drevisin g thes e cos t algorithm s fo r EPA' s 2 industria l boile r NSP S analysis . 4.1. 2 Fue l Cost s Projecte dfue l cost s significantl y affec t fue l choic e decision s fo r new industria l boiler s becaus e they contribut e a larg e shar e o f tota l lif e cycl e costs . Fo r example , coa l wil l b e selecte donl y i f fue l cos t saving s wil l b e sufficien t t o offse t th e relativel y highe r capita l an

doperatin g cost s associate dwit hcoa l utilization . IFCA M include s th e followin g fue l types :

• Natura l ga s • Distillat e fue l oi l t Residua l fue l oi l

- 3. 0 percen t sulfu r

- 1. 6 percen t sulfu r

- 0. 8 percen t sulfu r

- 0. 3 percen t sulfu r



### 4- 3P.7 5

• Coa l

- Si xbituminou s sulfu r conten t classe s

- Thre e subbituminou s sulfu r conten t classe s Th e majo r characteristic s o f th e nin e coa l type s inIFCA M (Bt uan

das h content ) var y

b y regio n(se e Table s 3- 8 throug h3-11) . Projecte dfue l price s ar e expecte dt o increas e inrea l term s ove r tim e an dt o var y

b y regio n(bu t no t t o var y withi na Federa l region). * Fue l pric e forecast s selecte db y EPA fo r us e i nth e industria l boile r NSP S analysi s hav e bee nbase donpublishe dDO E forecast s (i.e. , EIA' s Annua l Energ y Outloo k o r th e biennia l Nationa l Energ y Polic y Pla nforecast s prepare db

y th e Offic e o f Policy , Plannin g an dAnalysis ) o r projection s prepare db

y EP A contractors . 4. 2 INVESTMEN T DECISIO N APPROAC H 4.2. 1 Decisio nCriteri a Th e fue l choic e decisio nframewor k i nIFCA M i s base donth e premis e tha t industr y

wil l tr y

t o minimiz e th e tota l cost s o f generatin g steam o r hea t ove r th e usefu l lif e o f th e facility . Specifically , decision-maker s wil l ten dt o selec t tha t fue l wit hth e lowes t after-ta xne t presen t valu e (NPV ) o f th e tota l projecte dcas houtflow s fo r operating , maintenance , fuel , an dcapita l cost s ove r th e investmen t period . Fo r a give nse t o f projecte dfue l price s an dgovernmen t policie s (energy , environmental , an dtax) , IFCA

M select s th e least-cos t fue l typ e fo r eac hboile r recor dby : 1 ) Estimatin g th e capita l an dannua l non-fue l O& M cost s fo r eac h fue l typ e 2 ) Estimatin g th e capita l an dannua l non-fue l O& M cost s fo r applicabl e pollutio ncontro l equipmen t option s fo r eac hfue l typ e

*Intra-regiona l variabilit y i s simulate di nIFCA M b y assignin g SIP' s at th e AQC Rleve l (no t usin g regiona l "average " SIP's) .



### 4- 43 ) Fo r eac hcombinatio no f fue l typ e an dalternativ e pollutio n contro l equipmen t configuration, * th e after-ta xNPV o f tota l boile r an

dpollutio ncontro l equipmen t capita l an dannua l non fue l O& M cost s i s calculate d 4 ) Th e after-ta xNP

V o f projecte dfue l cost s i s derive dan dadde d t o th e tota l after-ta xNPV o f th e boile r an

dpollutio ncontro l equipmen t capita l an

dannua l non-fue l O& M cost s fo r eac hfue l type/pollutio ncontro l equipmen t configuratio n 5 ) Th e tota l after-ta xNPV (capital , O& M

an dfuel ) i s compare dfo r eac hfue l type/pollutio ncontro l equipmen t configuratio nan dth e alternativ e wit hth e lowes t tota l after-ta xNPV i s selecte d Thes e step s hav e bee nmodifie dinth e pas t t o mode l specia l governmen t policies . Fo r example , th e Economi c Regulatory.Administratio no f th e U.S . Departmen t o f Energ y

propose dprocedure s t o determin e i f th e cos t o f burnin g coa l substantiall y

exceede dth e cos t o f burnin g oi l innew larg e industria l

3 boiler s i naccordanc e wit hth e Powerplan t an dIndustria l Fue l Us e Act . Thi s cos t tes t ca nb e include dinth e fue l choic e decisio nlogi c inIFCAM . Lif e cycl e cost s ar e compare di nIFCA M onanafter-ta xbasi s becaus e Federa l ta xlaw s ar e differen t fo r oil/ga s boiler s tha nthe y ar e fo r coa l units . Th e Energ y

Ta xAc t o f 197 8 (Titl e III ) provide dta xincentive s fo r th e us e o f coa l an

dalternativ e fuels . Ne w industria l coal-fire dboile r investment s qualif y

fo r th e regula r 1 0 percen t investmen t ta xcredi t (ITC ) an daccelerate ddepreciatio nmethods . However , investment s i nnew industria l oil - an dgas-fire dboiler s do no t qualif y fo r th e regula r IT C an dstraigh t lin e depreciatio ni s require dfo r thes e units . 4.2. 2 Overvie w

o f NPV Calculation s A conventiona l NPV

approac hi s use dt o calculat e th e tota l after-ta x cos t o f producin g stea m o r ho t wate r ina boiler . Th e component s o f thi s calculatio ninclude :

*Fo r example , thre e FG D system s o r severa l particulat e matte r emission s contro l equipmen t alternative s fo r new industria l coal-fire dboilers .



### 4- 5P.7 7

FC t - th e fue l cos t i nyea r t
OM . - th e annua l non-fue l operatin g cost s i nyea r t
C - th e tota l capita l cos t o f th e facilit y
C t - th e capita l cos t expende dinyea r t

D . - depreciatio nexpens e oncapita l i nyea r t

e - th e shar e o f capita l cos t whic hca nb e expense d
(doe s no t form

th e basi s fo r capita l depreciation )

T - th e margina l incom e ta xrat e (e.g. , 0.5 )

IT C - th e allowabl e investmen t taxcredi t (e.g. , 0.1 )
i - th e real , after-ta xdiscoun t rat e (e.g. , 0.08 )

L - th e investmen t perio d(years ) After-ta xNP

V = y (l-T)(-FC t -OM t -D t -eC ) + D t -(l-e)C , + (l-e)(C t )(ITC ) 

### t= l (l+i) t _ 1
Expensibl e Constructio nCost s A portio n(1 0 percent ) o f equipmen t an dfacilit y

constructio ncost s i s considere dexpensibl e i nIFCAM . Thes e expensibl e costs , allowabl e deduction s fo r income taxpurposes , ar e exclude dfro m th e depreciabl e capita l cost . Expensibl e cost s normall y ar e highe r tha ninitia l engineerin g costs . The y ca nvar y fo r eac hcas e dependin g onth e amoun t o f wor k don e in-hous e an d th e portio no f turnke y cost s (i.e. , tota l packag e delivere dt o th e fue l user) . Th e estimat e tha t 1 0 percen t o f constructio ncost s ar e expensibl e i s assume dt o b e typical , base do ndiscussion s wit hequipmen t vendors . I t i s als o assume dt o b e expense dinth e firs t year .



### 4- 6I Constructio nPerio d Thi s perio drefer s t o th e interva l whe ncapita l expenditure s ar e bein g incurre dfo r facilit y construction , an

dn o fue l i s bein g burned . Thi s perio d i s assume dt o b e two years . Dt=FCt=0Mt=0 , fo r t=l,2 . Ct=0 , fo r t greate r tha n2 . Depreciatio n Depreciatio ni s a

naccountin g conventio nwhic hrepresent s th e declin e i npropert y

valu e a s a resul t o f time and/o r use . Thi s i s importan t inth e calculatio no f income ta xliabilities . Industria l boiler s ar e depreciabl e property . Th e Energ y

Ta xAc t o f 197 8 permit s investment s innew industria l coal fire dboiler s t o b e depreciate dusin g accelerate dmethod s whil e requirin g investment s innew

oil/ga s industria l boiler s t o b e depreciate dusin g a 4 straigh t lin e method . Th e Economi c Recover y Ta xAc t o f 198 1 establishe d th e accelerate dcos t recover y system (ACRS ) fo r propert y place dinservic e afte r 1980 . Th e annua l recover y percentage s wer e revise dby th e Ta xEquit y an dFisca l Responsibilit y Ac t o f 1982 . Industria l boiler s ar e five-yea r recover y property . I nthi s analysis , th e annua l depreciatio ncharge s mus t b e converte d 5 from nomina l t o rea l dollars . Investmen t Ta xCredi t (ITC ) Th e IT C rat e i s distinguishe dby fue l typ e inorde r t o analyz e specifi c polic y option s relate dt o differen t fue l types . Th e Energ y Ta xAc t o f 197 8 provide s severa l ta xincentive s fo r th e us e o f coa l an dalternativ e fuels . Thi s legislatio nauthorize s a nadditiona l 1 0 percen t busines s energ y investmen t ta xcredi t fo r coa l an dalternativ e fue l investment s mad e betwee nOctobe r 1 , 197 8 an

dDecembe r 31 , 198 2 fo r th e following :

• Boiler s an

dothe r combustor s • Equipmen t t o produc e alternativ e fuel s t Pollutio ncontro l equipmen t
• Fue l handlin g an

dstorag e equipmen t However , sinc e authorizatio nexpire s i n198 2 fo r coal-relate dproperty , th e additiona l alternativ e energ y propert y

IT C i s no t modele dfo r new industria l boiler s installe dafte r 1983 .



### 4- 7P.7 9

New coa l investment s qualif y fo r th e regula r 1 0 percen t ITC , an d investment s i nnew

oil/ga s boiler s ar e denie dth e regula r ITC . Th e Ta x Equit y an dFisca l Responsibilit y Ac t (TEFRA ) o f 198 2 provide s two options :

• Tak e a reduce dIT C ( 8 percen t fo r five-yea r recover y propert y place dinservic e afte r 1980 ) wit hno adjustmen t fo r th e depreciatio nbasi s o r
• Tak e th e regula r IT C (1 0 percen t fo r five-yea r recover y propert y place di nservic e afte r 1980 ) an dreduc e th e basi s fo r depreciatio nb

y 5 0 percen t o f th e amoun t o f th e credi t take n Sinc e new

industria l oil/ga s boiler s ar e denie dth e ITC , thes e TEFRA Federa l taxcod e revision s appl y onl y t o ne w industria l coal-fire dboile r investment s i nIFCAM . Thes e TEFR A Federa l ta xcod e revision s hav e no t ye t bee nincorporate dint o IFCAM . Income Ta xRat e A ta xrat e o f 5 0 percen t i s use dt o reflec t th e margina l corporat e Federal an

dStat e income ta xrat e fo r investmen t decisions . Thi s assume s tha t corporations ' earning s ar e sufficien t t o mak e thi s maximum ta xrat e relevan t fo r fue l choic e decisions . Discoun t Rat e A discoun t rat e i s th e expressio no f th e time valu e o f capita l use din equivalenc e calculation s comparin g alternatives . Thi s rat e i s essentiall y a valu e judgemen t base do na compromis e betwee npresen t consumptio n(i.e. , distributio no f profit s t o stockholders ) an dcapita l formation . Th e discoun t rat e represent s th e require drat e o f return ; tha t rat e a t whic h stockholder s ar e indifferen t betwee nthi s an dthei r nex t bes t investmen t opportunity . Traditionally , th e require drat e o f retur nsimpl y ha s mean t th e cos t o f capital . I f a ninvestmen t doe s no t pay fo r itsel f plu s th e charge s incurre dt o financ e th e project , a firm i s bette r of f no t makin g th e investment . Th e discoun t rat e i nIFCA M represent s th e averag e rea l (no t nominal ) after-ta xcos t o f capital . Th e discoun t rat e fo r new industria l boile r investmen t calculation s inIFCA M i s 8 percent .



### 4- 8I Investmen t Perio d Th e investmen t perio di s th e numbe r o f year s o f cas hflow s include din th e calculatio no f th e after-ta xNPV . Th e lengt ho f th e investmen t perio d i s importan t intha t i t affect s th e relativ e economic s o f capital-intensiv e alternative s suc ha s coal . I f th e investmen t perio di s shor t (e.g. , fiv e years) , th e fue l saving s associate dwit hcoa l ma y no t b e sufficien t t o offse t th e hig hcoa l capita l an dannua l non-fue l O& M cost s an

doi l o r ga s woul db e selecte da s th e least-cos t fue l type . I f a long perio di s use d(e.g. , 25-4 0 years) , th e coa l fue l cos t saving s ma y b e sufficien t i nman y case s t o offse t th e hig hcoa l capita l an dannua l non-fue l O& M costs . Th e curren t investmen t perio dinIFCA M i s 1 5 years . Thi s include s th e two-yea r constructio nperio dan d1 3 year s o f operation . Estimate s o f th e physica l lif e o f new

industria l boiler s rang e from 2 0 year s fo r packag e unit s t o 4 5 year s fo r larg e fiel derecte dunits . Du e t o th e discounte d cas hflow

decisio ncriteria , depreciatio ncost s an dannua l O& M

an dfue l expense s contribut e relativel y littl e t o th e tota l NPV fo r period s longe r tha n1 5 years . Therefore , a singl e investmen t perio dfo r al l boile r fue l choic e decision s i s no t expecte dt o seriousl y bia s th e analysis . 4.2. 3 Calculatio no f NP V Factor s Tabl e 4- 1 summarize s th e financia l parameter s use dinIFCAM' s new industria l boile r cos t comparisons . Table s 4- 2 an d4- 3 show

ho w after-ta x NP V factor s fo r capita l expense s ar e derived . Fo r ever y dolla r o f coa l boile r capita l costs , th e after-ta xNPV i s 52.6 1 cents. * Fo r ever y dolla r o f oil/ga s boile r capita l costs , th e after-ta xNP V i s 62.6 5 cents . Th e oil/ga s boile r capita l facto r i s large r tha nth e coa l boile r capita l facto r becaus e curren t Federa l ta xlaw s promot e th e us e o f coa l an dalternativ e fuels . Tabl e 4- 4 indicate s tha t th e after-ta xNP V i s $3,65 9 fo r ever y dolla r o f annua l non-fue l O& M costs . Tabl e 4- 5 present s a simila r calculatio nfo r fue l costs . Inthi s example , th e after-ta xNP V fo r fue l cost s i s $23.72/MMBt uxth e boile r annua l natura l ga s consumptio nquantity .

*55.8 3 cent s whe nTEFRA Federa l ta xcod e revision s ar e incorporate dint o IFCA M i nth e future .



### 4- 9P.8 1

TABL E 4-1 . FINANCIA L PARAMETE RASSUMPTION S FORNE W INDUSTRIA L BOILE R' DISCOUNTE D AFTER-TAXNPV COS T COMPARISON S

Financia l paramete r Coa l Oil/Ga s
Investmen t perio d(years ) 1 5 1 5 Depreciatio nmetho d Depreciatio nperio d(years ) Investmen t taxcredi t (percent ) Busines s energ y

ta xcredi t (percent ) Income ta xrat e - Federa l an dStat e (percent ) After-tax , rea l discoun t rat e (percent ) Inflatio nrat e (percent ) Constructio nperio d(years )
Accelerate dCos t Recover y System . A s define d b y th e Economi c Recover y Ta xAc t o f 198 1 fo r propert y acquire dafte r 1985 , th e annua l recover y percentage s ar e 20 , 32 , 24 , 16 , an d8 respectively . Th e Ta xEquit y an d Fisca l Responsibilit y Ac t o f 1982 , whic hha s no t ye t bee nincorporate d int o IFCAM , revise dth e annua l recover y percentage s fo r propert y acquire d afte r 1985 : 15 , 22 , 21 , 2 1 an d2 1 percen t respectively . Th e Energ y

Ta xAc t o f 197 8 indefinitel y exclude s new

oil - an

dgas-fire d industria l boiler s fro m an y IT C an drestrict s thes e boiler s t o straigh t lin e depreciation . r A s define db

y th e Economi c Recover y Ta xAc t o f 1981 . Th e alternativ e energ y propert y

investmen t ta xcredi t fo r new coa l boile r investment s (authorize db y th e Energ y

Ta xAc t o f 1978 ) expire don Decembe r 31 , 198 2 and , therefore , i s no t applicabl e t o new industria l boiler s ordere dafte r 1985 .
e Use d t o conver t depreciatio ncharge s fro m nomina l t o rea l dollars . Include di nth e investmen t period . ACRS 3 

### 5 C 

### 1 0 

## o d 

### 5 0 8 5 2 Stra i gh t lin e



### 5 C 

### 0 b 

### 0 5 0 8 5 2

4-1 0TABL E 4-2
. DERIVATIO NO F TH E AFTE R TA X NPV FACTO R FO R COA L BOILE R CAPITA L EXPENSES *

Depreciabl e Deprecia

- Expensibl e capita l Discounte d Yea r tion D construction 0 investment ^ ITC e Cas h flow ^ cas h flow 9
0.050 0 l h
2 h 

### 3 4 5 6 7 (0.0857 ) (0.1306 ) (0.0933 ) (0.0592 ) (0.0282 ) 0.450 0 0.450 0 (0.0450 )

(0.0450 ) 0.455 0

0.405 0 (0.0857 ) (0.1306 ) (0.0933 ) (0.0592 ) (0.0282 ) 0.455 0

0.375 0 (0.0735 ) (0.0735 ) (0.0686 ) (0.0403 ) (0.0178 ) 0.526 1

3 Tota l capita l cos t i s 1.0
. Onl y9 0 percen t o f th e capita l cos t i s assume d t o b e depreciable
. Nomina l depreciatio n charge s ar e adjuste d fo r inflatio n t o deriv e annua l rea l depreciatio n credits
. Th e annua l recover yfactor s (ARF) , no t includin g TEFR Aprovisions , ar e 0.20 , 0.32 , 0.24 , 0.16 , an d 0.0 8 respectivel yfo r i = 1-5
. Depreciatio n credit s = ((1-ta x rate ) x D-j ) - D-j , o r - D-j/ 2 fo r i = 1-5
. D i = 0. 9 x ARF 1 /(1.05) 1 fo r i = 1-5
.
c (l-ta x rate ) x 1 0 percen t o f th e tota l capita l cos t = 0. 5 x 0. 1 x 1. 0 = 0.05
. Tota l capita l cos t les s expensibl e constructio n cost s allocate d evenl y ove r th e two-yea r constructio n period , o r (1.0-(0. 1 x 1.0))/ 2 = 0.45
. investmen t Ta x Credi t (ITC ) i s 1 0 percen t o f th e depreciabl e capita l cost . f Sumo f depreciation , expensibl e construction , depreciabl e captia l investmen t an

d ITC . g Cas h flowt/(1.08) t_1

. i

_ Constructio n period
. Boile r i s place d i n servic e a t th e beginnin g o f yea r 3
.

4-1 1P.8 3

TABL E 4-3
. DERIVATIO NO F TH E AFTER-TAX NP V FACTO R FO R

- a OIL/GA S BOILE R CAPITA L EXPENSES '

Depreciabl e

. Expensibl e capita l , Discounte d Yea r Depreciatio n constructio n investmen t Cas h flo wcas h flo w


### 1 9 2 9 

### 3 4 5 6 7 (0.0857 )

(0.0816 ) (0.0777 ) (0.0740 ) (0.0705 ) 0.050 0 0.450 0 0.450 0 0.500 0

0.450 0 (0.0857 ) (0.0816 ) (0.0777 ) (0.0740 ) (0.0705 ) 0.500 0

0.416 7 (0.0735 ) (0.0648 ) (0.0571 ) (0.0504 ) (0.0444 ) 0.626 5

3 Tota l capita l cos t i s 1.0
. Regula r IT C i s exclude d b yth e Energ yTa x Act . Onl y9 0 percen t o f th e capita l cos t i s assume d t o b e depreciable
. Nomina l depreciatio n charge s ar e adjuste d fo r inflatio n t o deriv e annua l rea l depreciatio n credits
. Straigh t lin e depreciatio n (2 0 percen t pe r yea r fo r 5 years ) i s assumed
. Depreciatio n credits. = ([1-ta x rate ] x D. ) - D. , o r

- D./ 2 fo r i = 1-5
. D . = 0. 9 x 0.2/(1.05 r fo r i = 1-5
. n n

c (l-ta x rate ) x 1 0 percen t o f th e tota l capita l cos t = 0. 5 x 0. 1 x 1. 0 = 0.05
. Tota l capita l cos t les s expensibl e constructio n cost s allocate d evenl y ove r th e two-yea r constructio n period , o r (1. 0 - [0. 1 x 1.0])/ 2 = 0.45
.
e Su mo f depreciation , expensibl e construction , and depreciabl e capita l investment
. f Cas h flow t /(1.08) t_1

. 9constructio n period
. Boile r i s place d i n servic e a t th e beginnin g o f yea r 3
.

4-1 2I ' TABL E 4-4
. DERIVATIO NO F TH E AFTER-TA

X NP V FACTO R FO R ANNUA L NON-FUE L O&M EXPENSES 3

~ Discounte d Yea r Cas h flow cas h flow
l d 0. 0 0.00 0 2 d 0. 0 0.00 0 3 0. 5 0.42 8 4 0. 5 0.39 7 5 0. 5 0.36 8 6 0. 5 0.34 0 7 0. 5 0.31 5 8 0. 5 0.29 2 9 0. 5 0.27 0 1 0 0. 5 0.25 0 1 1 0. 5 0.23 2 1 2 0. 5 0.21 4 1 3 0. 5 0.19 9 1 4 0. 5 0.18 4 1 5 0. 5 0.17 0 3.65 9



### a Annua l non-fue l O&M cost s =1. 0 fo r year s 3 throug h 15 , = 0. 0 fo r year s 1 an d 2 (constructio n period ) Annua l non-fue l O& M cost s ar e assume d no t t o increas e in rea l term s ove r time
. (1-ta x rate ) x annua l non-fue l O&M cos t = 0. 5 x 1. 0 = 0.5
.

c Cas h flowed.08) t_1

. Constructio n period
. Boile r i s place d in servic e a t the beginning o f yea r 3
.

4-1 3Yea r



### l d 

### 2 d 

### 3 4 5 6 7 8 9 1 0 11 1 2 1 3 1 4 1 5

3 Se e Tabl e Presente d i n IFCAM .
c After-ta x Construc t yea r 3
. TABL E 4-5
. EXAMPL E CALCULATIO NO F TH E NPV O F ANNUA L FUE L EXPENSE S

After-ta x discounte d cas h flo wfactor 3

0.000 d 0.000 d 0.42 8 0.39 7 0.36 8 0.34 0 0.31 5 0.29 2 0.27 0 0.25 0 0.23 2 0.21 4 0.19 9 0.18 4 0.17 0

4-4
. Natura l ga s price 1 3 

### ($/MMBtu )
5.5 9 5.7 6 5.9 4 6.0 6 6.1 9 6.3 2 6.4 5 6.5 9 6.6 6 6.7 2 6.7 8 6.8 6 6.9 3 7.0 0 7.0 7

fo r illustrativ e purposes . No t a curren t
discounte d cas h flo wfacto r x fue l price
. ion period
. Boile r i s place d i n servic e a t

4-1 4 <\FTE R

i

fue l



### th e -TA X S " '

"\fter-ta x NPV 0 ($/MMBtu )
0.0 0 0.0 0 2.5 4 2.4 1 2.2 8 2.1 5 2.0 3 1.9 2 1.8 0 1.6 8 1.5 7 1.4 7 1.3 8 1.2 9 1.2 0 23.7 2

pric e projectio n

beginnin g o f P.8 5Th e tota l after-ta xNP V equal s th e su

m of :

• Tota l capita l cost * x(0.526 1 o r 0.6265 )
• Tota l annua l non-fue l O&M cost * x3.65 9
• Tota l after-ta xNP V o f fue l cost s (e.g. , annua l natura l ga s consumptio nx$23.72/MMBt ufro m Tabl e 4-5) ~

*Boile r an

dpollutio ncontro l equipment ,

4-1 5P.8 7

REFERENCE S

1
. Referenc e 2 , pp . 3-4 , 4-3
. 2
. Industria l Boile r SO 2 Cos t Report . Radia n Corporation
. EPA-450/3-85-011
. Prepare d fo r th e U.S . Environmenta l Protectio n Agency . Novembe r 1984
. 3
. Fo r example , referenc e 4 5 F R 8496 7 (Decembe r 24 , 1980 ) and 4 6 F R 3121 6 (Jun e 12 , 1981)
. 4
. Ta x Informatio n o n Depreciation
. Interna l Revenu e Service , U.S . Departmen t o f Treasury . Publicatio n 534 , 197 9 Editio n (revise d Novembe r 1979)
. p . 6
. 5 . Not e th e cos t calculatio n methodolog ypropose d byth e Economi c Regulator y Administration , U.S . Departmen t o f Energ yt o b e use d t o compar e th e cost s o f burnin g alternat e fuel s i n ne windustria l boiler s relate d t o th e Powerplan t an

d Industria l Fue l Us e Ac t (4 5 F R 84967 , Decembe r 24 , 1980)
. Egan , T . (Charle s Rive r Associates)
. Ho wt o Appl yFo r a FU AExemption
. Power . 124:85
. Septembe r 1980
. Lincoln , R . (Charle s Rive r Associates)
. Ho wt o Avoi d Commo n Error s i n Life-Cycl e Cos t Comparisons
. Power . 125:74-75
. Ma y1981
. Kolbe , A. , an

d R . Lincol n (Charle s Rive r Associates)
. Wha t Rat e o f Retur n Make s You r Energ yInvestmen t Worthwhile ? Power . 127:72
. Apri l 1983
. 6
. Investmen t Credit
. Interna l Revenu e Service , U.S . Departmen t o f th e Treasury . Publicatio n 57 2 (revise d Novembe r 1982)
. p . 5-6
. 7 . Devitt , T. , P . Spaite , L . Gibbs
. Populatio n an d Characteristic s o f Industrial/Commercia l Boiler s i n th e U.S . PEDC o Environmental , Inc . Cincinnati , Ohio
. EPA-600/7-79-178a
. Prepare d fo r th e Industria l Environmenta l Researc h Laboratory , U.S . Environmenta l Protectio n Agency . Augus t 1979
. p . 133
.

4-1 6