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Example

Consider the case of a facility seeking to meet NOx RACT requirements and evaluating the potential for installation of an SCR system on its boiler. Currently, the boiler is an uncontrolled source with a heat input rating of 350 MMBtu/h (369,000 MJ/h) operating continuously throughout the year. The boiler has never been source-tested and review of AP-42 factors indicates that the uncontrolled emissions rate is 0.130 lbm of NOx/MMBtu (0.056 g/MJ) natural gas consumed. [Note that AP-42 factors often establish worst case uncontrolled emissions rates.]

The budget estimate for turn-key installation of the SCR system is \$533,000, with vendor warrantee of an emissions rate reduction down to 0.0195 lbm NOX/MMBtu (0.0083 g/MJ) consumed of natural gas. The expected effective life of the SCR is 10 years and, assuming proper maintenance, the catalyst panels will require replacement every four years at a cost of \$75,000 per changeout. Based on vendor data, the estimated annual operating cost for the SCR will be \$33,000 in constant dollars. The time-valued cost of money is set at 8% in the facility's capital budgeting analysis.

All cost factors are expressed on an annual basis using the following formula:

Total annualized costs

Capital costs

Replacement costs

O&cM costs

Installed SCR = \$533,000 x 0.1490 ■ annualized cost

\$79,417

determined using the formula:

Tons of NOx = ( IbmNOx uncontroUed _ lbm NOX controUed reduced/yr ( MMBtu MMBtu hrs days 1 ton

MMBtu day yr 2,000 lbm hr

Thus,

(0.130 - 0.0195)lbm NOx x 8,760 hrs 1 ton ^350 MMBtu

MMBtu yr

2,000 lbm hr

Catalyst replacement = \$75,000 x 0.7350 + \$75,000 x 0.5403 present value = \$95,648 Catalyst replacement = \$95,648x0.1490 = \$14,252 annualized cost

Total annualized = \$79,417 + \$14,252 + \$33,000 = \$126,669 costs

Where: the discount factors (at 8%) for years 4 and 8, are 0.7350 and 0.5403, respectively, and the 10-year annualized cost factor is 0.1490.

Annual NOx emissions reductions can then be

= 169.3 tonsNox(153,700 kgNOx) reduced/yr

Cost-effectiveness is determined by dividing the annualized cost of control by the tons per year (tpy), or ton-years (ton-y), of NOx reduced. Based on Equation 17-3, this would be:

Cost Annualized costs \$126,669

effectiveness Annual tons reduced 169.3

Variations in Cost-Effectiveness Methodologies

There is considerable variation from region to region in both the methods used to determine cost-effectiveness and in the cost per ton or kg of a particular emissions that is considered to be cost-effective. While cost-effectiveness values are continually subject to change, levels in excess of \$15,000/ton (\$16.5/kg), adjusted to current dollars, of NOx, VOC, and SOx have been applied for BACT in the South Coast Air Quality Management District (SCAQMD), which has the most stringent regulations in the United States.

There is also ongoing debate as to the most appropriate methods to be used for calculating cost-effectiveness. The method used above is a levelized cash flow (LCF) method, which determines the average annual cost by multiplying the control equipment capital cost by a capital recovery factor, and adding it to all other direct and indirect costs. An alternative method is the discounted cash flow (DCF) method. This calculates the present value of the control costs over the life of the equipment by adding the capital cost to the present value of all annual costs over the life of the equipment and applying a uniform interest rate that is independent of the inflation rate. Equipment life is typically assumed to be 10 years, unless a shorter period can be justified. One advantage of the DCF method is that it can more easily take into account annual operating and maintenance x costs that are not constant, emissions reductions that vary with time, and capital costs that may occur after the first year.

Another area of debate for RACT compliance is whether or not cost-effectiveness evaluation should be based on standards for uncontrolled emissions or on actual test data for the specific system in question. If, in the previous example, other control measures had already been implemented, then test data would be used instead of specified uncontrolled emissions rate standards such as AP-42, depending on prevailing regulations. If, in the previous example, the facility had already installed control technology which achieved a NOx emissions rate of 0.060 lbm/MMBtu (0.029 g/MJ), the annual NOX emissions reduction resulting from additional control would be 62.1 tons (56,336 kg) and the cost-effectiveness would be \$2,040/ton-y (\$2.25/kg-y).

Similarly, there is also ongoing debate regarding the appropriateness of using marginal or average cost-effectiveness in a top-down BACT approach. In a top-down average cost approach, the control method with the highest emissions reduction is evaluated for cost-effectiveness (\$/ton reduced) based on an uncontrolled baseline condition. If the method is judged to be cost-effective, then it is selected. In a marginal, or incremental, approach, the difference in cost and emissions reduction

Low NOx Bul Flue Gas Rec ner with rculation

Low NOx Burner

20,000 40,000 60,000 80,000 100,000 120,000 Boiler Capacity (PPH)

Fig. 17-49 First-Cost of Low-NOX Burners with and without FGR as a Function of Boiler Capacity.

between one alternative and the next best alternative are compared. This yields an evaluation of the incremental benefit of employing successively more-effective control methods. In many cases, control methods that would pass based on the average cost approach would fail based on the marginal approach.

Consider, for example, a scenario in which uncontrolled emissions for a new fuel burning system would be 100 tpy (90,700 kg-y). If the highest emissions reduction method could reduce annual emissions to 10 tons (9,070 kg) at a cost of \$900,000, the average cost-effectiveness would be \$10,000/ton (\$11.0/kg). If the next highest emissions

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