Clean Water Act Compliance Brochure

Enercon Services, Inc. 500 TownPark Lane, Suite 275 Kennesaw, GA 30144 www.enercon.com October 2010 Financial Impacts of EPA’s Proposed Section 316(b) Regulations on US Power Plants The United States (US) Environmental Protection Agency (EPA) is considering a Clean Water Act Section 316(b) Phase II regulation that could require a substantial number, if not all, of US thermoelectric power plants with once-through cooling systems to retrofit to closed-loop cooling via cooling towers. These mandatory retrofits represent a substantial initial capital investment, lost generation during a closed-loop conversion forced outage, and ongoing losses of electricity required to operate with cooling towers. More than 360,000 megawatts (MW), about 36% of all power plant capacity in the US, are produced by power plants with once-through cooling systems. The vast majority, if not all, of these plants would be subject to conversion to closed-loop cooling under the new Phase II regulation. The addition of cooling towers would be extremely challenging at existing sites. This is primarily due to space constraints and the inability of existing plant equipment to accommodate increases in cooling water temperature due to the conversion. Air emission permits, waivers, and/or credits add increased expense, and in some instances, may not be obtainable at all. Replacement electricity to compensate for production lost during construction and to support the subsequent closed-loop operation will need to be provided by alternative power sources. If every nuclear unit currently using once-through cooling were required to retrofit and install new cooling towers, the initial cost is estimated at $83 billion. Additionally, the loss of megawatts to power the cooling towers represents a further cost of more than $1 billion annually from lost revenue. If every fossil unit currently using once-through cooling were required to retrofit and install new cooling towers, the initial cost is estimated at $66 billion, with an annual cost of more than $7 billion from lost revenue. The cost of the cooling tower equipment and the associated installation is greatly dependent on the site-specific conditions that dictate the cooling tower size, configuration, and material requirements; and, as such, industry-wide estimates contain a degree of uncertainty. These costs must inevitably be passed on to consumers, representing a significant increase in ratepayer price of electricity at a time when consumers and businesses are struggling through a difficult economy. Moreover, the Financial Impacts of EPA’s Proposed Section 316(b) Regulations on US Power Plants 2 Typical Condenser and Turbine Configuration: The orientation of the main condenser is such that the entire turbine building is built on top of, and around, the main condenser. The net result is that any significant increase to the size of the condenser would require a redesign and reconfiguration of the turbine building, potentially involving significant modifications to related equipment and systems. retrofit requirement could jeopardize the reliability of the US electricity supply. As electricity demand increases, the significantly reduced capacity margins of the US electricity grid would increase the risk of brown-outs and black-outs. Retrofit Cost Considerations The costs for closed-loop cooling retrofits vary by the engineering requirements of a given application. Six major considerations drive the site-specific conversion cost: 1. Site Characteristics and Available Space The sites of existing once-through cooling power plants were not originally designed with cooling towers in mind. In some cases there are significant space constraints or geographical challenges such as differences in elevation for available locations. The costs associated with creating a suitable configuration for the towers vary by plant but are inevitably more expensive when undertaken as a retrofit rather than as part of an original design. 2. Condenser Capacity/Size Conversion from once-through to closed-loop cooling presents a fundamental challenge for the condenser cooling system. Many of the power plants with once-through cooling are on large bodies of water and draw consistently cold water for condenser cooling, particularly on the Pacific coast and along the Northeast coast. It is often not possible for cooling towers to produce water as cold as that originally drawn from the source waterbody. When the condenser cooling water is not as cold as the original once-through design, plant performance will be significantly affected and generator output reduced. Although power plants with existing condenser capacity margins or plants with relatively warm water body source temperatures may not experience significant operational impacts, most plants will experience significant power losses if converted to closed-loop cooling. In order to avoid or minimize operational power losses, a significant increase in condenser size or efficiency would be required to accommodate increased condenser inlet water temperatures. However, due to space constraints surrounding the main condenser (see left), significant modifications to the condenser are typically not a viable option. Without adequate condenser cooling capacity, a plant converted to use cooling towers would be subject to significant seasonal variations and operational power losses based on ambient air temperature. Fewer megawatts Condenser Financial Impacts of EPA’s Proposed Section 316(b) Regulations on US Power Plants 3 Grand Gulf Nuclear Station Where inlet water temperatures are comparatively warm, the negative impacts of operating with closed-loop cooling are significantly decreased. Grand Gulf Nuclear Station is located on the Mississippi River, which has relatively warm water temperatures in the summer. of power would be produced by the plant during the warmer months when demand is highest. In cases where the original plant condenser design does not include the required margin to support the use of warmer water, continued operation would be severely compromised or simply not be cost effective. 3. Quality of Cooling Water Source The quality of the cooling water source appreciably affects the cost of closed-loop conversions. Closed-loop systems with evaporative cooling towers require a make-up water source to replenish water lost to evaporation/drift and to allow blowdown from the closed-loop system to maintain system water quality. Closed-loop cooling towers with make-up water drawn from a freshwater source are constructed with less expensive equipment, structural components, and fill materials. Brackish or saltwater sources require more expensive equipment, structural components, and fill materials to withstand the corrosive effects and dissolved solids content of the water source. Additionally, at plants with brackish or saltwater make-up water sources, salt would be deposited by the cooling tower plume in the vicinity of the tower, causing adverse impacts to vegetation, air quality, HVAC systems, and security systems. Salt deposits in the switchyard create the potential for electrical arcing, which constitutes a safety hazard and electrical reliability issue. Salt deposition would adversely affect existing systems and equipment to the extent that costly preventative and correctional maintenance would be required. 4. Loss of Operation During Closed-Loop Conversion Based on previous site-specific closed-loop conversion studies, plants could lose as much as two years of operation time while being converted to closed-loop cooling.1 Due to the need for continuous cooling water, the work required to tie in new systems into the existing plant would involve a significant outage during which the plant would not be generating electricity and, therefore, would be losing revenue. 5. Increased Operating Costs In addition to the up-front capital costs and lost generation associated with closed-loop conversion, there are ongoing costs associated with the power requirements and maintenance necessary to operate cooling towers. Financial Impacts of EPA’s Proposed Section 316(b) Regulations on US Power Plants 4 Evaporation losses from cooling towers represent a significant water loss to the source body. For example, if Indian Point2, a nuclear power plant in New York, were converted to closed-loop cooling, about 20,600 gpm would be lost to evaporation and drift. That’s enough water to fill more than 45 Olympic sized swimming pools a day. All cooling tower designs require additional power to pump circulating water through the cooling tower. If mechanical draft cooling towers are utilized, a considerable number of forced-draft fans are required to provide adequate cooling airflow. For example, the hybrid cooling towers analyzed in previous studies for Indian Point would require approximately 72 MW of electricity to power, which, when coupled with operational power losses associated with higher cooling water temperatures, results in a total power loss of up to 158 MW.2 These power requirements effectively de-rate the plant to a lower generating capability and, therefore, significantly reduce the revenue of the plant. Cooling tower equipment requires extensive support to ensure continuous operation. Additional personnel would be required to perform daily and weekly maintenance routines on the cooling tower. The water treatment requirements increase dramatically to ensure against cooling tower fouling. In addition, major equipment rehabilitation or replacement would occur every 20 to 40 years after the equipment is placed into service. 6. Permitting/Zoning The environmental impact of converting to a closed-loop system with cooling towers presents a series of permitting challenges. When operating, cooling towers evaporate a portion of the circulating water, which is lost from the source water body (see left). The water lost through evaporation concentrates dissolved solids in the circulating water system, and, in turn, releases a constant stream of particulates to the atmosphere through cooling tower drift (i.e., water droplets that do not evaporate, but become suspended within the cooling tower plume). Dissolved solids within the plume released by the tower may not meet air quality requirements. Frequently, the potential exists for substantial costs associated with obtaining the required permits for operation. Local height restrictions on new buildings and structures can also limit technology choices. For example, hyperbolic cooling towers are extremely difficult to site in most communities as they are typically greater than 500 ft in height, well over local height restrictions. As such, mechanical draft cooling towers that have additional parasitic losses and associated higher operating costs are often selected over hyperbolic cooling towers. Noise abatement and plume abatement requirements to meet local ordinances can also add appreciable expense to the towers. Financial Impacts of EPA’s Proposed Section 316(b) Regulations on US Power Plants 5 Kendal Power Station (South Africa): Largest indirect dry cooling system in service Mechanical Draft Cooling Towers: Linear Configuration Neckarwestheim Nuclear Power Station (Germany): Round hybrid cooling tower Cooling Tower Selection Cost Considerations Dry Cooling Towers Dry cooling towers are the most expensive and most challenging option for closed-loop conversions. Dry cooling towers do not use evaporative cooling, which means significantly less water is lost in the cooling process than with conventional wet (evaporative) cooled power stations. However, dry cooling towers require a far greater surface area than is available at many sites, and due to their significantly lower efficiency, dry towers are typically not capable of supporting condenser temperatures and associated backpressures necessary to be compatible with a facility’s turbine design. Replacement of a facility’s turbine to allow for a higher backpressure limit is rarely possible, and dry cooling towers are therefore typically infeasible from a reliability, cost, or environmental standpoint.3 Evaporative Cooling Towers Natural Draft Towers Natural draft towers rely on the “chimney effect” of a very tall hyperbolic tower to induce cooling airflow, and thus do not require the use of forced-draft fans. Adequate heat load must be provided by the circulating water system to fuel the thermal differential required to create and sustain the “chimney effect.” As a result of the height of natural draft towers and this “chimney effect,” the plume is discharged high into the atmosphere. Natural draft towers do not incur parasitic losses above those necessary to pump through the cooling tower. Mechanical Draft Towers Compared to the other types of evaporative cooling towers, a mechanical draft cooling tower is typically lowest in initial cost. Due to the need for forced-draft fans, this type of tower has slightly higher noise levels than a natural draft tower, although attenuation to acceptable levels is possible. However, the fans required for mechanical draft towers incur significant parasitic losses and the plume is released relatively low to the ground (increasing dissolved solid deposit concentrations). Hybrid Towers A hybrid (“plume abated”) cooling tower addresses plume-related issues associated with other tower types. A hybrid tower is essentially the combination of the evaporative cooling tower and a dry heat exchanger section used to eliminate visible plumes in the majority of atmospheric Financial Impacts of EPA’s Proposed Section 316(b) Regulations on US Power Plants 6 Cooling Tower Definitions: FRP = Fiberglass Reinforced Plastic MWPump= Power required for pumps BHPFan = Brake horsepower 7.5×10-4 = Conversion from BHP to MW Approach = The difference between the cooled water temperature and the ambient wet bulb temperature (a lower approach results in colder water) Linear Mechanical Draft Example: MWPump= 10 MW; # Fans = 14; BHPFan = 250 Power Loss = 10 + (14×250×7.5×10-4) = 12.6 MW conditions. Hybrid towers are slightly taller than comparable wet towers due to the addition of the “dry” section. They are also appreciably more expensive, both in initial cost and in ongoing operating and maintenance costs. For freshwater applications, the cost of a hybrid tower is four times the cost of a comparable mechanical draft tower. For saltwater applications, costs increase to five times the cost of a comparable mechanical draft tower due to the need for corrosion resistant materials, often titanium, in the dry heat exchanger section. Cooling Tower Cost Comparison Three main factors govern the cost of a cooling tower: 1) cooling tower type, 2) cooling tower performance (approach), and 3) operational features. The tables below illustrate the effect each identified factor has on cost. It should be noted that cooling tower costs are subject to site-specific consideration, and the general guidance provided is meant only to demonstrate typical cooling tower cost variables. Cooling Tower Cost Comparison4 Tower Type Construction Material Cost Relative to Baseline Average Loss to Power Cooling Towers (MW) Linear Mechanical Draft FRP Baseline MWPump+(# Fans×BHPFan×7.5×10-4) Back-to-Back Mechanical Draft FRP ~1.2 x Baseline MWPump+(# Fans×BHPFan×7.5×10-4) Octagonal/Round Mechanical Draft FRP ~2.4 x Baseline MWPump+(# Fans×BHPFan×7.5×10-4) Hyperbolic Natural Draft Concrete ~6 x Baseline MWPump Dry Cooling Tower (Mechanical Draft) FRP ~5 x Baseline MWPump+(# Fans×BHPFan×7.5×10-4) Cooling Tower Performance Comparison4 Cooling Tower Approach to Wet-Bulb Construction Material Cost Relative to Baseline Average Loss to Operate Cooling Towers (MW) Approach = 12°F FRP Baseline MWPump+(# Fans×BHPFan×7.5×10-4) Approach = 10°F FRP ~1.2 x Baseline MWPump+(# Fans×BHPFan×7.5×10-4) Approach = 8°F FRP ~1.3 x Baseline MWPump+(# Fans×BHPFan×7.5×10-4) Approach = 6°F FRP ~1.5 x Baseline MWPump+(# Fans×BHPFan×7.5×10-4) Cooling Tower Optional Features4 Optional Feature Cost Relative to Baseline Noise Abatement (Fan Noise Only) ~1.05 x Baseline Noise Abatement (Fan and Water Noise) ~1.25 x Baseline Plume Abatement (Hybrid) ~4 x Baseline Plume Abatement (Hybrid Saltwater) ~5 x Baseline Financial Impacts of EPA’s Proposed Section 316(b) Regulations on US Power Plants 7 San Onofre Nuclear Generating Station1 is located in California on the Pacific coast and has very limited space for conversion to closed-loop cooling. Constructing cooling towers at San Onofre is complicated by the compact site layout and proximity to a major interstate, marine base, and protected state park. Nuclear Cost Estimates Detailed cost estimates and engineering analyses for select nuclear sites show that costs vary widely.1,2,5 These studies also reveal that the cooling towers themselves present a number of environmental issues that will likely require exemptions from federal, state, and local permitting requirements. It is unclear whether these exemptions would be granted and if they were, at what cost. Cost estimates should therefore be considered a starting point, with the potential to increase significantly. The economic burden of obtaining, or failure to obtain, permits for a retrofit could force the premature closure of nuclear plants. Sample cost estimates for three similarly sized two-unit nuclear sites are provided in the tabulation below. The costs vary based on the geography, existing equipment, cooling tower selection, and environmental requirements at each site. For instance, building new cooling towers at San Onofre Nuclear Generating Station1 may have a lower capital cost compared to the other plants evaluated but would require tunneling under a major interstate and significant modifications to construct cooling water reservoirs. These and other site-specific constraints would necessitate a forced construction outage of approximately 21 months, and approximately $2.4 billion in replacement power costs. Regardless of the initial conversion expense, the concentrated air particulates from operation of cooling towers at San Onofre would not meet regional air quality requirements. Because there are not enough air quality off-set credits available in their regional market to compensate for the particulate discharge, it is highly unlikely that this site could receive the necessary permits to construct and operate cooling towers regardless of the economics. Sample Nuclear Cost Estimates, $ in Billions Plant Name Capital Cost for Cooling Towers Replacement Power Costs due to Downtime Total Initial Cost: Capital and Lost Generation Outage Duration (Months) Number of Units Total Plant Output (Megawatts) Average Yearly Loss in Megawatts to Operate with Cooling Towers Diablo Canyon5 2.7 1.8 4.5 17 2 2,310 55 Indian Point2 1.2 1.0* 2.2 10 2 2,158 88 San Onofre1 0.6 2.4 3.0 21 2 2,150 143 *Calculated based on average $70/MW-hr spot price for New York. Financial Impacts of EPA’s Proposed Section 316(b) Regulations on US Power Plants 8 The Initial Capital Costs to convert facilities to closed-loop cooling includes the cost of engineering design; the selection, procurement, and installation of major equipment (e.g., cooling towers, pumps, valves, etc.); and the costs of closed-loop const-ruction. A combination of three cost estimation techniques was used to determine the initial capital costs: 1. Vendor provided budgetary estimates for major components 2. Third-party expert detailed construction estimates 3. Estimation utilizing national production rates and cost factoring If every nuclear unit currently using once-through cooling (approximately 56,700 MW) were required to retrofit and install new cooling towers, the initial cost is estimated at $83 billion, based on the average cost per MW capacity of the sample nuclear estimates provided.1,2,5 Additionally, the loss of megawatts to power the cooling towers (based on a $50/MW-hr* spot price) represents a further cost of $1.1 billion annually from lost revenue. For perspective, annual revenues from all US nuclear plants are approximately $40 to $50 billion. The above nuclear industry estimates are based on detailed conversion cost assessments for approximately 12% of the installed once-through nuclear capacity; hence, the accuracy is dependent on how well the assessments model the remainder of the nuclear fleet. As more detailed closed-loop conversion cost assessments are performed, the ability to accurately forecast total fleet conversion costs will increase. *$50/MW-hr is utilized as an average spot price that is conservatively reflective of the general market. Fossil Cost Estimates Conversion of fossil power plants to closed-loop cooling is typically significantly less costly than conversion of nuclear power plants. This is due to differences in design, procurement, and construction costs of the retrofits. Design Cost Difference Due to the regulatory oversight provided by the NRC and the requirements to maintain nuclear safety at all times, any potential change in the configuration of a nuclear facility requires a more costly and time-consuming modification process. Some of the factors include formalized modification packages, calculations, analyses, specifications, and special security considerations, as well as screenings necessary to comply with 10 CFR 50.59. Based on ENERCON’s considerable experience with comparable design projects at nuclear and fossil plants, design costs at fossil plants are approximately 3.5 times less than those at nuclear plants. Procurement Cost Difference Procurement costs of non-safety related equipment are similar between fossil and nuclear plants; however, procurement of safety related equipment for a nuclear plant is appreciably higher than equipment for a fossil plant. The increase in procurement costs is attributable to the strict tolerances and qualification testing necessary to ensure safe operation of a nuclear plant. However, the majority of Financial Impacts of EPA’s Proposed Section 316(b) Regulations on US Power Plants 9 RSMeans, a construction cost estimating tool that provides detailed cost estimates for the construction industry including labor, industrial equipment, electrical systems, and other heavy construction components, supplies estimates for construction at both fossil and nuclear power plants. components required for closed-loop conversion would be non-safety related. Construction Cost Difference According to RSMeans (see left), construction cost of a similarly sized industrial building at a fossil plant is between 2 to 3 times less than at a nuclear plant, depending on the defined safety class of the industrial building. The increased cost for construction at nuclear facilities is due to heightened security and regulatory requirements compared to fossil facilities. The impact of these requirements is ubiquitous throughout any construction project and includes, but is not limited to, the following additional time and cost factors: • Obtaining security clearances for construction workers • Inspection of workers and materials entering the site • Frequent personnel safety and procedural training • Extensive documentation and inspection of construction activities • Stringent vibration limitations on work near an operating reactor Sample Costs Sample cost estimates for two fossil sites are provided in the tabulation below for comparison. The costs vary based on the existing equipment, cooling tower selection, and environmental requirements at each site. If every fossil unit currently using once-through cooling (approximately 300,000 MW) were required to retrofit and install new cooling towers, the initial cost is estimated at $66 billion, based on the average cost per MW of the sample fossil estimates provided. Additionally, the loss of megawatts to power the cooling towers (based on a $50/MW-hr spot price) represents a further cost of $7.2 Sample Fossil Cost Estimates, $ in Millions Plant Name Capital Cost for Cooling Towers Replacement Power Costs due to Downtime Total Initial Cost: Capital and Lost Generation Outage Duration (Weeks) Number of Units Total Plant Output Range (Megawatts) Average Yearly Loss in Megawatts to Operate with Cooling Towers Plant A 59.2 8.8 68.0 3 2 450-490 9.7 Plant B 53.6 14.8 68.4 12 3 140-160 24.4 Plants A and B are fossil plants for which ENERCON has developed detailed cost estimates and engineering analyses for conversion to closed-loop cooling. Due to confidentiality requirements, the plant names and specific plant outputs have not been included. Financial Impacts of EPA’s Proposed Section 316(b) Regulations on US Power Plants 10 Enercon Services, Inc. 500 TownPark Lane, Suite 275 Kennesaw, GA 30144 billion annually from lost revenue. The above fossil industry cost estimates were evaluated similarly to the nuclear assessments. As more detailed closed-loop conversion cost assessments are performed, the ability to accurately forecast total fleet conversion costs will increase. Conclusions Cooling towers present a number of environmental issues that will likely require exemptions from federal, state, and local permitting requirements. It is unclear whether these exemptions would be granted and, if they were, at what cost. Due to permitting uncertainty and variability in construction and operation of closed-loop cooling, conversion cost estimates provided should be used as an average appraisal of the known costs, with the potential to vary based on site-specific analysis. The Phase II regulation could require plants with once-through cooling (totaling more than 360,000 MW) to retrofit to closed-loop cooling via cooling towers. While site specific evaluations are required, conversion of the entire once-through cooling fleet would have a total initial cost (capital and lost generation) of approximately $149 billion, based on the average cost per MW of the sample estimates provided. Additionally, ongoing parasitic and operations and maintenance costs from operation of closed-loop cooling would cost approximately $8 billion annually. 1 ENERCON, “Feasibility Study for Installation of Cooling Towers at San Onofre Nuclear Generating Station,” 2009. 2 ENERCON, “Engineering Feasibility and Costs of Conversion of Indian Point Units 2 and 3 to a Closed-Loop Condenser Cooling Water Configuration,” 2010. 3 Southern Company, SNCR00024, “Feasibility of Air-Cooled Condenser Cooling System for the Standardized AP1000 Nuclear Plant,” 2009. 4 SPX Cooling Technologies 5 ENERCON, “Diablo Canyon Power Plant – Cooling Tower Feasibility Study,” 2009.