LOOMING Flue-gas desulfurization is beginning to move into the market as SCR installations are coming to an end. (Photo courtesy of Babcock Power Environmental Inc.)
Before the Enron and WorldCom debacles and subsequent telecom meltdown, the outlook for new powerplant construction had engineering and construction firms juiced about their future. But scandal, a slumping economy and prolonged anxiety about war in Iraq have short-circuited any near-term hope for sector expansion. If there is a silver lining for power engineers and contractors, it's in the pollution-control retrofit market. One consultant predicts the U.S. flue-gas desulfurization market will top $20 billion over the next decade. That may be high, but even the most bearish analysts peg the market at $13 billion to $14 billion.
As long as powerplants burn coal, there will be a market for scrubbers to remove sulfur dioxide (SO2 ) and other emissions controls. The U.S. Environmental Protection Agency reports that coal will continue as the predominant energy source for the next 20 years. Coal use will continue to grow, although not at the same rate as natural gas, says Jeffrey Holmstead, EPA's assistant administrator for air and radiation. New powerplants are more likely to be fueled by cheaper, cleaner burning natural gas, and renewables, he says.
Coal currently fuels about 50% of U.S. generation. President Bush's pollution control policy, the so-called Clear Skies proposal, shows coal will still be smoking through 2020, but will slip a few percentage points as new gas capacity comes on line.
Clear Skies would fit best available control technology (BACT) on about 85% of coal burning capacity by 2020. As the program's emissions caps phase in, bigger powerplants would install scrubbers and other controls to limit emissions of oxides of nitrogen (NOX) and other pollutants in the first few years. By 2020 almost every plant bigger than 200 Mw will have controls, he says. "If you're looking at (SO2 ) or NOx, you're going to put in the most expensive, but most efficient, technology at the largest emitter," says William Spangle, vice president for services at the Washington Group Inc.'s Princeton, N.J., power division.
Clear Skies, reintroduced in the House and Senate in late February, would reduce emissions of nitrogen oxides, sulfur dioxide and mercury using a market-based, cap-and-trade approach. Holmstead says EPA is "optimistic" that Congress will pass a multipollutant bill "this year or early next year."
Clear Skies' opponentsboth Democrats and some moderate Republicansare also pushing for curbs on carbon dioxide. One such measure is sponsored by Sen. James M. Jeffords (I-Vt.), the senior minority member on the Environment and Public Works Committee. He calls the Clear Skies plan "corporate regulatory relief." Jeffords cites evidence that "more people are dying from powerplant pollution every year than from homicides or drunk-driving accidents."
Many environmental groups also believe Clear Skies does not go far enough. Clear Skies "is not a realistic option," says David McIntosh, an attorney specializing in clean air issues for the Natural Resources Defense Council, Washington, D.C. Sooner or later, carbon dioxide emissions will be regulated, NRDC says. The message to powerplant owners and operators: Negotiating emissions caps will be more productive than spending time and money to lobby against regulation.
EPA's order for states to execute their State Implementation Plans (SIP) accounts for "the vast majority of demand for [selective catalytic reduction technology]," says Carl Weilert, air-pollution control manager for Burns & McDonnell, Kansas City. SCR technology injects ammonia into flue gas, and passes through a catalyst where NOx and ammonia react to form nitrogen and water vapor. "There's a lot of SCRs under construction," probably more than 150, he estimates. Existing compliance deadlines are May 2004, but Clear Skies would extend the SCR boom because the bill calls for further NOx reductions beyond 2008, notes Robert Giglio, director of Livingston, N.J.-based Foster Wheeler Corp.'s research center.
"Costs have been much higher in general than everybody expected, including EPA," says Weilert. Actual costs have been about double EPA's estimate of $60 to $80 per kilowatt of generation at the source, he says. "It's actually more difficult to install on an existing plant than it was expected to be because of the place the SCR has to reside in the gas-flow path." A contributing factor has been a tight labor market that resulted from the requirement to complete so much construction in a short period (see bottom story).
Now, the flue-gas desulfurization (FGD) market also is growing, says Tony Licata, environmental systems customer relations director at Babcock Borsig Power Inc., Worcester, Mass. In contrast to SCRs, scrubber construction costs have fallen. FGD equipment installed in the mid-1990s to comply with the Clean Air Act Amendments of 1990 cost more than $200 per kw of installed generation, says Weilert. Average FGD costs now run in the range of $150 to $200 per kw. "Technology developments have made them less expensive," he says. Click here to view chart
"There's a very substantial market there, but it will be less than EPA has projected," says Licata. He sees a $13-billion FGD market, covering 80,000 to 90,000 Mw, in contrast to EPA's estimate of 160,000 Mw costing $25 billion. That's because uneconomic units will be retired; others can comply by switching fuels, says Licata.
In 2010, under the existing clean air amendments, sulfur emission allowances will be cut to 46% of today's standard, doubling the installed scrubber base, says Weilert. Clear Skies would accelerate that. "If the Clear Skies Act were passed today, utilities would have incentives to install FGD at the earliest possible time because of the way allowances will be structured in 2010," he says. With early reduction credits, "Units burning Eastern bituminous would have the most incentive to scrub and scrub early," he says.
Burns & McDonnell is expecting air-pollution control to be its largest energy-related business for the near term because of the "severe overbuilding in [gas-fired] combined-cycle plants," says Weilert.
But the fluid state of emissions regulations is frustrating. "Ambiguity is driving the market crazy," says Michael Perry, Black & Veatch senior vice president and director of air quality programs. Owners are demanding regulatory certainty before proceeding with huge investments. Many players won't enter the market until new regulations are passed.
"States are getting tired of waiting for the feds to come up with a law," Perry warns. Massachusetts has ordered its older coal-burners to clean up or shut down. This could be problematic for several utilities with weak balance sheets, says Chris Larson, vice president of business development for the Stone & Webster power division of the Shaw Group, Baton Rouge. On the other hand, North Carolina's aggressive stance pushed Duke Power to hire a joint venture of Stone & Webster and technology vendor Alstom Inc. to backfit 12 units at six plants. The 10-year, $1-billion engineer-procure-construct program is now in preliminary design, with work scheduled to start by year-end, says Larson.
Industrial plants contribute fewer emissions than powerplants, and many rely on emission credit trading rather than capital improvements, says Paul Eisen, Northeast regional manager of BE&K/Terranext, an environmental subsidiary of BE&K, Birmingham, Ala.
Emission controls now focus separately on offending emissions. But construction is expected to begin next month on a commercial-scale plant to demonstrate the feasibility of multipollutant control.
Engineering is 60% complete on an Electro-Catalytic Oxidation (ECO) unit developed by Powerspan Corp., New Durham, N.H., to treat 50 Mw-equivalent of flue gas in a four-stage process from a 156-Mw generating unit at FirstEnergy Corp.'s R.E. Burger powerplant near Shadyside, Ohio. Market partner Wheelabrator Air Pollution Control Inc., Pittsburgh, is contractor for engineering, procurement and construction of the $17.2-million Burger demonstration unit.
ECO oxidizes pollutants using a high-voltage discharge in flue gas exiting an elecrostatic precipitator and collects byproduct for fertilizer. A pilot plant reduced NOx by 90% based on typical inlet conditions; (SO2 ) by 98%; mercury by 80 to 90%; and PM2.5, particulate matter, by more than 95%, says Powerspan spokeswoman Stephanie Procopis.
If construction starts as scheduled next monthit has been repeatedly delayedthe demonstration could be operational by year's end, Procopis says. Electricity-generating companies of Cinergy Corp., Allegheny Energy Supply, AmerenUE and Ontario Power Generation are members of the ECO Development Partner Program that will closely watch the results. Some are preparing to launch full-scale installations, she says. With a capital cost of $150 to $200 per kw of installed generation, ECO costs the same as Burns & McDonnell's estimate of scrubber costs, but does the jobs of both scrubber and SCR while also removing mercury and particulates.
Retrofit Programs Challenge Ingenuity
LG&E Corp.'s program to remove oxides of nitrogen is the Louisville, Ky.-based utility's largest single investment ever, says Scott Straight, NOx projects director. Begun in 1999, LG&E is performing combustion modifications on 6,000 Mw of capacity and selective catalytic reduction retrofits on 4,000 Mw more at a total cost exceeding $600 million.
Under the best conditions, adding new equipment to an existing plant is a challenge. It requires inserting the equipment into space that already is engineered for maximum efficiency, estimating cost and schedule often without accurate as-built drawings and making the new equipment work smoothly with processes that were designed on the assumption that all operating conditions were known. Work must be done with minimal disruption of the plant's ongoing production.
Nationwide, retrofitting powerplants with SCR technology to comply with the Clean Air Act Amendments of 1990 has proven to be especially costly and challenging. "Sites tended to be developed very tightly to begin with," says James E. Templeton, principal of engineering consultancy Aradia Management LLC, Southbury, Conn. The locations of the boiler and stack are set, and an electrostatic precipitator or baghouse may have been added since the plant was built. "Typically...since you can't spread out, you end up going up," he says.
Shoehorning the SCR into the site is only one of the challenges. At LG&E's Mill Creek station in Louisville, electric transmission lines crossing the plant above the location where the SCR was to be erected had to be relocated at a cost of "millions of dollars" to make room for the cranes, says Straight. At the Ghent powerplant in Ghent, Ky., there was sufficient space for the SCR, but not for the cranes to set it. The contractor set piles for the crane pad on a riverbank, then restored it after completion.
LG&E's contractor for engineering, procurement and construction of its SCR program is Alliance Contractor, a joint venture of Duke/Fluor Daniel, Charlotte, N.C., and Babcock Power Inc., Worcester, Mass. Alliance next month will start up 450-Mw D.B. Wilson Unit 1 in Island, Ky., the fourth of nine LG&E units in the program.
Alliance Project Director Jerry Bowen says the SCR site at Wilson was congested. One of the erection subcontractor's two cranes had to operate a 220-ft main boom and 120-ft luffer in a 70-ft-wide corridor between the boiler building and the coal conveyor.
Kelley McGill, site manager for erection sub L-Con Constructors, a subsidiary of Little Rock, Ark.-based Lexicon Inc., says this was his company's first SCR project, and its challenges sparked innovative solutions. One was a runway system to convey ductwork through the sides of the building instead of drifting pieces with rigging inside. Bowen says substituting steel grating for scaffold inside the SCR during construction saved $100,000.