Update/Status on Permitting Challenges Facing New Coal Plant Construction

© 2004 Zephyr Environmental Corporation

Update/Status on Permitting Challenges Facing Update/Status on Permitting Challenges Facing New Coal Plant ConstructionNew Coal Plant Construction

Presented to:American Public Power Association

APPA New Generation WorkshopPortland, Oregon

August 1 and 2, 2007

Presented by:

Jennifer Sharp Seinfeld, P.E.

PrincipalZephyr Environmental Corporation


•Construction of New Coal-Fired Generation Issues

–Overview–Costs–Carbon/Climate Change–Mercury–BACT–Modeling

•Status of Recent Projects

Outline of PresentationOutline of PresentationOutline of PresentationOutline of Presentation


Where have we come from?Where have we come from?Where have we come from?Where have we come from?

Ref: epa.gov/air/airtrends/econ-emissions.html

…and electrical demand keeps growing…


The “Old” News HeadlinesThe “Old” News HeadlinesThe “Old” News HeadlinesThe “Old” News Headlines

• Coal’s Bright Future(Time, Jun 2006)

• TXU Faces a Texas Coal Rush (Fortune, Feb 2007)

• Midwest Has ‘Coal Rush’, Seeing No Alternative(Washington Post, Mar 2007)

• Coal? Yes, Coal!(Business Week, May 2007)


The New News Headlines…The New News Headlines…The New News Headlines…The New News Headlines…

• Burning Issue – Environmentalists, Utility at Odds over Coal

Post and Courier, ~July 17, 2007

• Coal Doubters Block New Wave of Power Plants

(Wall Street Journal, July 25, 2007)

• U.S. Senate Majority Leader Harry Reid Tells Four Companies No Coal Power in Nevada

(Washington Post, July 26, 2007)


Why the shift? Why the shift? Why the shift? Why the shift?

• Primarily– Costs

– CO2/Climate Change Issues

• In addition,– IGCC?– Mercury– BACT issues– Modeling


CostsCostsCostsCosts

• In February 2007 APPA study concluded that capital costs for new generation were increasing rapidly

• Duke Energy Carolina Cliffside Project– In testimony before NC Utilities Commission

announced a 50% increase in expected project cost (from 18 mon earlier) due to price escalation in raw materials and increased demand for coal plants

– NC Utilities Commission denied authorization for second unit based on cost


Costs (cont)Costs (cont)Costs (cont)Costs (cont)

• More recently (UARG study):– Price increases of basic materials (steel,

concrete, copper wire/cable, etc.)– Limited suppliers (less bids)– Shortage of equipment (e.g., cranes)– Restricted labor pool

• Cost and schedule pressures will be greater for small generators


COCO22 – Role in Permitting – Role in PermittingCOCO22 – Role in Permitting – Role in Permitting

• April 3, 2007 Supreme Court Decision: EPA has authority to regulate GHG

• So exactly what does this mean for CO2 in new coal plant permit applications? – Collateral impacts in BACT evaluation? – Carbon reduction commitment

• EPA is evaluating its options– New Source Performance Standards?


GHG/Climate ChangeGHG/Climate ChangeGHG/Climate ChangeGHG/Climate Change

• Currently, GHG emissions almost always No. 1 issue in opposition to new construction

• Carbon reductions often part of settlement agreements

• Climate change concerns a huge issue for public service commissions, utility management in considering new plants

• The reality is that GHG/CO2/climate change issues must be addressed in the permitting process


Cost Issues and Climate Change Cost Issues and Climate Change Concerns Sometimes ConflictConcerns Sometimes Conflict

Cost Issues and Climate Change Cost Issues and Climate Change Concerns Sometimes ConflictConcerns Sometimes Conflict

Hearing judge of Minnesota PUC recommended Excelsior Energy’s proposed power purchase agreement be denied because costs would increase by $1.1 billion ($50/MW-hr) to capture 30% CO2 emissions and convey by pipeline to deep geologic storage at the proposed Excelsior Energy Mesaba IGCC plant


GHG State and Regional Initiatives GHG State and Regional Initiatives Continue to Gain SupportContinue to Gain Support

GHG State and Regional Initiatives GHG State and Regional Initiatives Continue to Gain SupportContinue to Gain Support

• Washington ESSB 6001– “1100 lb CO2/MWhr” standard– 1990 CO2 levels by 2020

• California AB 32– Goal: reduce GHG to 1990 levels (~25%) by 2020– Affects multiple sectors– Restricts ‘dirty power’ coming into the state

• Regional Greenhouse Gas Initiative (RGGI)– GHG cap-and-trade program for EGUs in CT, DE, ME,

NH, NJ, NY, VT, and MD– Begins Jan 1, 2009

• Other State/Regional Programs– Lake Michigan Air Directors Consortium (LADCO) – IL,

IN, MI, OH, and WI


IGCC for PC Plants?IGCC for PC Plants?IGCC for PC Plants?IGCC for PC Plants?

• Dec 2005 EPA letter (“…redefines the source..?”)

• However, on a practical level, the state decides whether BACT includes IGCC – Michigan, Kentucky, New Mexico –

required to be considered– Often required to be considered in

alternatives analysis• IGCC with and without CCS – a

distinction not understood by all


Future IGCC ProjectsFuture IGCC ProjectsFuture IGCC ProjectsFuture IGCC Projects

• Two Operating Plants (Wabash River in IN and TECO in FL)

• Several other applications pending– Pacific Mountain Energy Center – WA (project

being reviewed)– Christian Co. Generation - IL

• Permit issued 6/07• Sierra Club appealed on CO2 issues

– Duke Energy Indiana – IN– AEP Mountaineer – WV (stalled Jan 2007 due to

rising construction costs)– AEP Great Bend – OH (permit under appeal;

arguments scheduled for Oct 2007)– OUC Southern Power Co – FL (permitted 12/06)– Xcel Energy – CO (permit to be filed later in 2007)


Mercury Requirements for New Mercury Requirements for New ConstructionConstruction

Mercury Requirements for New Mercury Requirements for New ConstructionConstruction

• Clean Air Mercury Rule (CAMR)– 40 CFR 60, Subpart HHHH

• BACT for Mercury– Regulated as a PSD pollutant– CAMR or state mercury requirements

satisfy BACT(?)

• Mercury impacts on Class I Areas?– Requested for FP&L project – Possible requirement for ecological risk

assessment


More Stringent State Mercury More Stringent State Mercury RequirementsRequirements

More Stringent State Mercury More Stringent State Mercury RequirementsRequirements

Regulations may be/close to being final in NY, OR, MA and GA

Map courtesy of ADA-ES, Inc.


BACT Issues - % RemovalBACT Issues - % RemovalBACT Issues - % RemovalBACT Issues - % Removal

• Should % removal be required as BACT?

• Case-by-case determination; precedent for requirement

• EPA argument – Ensures maximum control at all times

– Unrealistic to base SO2 emissions on continuous use of highest sulfur fuel

• Much less flexibility for operation


BACT Issues – BACT Issues – Start-up/Shutdown/Malfunction (SSM)Start-up/Shutdown/Malfunction (SSM)

BACT Issues – BACT Issues – Start-up/Shutdown/Malfunction (SSM)Start-up/Shutdown/Malfunction (SSM)

• Operation of many air pollution control equipment systems infeasible during SSM– Limits as permit conditions?– Modeled for NAAQS compliance?


BACT: PMBACT: PM10 10 CondensablesCondensablesBACT: PMBACT: PM10 10 CondensablesCondensables

• Typically PM10 emissions - ~ 50% condensibles

• Continues to be inconsistencies in permitting decisions

• Measurement method is critical; some agencies allow for alternative test method


Modeling Issues – Class IIModeling Issues – Class IIModeling Issues – Class IIModeling Issues – Class II

• PM modeling requirements – PM2.5 24-hr standard lowered

– PM10 annual standard revoked

• Fugitive sources (e.g., road dust) can cause impact problems

• Ozone and PM2.5 NAAQS modeling


Modeling Issues – Class IModeling Issues – Class IModeling Issues – Class IModeling Issues – Class I

• Increasing distance (300 km?) to Class I areas requiring FLM review

• Modeling (e.g., Calpuff) is more complicated, time-consuming

• Can add significant delays• New guidance was expected early

2007, but is not available yet


Class I Modeling RequirementsClass I Modeling RequirementsClass I Modeling RequirementsClass I Modeling Requirements


Settlement Agreement SuccessSettlement Agreement SuccessSettlement Agreement SuccessSettlement Agreement Success

• Public Service Commission of Colorado – Camanche 3– DSM programs– Renewable commitments– $250,000 to Pueblo schools for

school bus emission reduction


The TXU storyThe TXU storyThe TXU storyThe TXU story

• Applications filed for 11 new coal plants in April, 2006

• TX Governor Perry issued an Executive Order to fast-track permit applications

• Consolidated hearings (rather than individual ones) scheduled on emission calculations, BACT - topics that are not site-specific BACT; unique issues (e.g., modeling results) to have separate hearing

• MANY objected!


The TXU Story (ending)The TXU Story (ending)The TXU Story (ending)The TXU Story (ending)

• In March, 2007, TXU abandoned plans for 8 of the 11 plants and further agreed to:– Back federal legislation requiring CO2

reductions through a cap-and-trade system

– Double spending (to $80 million/yr) to promote energy efficiency

• (Be careful how you use your political connections!)


The Florida StoryThe Florida StoryThe Florida StoryThe Florida Story

• FL Power & Light Glades project– 1960 MW coal plant proposed– 80 km from the Everglades– Project killed in mid-July citing uncertain future costs for

CO2 capture• Taylor Energy Center (Florida Municipal Power

Agency, JEA, City of Tallahassee, and Reedy Creek Improvement District)– 800 MW coal plant– “pulled the plug” on the project July 3

• Seminole– 750 MW unit– In July, FL Department of Environmental Protection

rescinded permits


Indian River IGCC, DEIndian River IGCC, DEIndian River IGCC, DEIndian River IGCC, DE

• NRG Energy proposed a new 600 MW IGCC plant at existing Indian River Generating Station, DE

• Opportunity to sell power to Delmarva Power

• In May 2007, DE PSC approved Bluewater Wind’s proposed offshore wind plant and ‘ordered’ Delmarva to purchase its power, effectively derailing the NRG IGCC project


Concluding ThoughtsConcluding ThoughtsConcluding ThoughtsConcluding Thoughts

• Increased construction costs are a reality• There have been some successes (e.g.,

through use of settlement agreements, and CPS, City Utilities of Springfield, etc.)

• Biggest issues/concern is carbon/climate change

• PCs are increasingly difficult to permit, perhaps impossible in some locations

• Even approval of an IGCC is not a given due to costs and CCS uncertainties

• But demand for energy is not going away…


Contact InformationContact Information Contact InformationContact Information

Jennifer Sharp Seinfeld, P.E.Zephyr Environmental Corporation

10420 Little Patuxent Parkway, Suite 320

Columbia, Maryland 21044

410-312-7915

[email protected]

visit us at www.ZephyrEnv.com

And www.HazMatAcademy

Documents

Update/Status on Permitting Challenges Facing New Coal Plant Construction