
                                       

                                  MEMORANDUM

Tetra Tech, Inc.
10306 Eaton Place, Suite 340
Fairfax, VA 22030
phone	703-385-6000
fax	703-385-6007

TO:			Paul Shriner and Jan Matuszko, EPA
FROM:		John Sunda (SAIC) and Kelly Meadows
DATE: 		March 10, 2010

SUBJECT:		Preliminary Estimate of Costs for Combustion Turbines Installed at Power Plants to Generate Electricity to Replace Closed Cycle Cooling Energy Penalty

This memo presents preliminary cost estimates for combustion turbines installed at power plants.  The turbines used in the analysis are sized to replace the power plant energy penalty associated with converting a once-through cooling system to a closed-cycle one.

Table 1 below presents the estimated total energy penalty for different types of power plants. The parasitic energy penalty is based on a condenser ∆T of 15 [o]F and uses the parasitic energy factor of 0.0000237 MW/gpm used in EPA cost estimates.

Table 1. Energy Penalty Estimates


Table 2 presents performance and costs assumptions for a 160 MW conventional combustion turbine that are used by EIA in their modeling for the 2009 Annual Energy Outlook.


Table 2. EIA Model Technology Performance and Cost Assumptions for Conventional Combustion Turbines
                                   Data Item
                                     Units
                                     Value
Size
MW
160
Total Overnight Cost in 2008
2007 $/Kw
$670
Variable O&M
Million $/Kwh
$3.57
Fixed O&M
$
$12.11
Heat Rate
BTU/Kwh
10,810
Source: EIA 2009

Two other sources cited capital cost values as high as roughly $1,000/Kw for smaller combustion turbines in the 15 to 40 MW range. Dollar per Kw costs decrease with increasing generating unit size and since the units for this analysis will not be as large as the one cited in Table 2, a midpoint value between $670 and $1,000/Kw of $850/Kw was selected for the combustion turbine capital cost estimate.  

Capital Costs

Table 3 provides combustion turbine generating capacity and capital costs for an example 1,000 MW plant for each plant type. The capital costs for an "average" difficulty closed cycle cooling retrofit are also shown for comparison.

Table 3. Capital Costs for Energy Penalty Combustion Turbines and Closed Cycle Cooling
                                       

O&M Costs and Revenue

O&M costs and revenue of the combustion turbine turbines are provided as a rough measure of the economic viability of this as an option to offset the energy penalty. These costs will be highly dependent on the capacity utilization rate (CUR), the fuel costs, and the wholesale price of electricity sold which are difficult to predict. The costs presented in Table 4 are rough estimates that are based on data shown in Table 2 and the following assumptions:

   * CUR is 15%;
   * Fuel cost of natural gas is $5.00/1,000 cf based on November 2009 EIA Electric Power Price;
   * Heat content of Natural gas is 1,028,000 BTU/cf
   * Average peak wholesale power price of $81/MWh

Of particular importance to these costs are the costs of fuel and the wholesale cost of electricity during peak periods.  The fuel cost is calculated to be $55.56 /MWh based on the above assumptions. The assumed average peak wholesale price of $81 is a BPJ value based on the 95[th] percentile value from a table of the EIA 2009 daily "Peak Wholesale Day Ahead Prices for the NEPOOL (New England) Hub.  It is not clear how accurate this peaking power price is, so this value may require adjustment to get a more accurate measure.  The revenue shown is simply the sales minus the fuel and O&M costs.  The relatively high fuel cost is the reason combustion turbines are generally reserved for peak power demand when the wholesale cost of power rises well above the combined fuel and variable O&M cost. In each of these example calculations the combustion turbine capital cost is 51 times as large as estimated annual revenue.

Table 4. O&M and Revenue Estimates for Natural Gas Combustion Turbines



References

EIA. Energy Information Administration/Assumptions to the Annual Energy Outlook 2009. Table 8.2. Cost and Performance Characteristics of New Central Station Electricity Generating Technologies. from EIA website: http://www.eia.doe.gov/oiaf/aeo/overview/electricity.html

