
                                       

                                  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: 		April 22, 2010

SUBJECT:		Comparison of Cooling Tower Retrofit Costs to the Cost of New and Repowered Power Plants

EPA requested that Tt and SAIC compare the cost of retrofitting a facility with closed-cycle cooling to the cost of constructing a new power plant and to the cost to repower a plant.  This memo describes the results of the research.

Capital Costs for a New Plant

Table 1 presents a comparison of the capital costs of retrofitting a recirculating cooling tower at an existing power plant to the costs of building a new greenfield power plant with the same generating capacity.  A plant capacity of 1,000 MW was chosen as the size for both the existing and new plant. 

Cooling tower retrofit costs are based on cost factors derived for EPA 316(b) compliance costs, which are based on the factors used in the EPRI Tower Calculation Worksheet.  Costs for "average" difficulty and "difficult" retrofits are presented, since the actual costs will vary depending on existing plant site conditions.  These cost factors use condenser flow rates as the basis, which have been estimated assuming a condenser delta T of 15[o]F and typical heat rates of 9,300 BTU/Kwh (plant efficiency = 37%) for an existing coal plant and 10,200 BTU/Kwh (plant efficiency = 33%) for an existing nuclear plant.

The new plant construction capital costs are based on cost assumptions used by EIA in developing economic data in their Annual Energy Outlook 2009.  These are overnight costs and do not include escalation or financing costs.  Other sources suggest that the estimates for construction costs of new nuclear power plants have increased in recent years and are very uncertain, with costs possibly being greater than those used by EIA.  A 2008 report stated that companies that were planning new nuclear units indicated that the total costs (including escalation and financing costs) would be in the range of $5,500/kW to $8,100/kW (Synapse 2008a).  To capture these higher costs, the "advanced nuclear  -  high" costs were added to Table 1 to reflect these higher estimates using the upper end of the range of costs that Florida Power & Light (FPL) projected in October 2007 for two new plants (Synapse 2008).  Interest and escalation may add between 35% and 75% to the costs.

Other sources indicate that the estimated costs of new coal plants have been increasing recently as well.  A 2008 report states that the estimated costs of building new coal plants has reached $3,500 per kW, not including financing costs (Synapse 2008b).  These cost increases are mostly due to a significant increase in the worldwide demand for power plant design and construction resources, commodities, and equipment.  This report was written in mid 2008, a time when commodity prices had increased rapidly and reached a peak and have subsequently dropped to lower levels due to the recent worldwide economic downturn.  However, high construction costs remain as a concern Table 2 provides some recent examples of capital cost estimates for both nuclear and coal-fired plants.  Two of the coal plants were cancelled in late 2008 and 2009 due to concerns about increased costs and greenhouse gas emissions.  Table 2 also shows that the estimated cost of the cooling tower and basin component are a small portion (<=2%) of total costs.  This is based on the assumption that cooling tower and basin costs are roughly $80/gpm (SAIC 2010).

In summary (as shown in Table 1), costs for construction of a conventional fossil fuel plant can be nearly 14 times higher than the cost to retrofit a closed-cycle cooling system at a comparable facility.  Costs for a new combined cycle plant can be nearly 7 times higher, while the costs for a new nuclear facility can be as much as 20 times higher.

Capital Costs for a Repowered Plant

While the costs in Table 1 reflect greenfield costs for a new plant, they can be viewed as indicative of the magnitude of costs for a full repowering at coal and combined cycle power plants as well.  The generating capacities of new repowered plants will in most cases be greater than those of the existing plants.  In the case of repowering of an existing steam plant to combined cycle, the repowered capacity could be as much as 200% greater than the existing plant, while producing the same amount of waste heat and requiring the same amount of cooling water as before.

On a non-incremental dollar/MW basis, fossil-fuel repowering projects can typically be implemented for about 70-80% of the cost of a greenfield plant in dollars/MW, because they are able to utilize existing infrastructure and steam turbines (ALSTOM Power Inc. 2003).  

Other Cost Considerations

There are many other cost considerations, in addition to differences in capital costs, that factor into the decision to construct new generating units either onsite or at a new location.  The decision to construct new generating units requires a detailed economic evaluation of all of these factors.  These cost factors include:
   * Plant efficiency and energy penalty - New power generating units can be designed to operate more efficiently than existing units that are retrofitted. Thus, new generating units will use less fuel and cost less to operate.  This increased efficiency results from the use of state-of-the-art power generation and cooling technology that is more efficient and designed for optimized performance. While the use of a recirculating cooling tower with the new unit may still experience some amount of both parasitic energy requirements and turbine efficiency reductions compared to a once-through system, there is a greater opportunity to design the system to optimize system performance plus in most cases the increased generating unit efficiency will be much greater than the energy penalty.
   * Changes in plant dispatch schedule and capacity utilization - A more cost efficient plant will tend to be dispatched more frequently resulting in a higher utilization rate affecting long term revenue estimates.
   * Fuel type  -  Changes in fuel type can also affect operating costs, dispatch rate, pollution emissions, and potential costs associated with carbon emissions.
   * Permitting  -  Existing generating units may require only minor modification to existing permits. New units may undergo an extensive, lengthy, and potentially restrictive permitting process.
   * Downtime costs  -  Offsite new generating units will have no downtime costs.  Onsite new generating units will result in minimal downtime, if any, depending on the need to tie into existing infrastructure such as water intakes or power distribution.
   * Timeframe  -  Cooling tower retrofits can be accomplished within a period of several years. New generating units require a long lead time of several years to plan plus up to seven years to obtain required permits.
   * Service life  -  New generating units will tend to have a much longer service life than retrofitted existing generating units. O&M costs of generating units tend to increase over time. 
   * New generating unit tower costs  -  New units with recirculating cooling towers will completely avoid retrofit costs and may have lower capital costs than new units with once-through cooling systems. See SAIC memo: "Estimation of Net Difference in Capital and O&M Costs for Once-through Versus Closed Cycle Cooling for New Generating Units at Existing Power Plants and for Repowering of Existing Generating Units" March 5, 2010.
   * Flue gas disposal - New and repowered units requiring air pollution equipment upgrades where natural draft cooling towers (NDCT) are an available option can save costs of a new stack by disposing of flue gas through the NDCT.  See SAIC memo: "Technology Analysis for the Discharge of Power Plant Combustion Flue Gas Through Natural Draft Cooling Towers." March 12, 2010.
   * Future environmental requirements and regulations  -  Uncertainty about future regulation and associated costs regarding emission of carbon dioxide is clouding the current decision making process. Once these regulations are enacted, the associated costs and credits will factor in as well. 




References

ALSTOM Power Inc. Schretter, J. Williams, S. Brandett, J.  Repowering: A Financially Compelling Method to Improve Existing Assets. Winter 2003.
http://beaconenergy.com/html/JSPF%20Repower%20Winter03%20article.pdf 

EIA. Assumptions to the Annual Energy Outlook 2009. Table 8-2 Costs and Performance Characteristics of New Central station Electricity Generation technologies. 2009.

Synapse Energy Economics Inc. David Schlissel and Bruce Biewald. Nuclear Power Plant - Construction Costs. July 2008a.


Synapse Energy Economics Inc. David Schlissel, Allison Smith and Rachel Wilson. Coal-Fired Power Plant - Construction Costs. July 2008b.

AMP. News Release "AMP ANNOUNCES LIKELY CONVERSION OF AMPGS PROJECT" November 25, 2009. http://media.cleveland.com/business_impact/other/Project%20conversion%20release.pdf

Journal Sentinel. Milwaukee Wisconsin. PSC rejects Alliant Energy's proposed coal plant. Nov. 11, 2008
http://www.jsonline.com/business/34277094.html

Miami Herald "FPL suspends long-term projects, hints at job cuts" January 15, 2010.
http://www.miamiherald.com/2010/01/14/1426344/fpl-suspends-long-term-projects.html 

Charlotte Business Journal. "Cost of Duke Energy's Cliffside project holding steady" March 19, 2010.

iStockAnalyst. "Federal loan guarantees encourages Levy County, Fla., plant construction" February 18, 2010.
http://www.istockanalyst.com/article/viewiStockNews/articleid/3880743
 
SAIC memo: "Estimation of Net Difference in Capital and O&M Costs for Once-through Versus Closed Cycle Cooling for New Generating Units at Existing Power Plants and for Repowering of Existing Generating Units" March 5, 2010.

 Table 1. Comparison of the Capital Costs for Closed-Cycle Cooling Tower Retrofit at an Existing Plant to the Capital Cost of a New Greenfield Power Plant of a Similar Size
                                       
                                      Old
                                      New
                                      Old
                                      New
Plant Type
Conventional Coal
Scrubbed New Coal[3]
Conventional Combined Cycle[3]
Conventional Nuclear
Advanced Nuclear (Low)[3]
Advanced Nuclear (High)[4]
Plant Capacity (MW)
1000
1000
1000
1000
1000
1000
Unit Cooling Flow1 (gpm/MW)
600


910


Existing Condenser Flow (gpm)
600,000


910,000


"Average" Difficulty Cooling Tower Retrofit Costs2 (million $)
$150


$228


"Difficult" Cooling Tower Retrofit Costs2 (million $)
$234


$355


Overnight Total Cost Factor ($2007/kw)

2,058
962

3,318
4,540
New Plant Overnight Capital Costs (million $)

$2,058
$962

$3,318
$4,540
All costs are in 2007 dollars.
1 Based on a delta T of 15°F and a heat rate of 9300 BTU/Kwh for coal and 10,200 BTU/Kwh for nuclear.
2 Based on EPRI Cooling Tower Retrofit Estimates.
3 Based on data in Table 8-2 of EIA Assumptions to Annual Energy Outlook 2009.
4 Based on FPL estimate in 2008 Synapse Report.


Table 2. Recent Capital Cost Estimates
                               Company and Plant
                                 Type of Unit
                                       
                                   Capacity
                             Total Plant Costs[1]
                 Wet Cooling Tower Costs as % of Project Total
               Florida Power and Light Turkey Point, Florida[1]
                                    Nuclear
                                       
                               2200 MW (2 units)
                               $12.1 billion to
                                $17.8 billion.
                                    <1%
                    Progress Energy Levy County, Florida[2]
                                    Nuclear
                               2200 MW (2 units)
     $10.5 billion with financing costs the total becomes $13-14 billion.
                                    <1%
                   Duke Energy Cliffside, North Carolina[3]
                             Coal - supercritical
                                    800 MW
                                 $1.8 billion
                                      2%
                        AMP-Ohio Meigs County, Ohio[4]
                            Coal  -  supercritical
                                    960 MW
                           $3 billion plus financing
                                    <2%
                       WPL Nelson Dewey 3, Wisconsin[5]
                   Coal and Biomass - Circulating Fluid Bed
                                    300 MW
                          $1.3 billion plus financing
                                    <1%
Costs are based on 2007/2008 estimates.
[1] FPL has suspended all long term capital projects for the next 5 years due to rejection of $1.3 billion rate increase in January 2010 but continue to seek nuclear licenses.
[2]   Plant construction originally scheduled to begin construction in 2010, will be delayed 20 to 36 months due to economic and regulatory problems including rejection of $500 million rate hike.
[3]  Plant was 55% complete at end of 2009 with projected costs remaining at $1.8 Billion
[4]  Plant was cancelled in 2009 when cost estimate increased 37% to $4 Billion. There are tentative plans for a smaller gas-fired combined cycle plant instead.
[5]  Unit 3 was rejected by state regulators in November 2008 citing concerns about increased total cost of $1.3 billion and greenhouse gas emissions. 
Sources: Synapse 2008a; Synapse 2008b; AMP 2009; Journal Sentinel 2008; Miami Herald 2010; Charlotte Business Journal 2010; iStockAnalyst 2010.
 

