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HomeMy WebLinkAbout6.e. Generator Upgrades4ROSEMOUNTEXECUTIVE SUMMARY CITY COUNCIL Utility Commission Meeting: March 11, 2013 ISSUE RICE NESHAP is the acronym for the EPA rule for Reciprocating Internal Combustion Engines National Emission Standards for Hazardous Air Pollutants. The RICE NESHAP rule requires implementation of new maintenance and reporting practices for certain stationary diesel engines. Many of these engines also require retrofit with catalytic emission control. The city operates three generators that currently fall under the regulation of this new rule and may need to be upgraded in the near future. Staff is in the process of researching this issue to determine what, if any, corrective actions must be taken as a result of the new regulations. BACKGROUND Three of our backup generators are currently enrolled in the Xcel Energy Electric Rate Savings (ERS) peak demand program. By participating in the ERS program and switching to standby power during periods of peak electrical demand, we receive substantially lower usage rates from Xcel Energy, providing a savings of approximately $13,720 annually. To continue in the ERS program, components on these three generators would likely need to be upgraded to be NESHAP compliant by May 2014. The estimated cost of these upgrades is provided in Table 1. Table 1 AGENDA SECTION: AGENDA ITEM: Generator Upgrades New Business PREPARED BY: Andrew J. Brotzler, PE, Director of AGENDA NO. Public Works / City Engineer Well 9 - stationary ATTACHMENTS: Information Sheets APPROVED BY: RECOMMENDED ACTION: Discussion ISSUE RICE NESHAP is the acronym for the EPA rule for Reciprocating Internal Combustion Engines National Emission Standards for Hazardous Air Pollutants. The RICE NESHAP rule requires implementation of new maintenance and reporting practices for certain stationary diesel engines. Many of these engines also require retrofit with catalytic emission control. The city operates three generators that currently fall under the regulation of this new rule and may need to be upgraded in the near future. Staff is in the process of researching this issue to determine what, if any, corrective actions must be taken as a result of the new regulations. BACKGROUND Three of our backup generators are currently enrolled in the Xcel Energy Electric Rate Savings (ERS) peak demand program. By participating in the ERS program and switching to standby power during periods of peak electrical demand, we receive substantially lower usage rates from Xcel Energy, providing a savings of approximately $13,720 annually. To continue in the ERS program, components on these three generators would likely need to be upgraded to be NESHAP compliant by May 2014. The estimated cost of these upgrades is provided in Table 1. Table 1 Description Asset Estimated Cost Well 7 - portable 8059 $30,000 Well 9 - stationary 0053 $45,000 Well 12 - stationary 0060 $45,000 Total Estimated Cost $120,000 In addition to the upgrade costs, there would be an additional cost of approximately $15,000 every three years to have the equipment inspected to ensure it remains NESHAP compliant. GAUTILITY COMMISSION= Information \20130311 UC Generator Upgrades V2.docx Staff has also explored the possibility of withdrawing from the Xcel Energy ERS program It is our understanding that by doing so, the three generators would then be considered exclusively emergency units and would no longer be held to the regulations of RICE NESHAP; no equipment upgrades would be immediately necessary. The drawback to this option is that the City would incur an additional $14,000 annually in electrical charges by not participating in the ERS program. There is a potential for an additional cancellation fee from Xcel Energy, as well. SUMMARY Staff will continue to gather more information about the RICE NESHAP rule and its impact on City equipment. Staff is planning to discuss these and other possible options with an outside electrical specialist in the coming weeks. An update will be provided to the Utility Commission during the April 2013 meeting. 2 January 15, 2013 FACT SHEET FINAL AMENDMENTS TO THE EMISSION STANDARDS FOR RECIPROCATING INTERNAL COMBUSTION ENGINES ACTION • On January 14, 2013, the Environmental Protection Agency finalized amendments to the National Emissions Standards for Hazardous Air Pollutants (NESHAP) for stationary reciprocating internal combustion engines (RICE). • In this rulemaking, EPA addressed several petitions for reconsideration, legal challenges and new technical information submitted by stakeholders, including industry and environmental groups, which were brought to the EPA's attention after publication of the 2010 standards. • The final amendments will ensure that the standards are cost effective, achievable and protective. • The final revisions will reduce the capital and annual costs of the original 2010 rules by $287 million and $139 million, respectively, while still reducing 2,800 tons per year (tpy) of hazardous air pollutants (HAP); 36,000 tpy of carbon monoxide; 2,800 tpy of particulate matter; 9,600 tpy of nitrogen oxides, and 36,000 tpy of volatile organic compounds. • Pollutants emitted from diesel engines are known or suspected of causing cancer and other serious health effects including: • Aggravation of respiratory and cardiovascular disease • Changes in lung unction and increased respiratory symptoms • Premature death in people with heart or lung disease • Neurological, cardiovascular, liver, kidney health effects, and also effects on immune and reproductive systems. • Stationary engines generate electricity and power equipment at industrial, agricultural, oil and gas production, power generation and other facilities. EPA estimates there are over 1 million of these engines in the U.S., and this rule will apply to some of these engines. The final amendments generally apply to the following: • engines typically used in sparsely populated areas for oil and gas production • engines in remote areas of Alaska • engines scheduled to be replaced in the next few years due to state or local requirements, and certain engines installed in 2006 • engine testing requirements for formaldehyde emissions • engines for offshore vessels operating on the Outer Continental Shelf • engines used in emergency demand response programs • Cl engines are compression ignition engines that use diesel fuels. SI engines are spark ignition engines that use mainly natural gas and gasoline fuels. • EPA is also revising the new source performance standards (NSPS) for stationary internal combustion engines (ICE) to ensure consistency with the RICE NESHAP. In particular, specifying how the NSPS standard will apply to emergency engines used for demand response purposes. AMENDMENTS Area Source Stationary Spark Ignition Engines Above 500 HP • These engines are typically natural gas powered engines that are used to power equipment for oil and gas production. • EPA is replacing numerical emission limits for existing area source stationary spark ignition (SI) 4- stroke engines above 500 horsepower (HP) that are located in populated areas with requirements to install catalytic controls, conduct an initial test and annual performance checks of the catalyst, and equip the engine with a high temperature shutdown device or monitor the catalyst inlet temperature continuously. o Populated areas are defined as not being on Department of Transportation (DOT) Class 1 pipeline segments or having more than 5 buildings within 0.25 mile radius of the engine. • EPA is specifying that existing area source stationary SI 4- stroke engines above 500 HP that are not located in populated areas are subject to management practices. o Unpopulated areas are DOT Class 1 pipeline segments or having 5 or fewer buildings within 0.25 mile radius of the engine. Remote Areas of Alaska • EPA is expanding the definition of remote areas of Alaska beyond those not on the Federal Aid Highway System. • This amendment addresses issues unique to Alaska residents who have more energy supply challenges and face harsh weather conditions. Engines scheduled to be replaced in the next few years due to state or local rules, and certain engines installed in 2006 EPA is amending the RICE NESHAP to: • Allow Tier 1 and Tier 2 certified stationary CI engines, that are scheduled to be replaced due to state or local rules, to meet management practices until January 1, 2015, or 12 years after installation date, but not later than June 1, 2018. • Specify that existing stationary area source Tier 3 certified CI engines installed before June 12, 2006, are in compliance with the NESHAP. 4 Compliance Alternative for Formaldehyde Emissions EPA is adding an option for demonstrating the engines can meet the formaldehyde emission standard including: o For existing and new SI 4- stroke rich burn (4SRB) non - emergency engines greater than 500 HP located at major sources, showing compliance with the formaldehyde percent reduction standard by demonstrating compliance with a 30 percent reduction of total hydrocarbon emissions. Stationary Cl Engines on Offshore Vessels on the Outer Continental Shelf EPA is specifying that existing area source stationary CI non - emergency engines above 300 HP that are on offshore drilling vessels on the Outer Continental Shelf are subject to management practices. Emergency Engines • EPA is specifying how NESHAP and NSPS standards will apply to a category of engines called emergency engines. • Emergency engines may be used to prevent electrical outages and to test and maintain engines for up to a total of 100 hours per year. • In 2015, emergency engines will be required to use cleaner fuel -- ultra low sulfur diesel (ULSD) -- if they operate, or commit to operate, for more than 15 hours annually as part of blackout and brownout prevention, also known as emergency demand response. o Switching to cleaner fuel will reduce emissions of HAP, particulate matter and sulfur dioxide. Our information shows that only a small percentage of emergency engines currently use ULSD fuel. This will result in lower emissions. • Starting in 2015, entities with 100 horsepower (hp) or larger engines that operate, or commit to operate, for more than 15 hours and up to 100 hours per year for emergency demand response will need to collect and submit an annual report including location, dates and times of operation. o Reporting requirements ensure compliance with the regulations and provide information about the air pollution impacts of the engines. For a combined total of 100 hours per year, emergency engines can be used for the following purposes: • maintenance and testing, • emergency demand response for Energy Emergency Alert Level 2 situations, • responding to situations when there is at least a 5 percent or more change in voltage, and • operating for up to 50 hours to head off potential voltage collapse, or line 3 overloads, that could result in local or regional power disruption. • The rules restate that in an emergency, such as hurricane or ice storm, any engine of any size can operate without meeting control requirements or emission limits. • Emergency engines that commit to run less than 15 hours for emergency demand response can operate without meeting federal control requirements or numeric emission limits. BENEFITS AND COSTS • The amendments will reduce the capital and annual costs of the original 2010 rules by $287 million and $139 million, respectively. EPA estimates that, with the amendments incorporated, the capital cost of the rules is $840 million and the annual cost is $490 million. The updated estimated reductions each year starting in 2013 are: 0 2,800 tons per year (tpy) of HAP, 0 36,000 tpy of carbon monoxide, 0 2,800 tpy of particulate matter, 0 9,600 tpy of nitrogen oxides, and 0 36,000 tpy of volatile organic compounds. • EPA estimates the monetized co- benefits of the updated standards to be $830 million to $2.1 billion. EPA did not monetize the benefits associated with reducing exposure to air toxics or other air pollutants, ecosystem effects, or visibility impairment. BACKGROUND • In 2004, EPA finalized the first regulation for stationary RICE greater than 500 HP located at major sources of HAP. In 2008, EPA finalized regulations for new RICE less than or equal to 500 HP located at major sources and new RICE located at area sources. On March 3, 2010, EPA promulgated NESHAP for existing stationary Cl RICE that are used at: o area sources of air toxics emissions and constructed or reconstructed before June 12, 2006, • major sources of air toxics emissions, have a site rating of less than or equal to 500 HP and constructed or reconstructed before June 12, 2006, • major sources of air toxics for non - emergency purposes, have a site rating of greater than 500 HP and constructed or reconstructed before December 19, 2002. On August 20, 2010, EPA promulgated NESHAP for existing stationary SI RICE that are used at: o area sources of air toxics emissions and constructed or reconstructed before June 12, 2006, El o major sources of air toxics emissions, have a site rating of less than or equal to 500 HP and constructed or reconstructed before June 12, 2006. After the publication of the final rules in 2010, various stakeholders raised a number of issues through lawsuits, petitions for reconsideration of the final rule and other communications. The stakeholders requested that EPA reconsider requirements for operation of emergency engines, the control and monitoring requirements associated with existing SI engines at area sources, the requirements affecting engines in remote areas of Alaska and provisions related to agricultural engines. EPA granted the petitions, and, to address the issues, is making these amendments. • EPA proposed amendments on May 22, 2012. A public hearing was held in Washington, D.C. on July 10, 2012, and comment was accepted on the proposed amendments through August 9, 2012. EPA has evaluated the issues raised and has made amendments based on our assessment of the comments provided. FOR MORE INFORMATION • The rule is posted at: http: / /www.0a.gov /ttn/oarpg/new.html. • For more information on how to comply with the rule, please see: httv://www.qpa.gov/ttn/atw/rice/ricgpg.html. Today's rule and other background information are also available either electronically at http: / /www.regulations.gov, EPA's electronic public docket and comment system, or in hardcopy at the EPA Docket Center's Public Reading Room. • The Public Reading Room is located in the EPA Headquarters Library, Room Number 3334 in the EPA West Building, located at 1301 Constitution Ave., NW, Washington, D.C. Hours of operation are 8:30 a.m. to 4:30 p.m. eastern standard time, Monday through Friday, excluding federal holidays. • Visitors are required to show photographic identification, pass through a metal detector and sign the EPA visitor log. All visitor materials will be processed through an X -ray machine as well. Visitors will be provided a badge that must be visible at all times. • Materials for this action can be accessed using Docket ID No. EPA- HQ -OAR- 2008 -0708. • For further information about the action, contact Melanie King of EPA's Office of Air Quality Planning and Standards, Sector Policies and Programs Division, Energy Strategies Group at (919) 541 -2469 or by email at king.melanie @epa.gov. 5 M— Stationary Reciprocating Internal Combustion Engines (RICE) 40 CFR part 63, subpart ZZZZ Applicability Flowchart Is your engine being tested at a stationary RICE test cell/stand?e Does your facility have the potential to emit 10 or more tons /year of any single hazardous air pollutant or 25 or more tons /year of any combination of hazardous air nollutants ?b NO W You have an area source YES YES START Do you own or operate a stationary engine? You have a major source GO TO STEP 2 Did you begin construction or reconstruction on your stationary engine before June 12, 2006? NO y You have a new or reconstructed area source You are not subject to 40 CFR hart 63. subpart ZZZZ YES —> You have an existing area source eAn engine test cell/stand is any apparatus used for testing uninstalled stationary or uninstalled mobile (motive) engines. ] Vor assistance in determining the potential to emit, please refer to http: / /www.gpa.izov /ttn/chiekap42 /index.html or contact your EPA regional office or state permitting staff. To determine the potential to emit, you may use emission factors from http:// www. epa. t; ov/ ttn/chief/gp42 /chO3 /index.html, test data, or other published information. Stationary Reciprocating Internal Combustion Engines (RICE) 40 CFR part 63, subpart ZZZZ Applicability Flowchart NO Did you begin construction or Does your major reconstruction on source have a your stationary staonary engine engine before June 12, 2006? You have an existing stationary engine of 500 HP or less at a major source NO ti above 500 HP? You have a new or reconstructed stationary engine of 500 HP or less at a major source Did you begin construction or reconstruction on YES < your stationary engine before December 19, 2002? You have an existing station engine above 500 HP at a major source M You have a new or reconstructed stationary engine above 500 HP at a major source 2 EPA RICE NESHAP (National Emission Standards for Hazardous Air Pollutants) for Existing Stationary Gas and Diesel Engines Gas Engine Standards (effective October 2013) Johnson Matthey Fi_mT-77 Stationary Emissions Control Tel: 484 - 320 -2125, Fax: 484 - 320 -2152 Suite 200, 400 Lapp Road E -mail: info @jmsec.com Johnson Matthey Malvern, PA 19335 USA www.jmsec.com 100 to 500 Hp Non - Emergency > 500 Hp that Operate > 24 Hrs/Yr Located at New/ Type of Engine Engine Located at Major Sources Reconstucted /Existing Major Source or Existing Area Sources 2SLB (2- stroke lean burn) 225 ppmvd CO @ 15% 0, No MACT std. due to insufficient data 4SLB (4- stroke lean burn) 47 ppmvd CO @ 15% 0, 47 ppmvd CO @ 15% O; or 93% CO reduction 4SRB (4- stroke rich burn) 10.3 ppmvd formaldehyde @ 15% O, 2.7 ppmvd formaldehyde @ 15% Oz or 76% formaldehyde reduction or 350 ppbvd formaldehyde @ 15% O> Landfill /Digester Gas 177 ppmvd CO @ 15%02 After Treatment 3 -way (NSCR) for rich burn engines and 2 -way (oxidation catalyst) for lean burn engines Diesel Engine Standards (effective May 2013) Engine Size Non - Emergency Engines Located at Major Sources Non - Emergency Engines Located at Area Sources 100 to 300 Hp 230 ppmvd CO @ 15% O, 300 to 500 Hp 49 ppmvd CO @ 15% G. or 70% reduction 49 ppmvd CO @ 15% O, or 70% reduction > 500 Hp 23 ppmvd CO @ 15% O, or 70% reduction 23 ppmvd CO @ 15% O, or 70% reduction After Treatment Burn LILSD and install DOC on non - emergency engines with a site limit of > 300 Hp Major Source: Any stationary source or group of stationary sources located within a contiguous area and under common control emits or has the potential to emit considering controls, in the aggregate >_ 10 TPY of a single HAP or > 25 TPY of two or more HAPs. Area Source: Not a major source I EPA estimates there are > 900,000 stationary Cl engines installed I EPA estimates there are > 330,000 stationary SI engines installed. Date Applicability: ENGINES >500 HP AT MAJOR SOURCE: Existing if constructed before Dec. 19, 2002 1 New if constructed on or after Dec. 19, 2002 1 Reconstructed if reconstruction began after Dec. 19, 2002. ENGINES 5500 HP AT MAJOR SOURCE OF HAP AND ENGINES OF ALL HP AT AN AREA SOURCE OF HAP: Existing if constructed before June 12, 2006 1 New if constructed on or after June 12, 2006 1 Reconstructed if reconstruction began after June 12, 2006. Johnson Matthey Fi_mT-77 Stationary Emissions Control Tel: 484 - 320 -2125, Fax: 484 - 320 -2152 Suite 200, 400 Lapp Road E -mail: info @jmsec.com Johnson Matthey Malvern, PA 19335 USA www.jmsec.com