Navajo Generating Station and Air Visibility Regulations: Alternatives and Impacts
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Energy Analysis Navajo Generating Station Navajo Generating Station and Air Visibility Regulations: Alternatives and Impacts David J. Hurlbut, Scott Haase, Gregory Brinkman, Kip Funk, Rachel Gelman, Eric Lantz, Christina Larney, David Peterson, Christopher Worley National Renewable Energy Laboratory Ed Liebsch HDR Engineering, Inc. Prepared under Task No. WFJ5.1000 Technical Report NREL/TP-6A20-53024 • Revised March 2012 Contract No. DE-AC36-08G028308 Produced under direction of the U.S. Department of the Interior by the National Renewable Energy Laboratory (NREL) under Interagency Agreement R11PG30024 and Task No. WFJ5.1000. NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC. ERRATA SHEET NREL REPORT/PROJECT NUMBER: NREL/TP-6A20-53024 DOE NUMBER: N/A TITLE: Navajo Generating Station and Air Visibility Regulations: Alternatives and Impacts, Energy Analysis, NREL (National Renewable Energy Laboratory) AUTHOR(S): David J. Hurlbut, Scott Haase, Gregory Brinkman, Kip Funk, Rachel Gelman, Eric Lantz, Christina Larney, David Peterson, Christopher Worley National Renewable Energy Laboratory Ed Liebsch HDR Engineering, Inc. ORIGINAL PUBLICATION DATE: 1/18/2012 DATE OF CORRECTIONS (MM/DD/YYYY): 3/15/2012 Revised March 2012: • Page 75: Replaced incorrect data in Table 5-1. • Page 84: Replaced incorrect data in Table 5-6. • Page 106: Replaced incorrect data in Table 7-1. This report, as originally published, also contained editorial errors that have been corrected in this revision. No changes, except those noted here, affect the substance of the report or the authors’ intent. Instructions for Hard Copies: - This publication was released as an electronic only document. 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Executive Summary The U.S. Environmental Protection Agency (EPA) Under any outcome, the burden of compliance will intends to issue rules for controlling emissions from probably fall most heavily on those who rely on the the Navajo Generating Station (Navajo GS) that federal government’s 24.3% share of the power plant. contribute to haze at the Grand Canyon and at several Furthermore, the web of needs laying claim to the other national parks and wilderness areas. The final government’s share is uniquely complex. Therefore, a rule will be based on what EPA determines is the best BART outcome that met Interior’s interests—secure available retrofit technology (BART) for the control of sources of power for CAP, no additional disruption of haze-causing air pollutants, especially nitrogen oxides tribal economic development, and good stewardship (NOx). of national parks and other public lands—would in all likelihood be adaptable to the needs of the utilities Several factors make this case unusually complex. that rely on Navajo GS for part of their conventional Unlike other coal plants in the West, Navajo GS came supply needs. This would especially be true if the into being at the initiative of the federal government. outcome allowed time for Interior to prepare for a Low-cost power from Navajo GS runs the massive smooth transition to cleaner energy sources for CAP, pumps of the Central Arizona Project (CAP)—a major and allowed the utilities time to fully depreciate their water delivery project built to fulfill terms of the current investments in Navajo GS. Colorado River Compact, a multistate water agreement that many consider to be one of the most contentious EPA’s statutory authority in this particular proceeding in U.S. history. In addition, the plant and the coal mine focuses on visibility at national parks and other that supplies it are located on tribal lands. The U.S. priority areas. The analysis and findings of this report Bureau of Reclamation (Reclamation) owns the largest (conducted by NREL for the Department of the share of the plant on behalf of the federal government. Interior) focus on these statutory issues and therefore Some of Reclamation’s sister agencies within the U.S. address only a small subset of the issues facing Department of the Interior, however, have missions coal-fired power plants throughout the country. This relating to tribal affairs, national parks management, report does not address the larger question of whether and habitat protection that in this case are not easily Navajo GS should continue operating or should retire. reconciled with Reclamation’s job of supporting the Rather, the questions have to do with how proposed CAP with low-cost power. changes to the plant are likely to affect visibility. (A supplemental volume examines the feasibility of using Many of the analyses conducted by and for parties clean generating technologies to achieve comparable in this case have contemplated three possible BART outcomes.) outcomes: ■ accepting existing plant improvements as the With respect to BART determinations, the Clean Air standard with no additional retrofit; Act requires EPA to ■ adopting a new control technology such as …take into consideration the costs of compliance, selective catalytic reduction (SCR) as the the energy and nonair quality environmental standard; or impacts of compliance, any existing pollution ■ shutting down Navajo GS because of the control technology in use at the source, the cost of SCRs and other upgrades that may be remaining useful life of the source, and the required under future emission rules. degree of improvement in visibility which may reasonably be anticipated to result from the use The two SCR scenarios include SCR only, and SCR of such technology.1 plus additional controls (baghouses and sorbent injection) in anticipation of future emission regulations. Navajo GS owners are also considering selective non- catalytic reduction, which would cost less than SCR 1 CAA Sec. 169A, Sec. 42 USC 7491 (g)(2). but would remove less NOx. ii This report’s main conclusions address these statutory factors. $500 Cost of compliance $400 Economic analysis suggests $300 that, holding all other factors the same, installing SCRs at (millions) $200 Navajo GS would likely cost less than shutting it down and $100 replacing it with power from $- unused capacity elsewhere in SCR only SCR, baghouse, sorbent Replacement the West. Key uncertainties injection (shutdown) that could affect the basic economics include (among other Baseline for comparison: existing controls as BART (no additional cost). factors) investment recovery timelines, changes in future Figure ES-1. Likely ranges of additional annual costs for retrofits, shutdown plant ownership, changes in transmission path ratings, renegotiating the site lease with Navajo Nation, and delivery commitments under Unlike its utility partners, Reclamation lacks an established rate mechanism for recovering its share long-term power contracts.2 Figure ES-1 shows likely ranges of additional annual costs associated with two of future capital costs for Navajo GS. Assuming no SCR scenarios, and with shutting down the plant and federal appropriations, the additional capital costs and replacing it with the West’s least expensive unused production costs associated with SCRs would probably capacity. increase power costs for the CAP by 0.39 cents to 0.48 cents per kilowatt-hour. For agricultural users The cost burden of either SCR option or shutdown and Indian tribes, water rates from CAP would likely would probably fall more heavily on the Bureau of increase between 13% and 16%. For municipal and Reclamation than it would on any of the five utilities industrial users, the increase would likely be between that also own shares of Navajo GS. This is due to the 5% and 7%. Baghouses and sorbent injection would fact that Reclamation and the Central Arizona Water roughly double the impact on water rates. Conservation District rely on Navajo GS for 92% of the total electricity needed for the CAP, while the utility Energy impacts of compliance partners rely on the plant for only 9% to 26% of their Installing SCRs would not significantly change the total electricity supply. amount of energy provided by Navajo GS. On-site employment at the power plant and the mine would SCR capital costs would result in a likely retail be unchanged, except for the possible addition of a rate increase of between 0.02 cents to 0.06 cents small number of jobs at the power plant to operate and per kilowatt-hour for Navajo GS’ utility partners.