Centre for Economic and Social Studies for the Environment
Other Researchs

Stranded Costs of Air Pollutant Control Equipment under the Deregulation of the Electricity Market

Executive summary

Version française

Objective :

The objective of this study is to evaluate the setting into conformity of air-pollutant control equipment for SO2, NOx and particulates produced by thermal power plants which may have usually their lifetimes extended but under the context of the deregulation of the electricity market.

Before dealing with the economic aspect, the first stage consists of an overview of the existing regulations. In federal Belgium, the relevant standards are covered by regional legislations. However, the standards for energy products, particularly fossil fuels and nuclear facilities, come under a federal responsibility.

In the second stage, different types of control equipment for the treatment of flue gases are considered and described. The feasibility and efficiency of this equipment have been demonstrated in industrial practice.The air pollutant control technologies considered deal with the sources of emissions (primary measures), or the emissions themselves (secondary measures or "end-of-pipe" and technico-economic analysis). The more efficient previous devices are presently the most widespread in Europe.

Application :

The contextual basis of the study rests essentially on the following three aspects:

• Choice of a pilot power plant

We selected units 3, 4 and 5 of the Ruien power plant which, by its economic and technical lifetime, represents a typical part of the Belgian electricity production park.

The main characteristics of these units are the following:

Table 1 : Principal emission characteristics of the Ruien power plant

	Unit 3 (and 4)	Unit 5
Power (MWe)	130	200
Maximum flow gas (Nm3/h)	400.000	600.000
Technical lifetime (years)	10	10
Emission value (mg/Nm3)	Particulate : 80 SO2 : 1175 NOx (NO2 eq.) : 650	Particulate : 60 SO2 : 1000 NOx (NO2 eq.) : 800

• Choice of emission limit values

The emission limit values taken into account come from the proposed future European standards applicable to units liable for receiving a new exploitation permit. In Belgium, these standards are stricter than the present ones especially as far as nitrogen-oxides are concerned. These values determine the minimum efficiency of air-pollution control equipment (see Table 2).

Table 2 : Reference limit values for emissions (large combustion installations, proposal for future European standards)

Pollutants	Emissions limit values (mg/Nm3, 6% O2)
Particulates	30
SO2	200
NOx	200

• Choice of air pollution control equipment

The study of the pilot power plant has made it possible to isolate four significant parameters for choosing air pollution control equipment. These are: amount of space available; characteristics of the by-products; adaptability of control technologies to the nature of the fuel; and pollution control efficiency.

• Amount of space available: air pollution control equipment must not be too bulky. Progress is continuously being made in this direction, and the proposed equipment is becoming more and more compact. In consideration of this last point and our decision not to limit the study solely to Ruien, we assumed that each existing unit is fitted with the equipment selected.
• Characteristics of the by-products: by-products disposal must be reduced, which certainly does not make up for an appropriate environmental solution, and which is also very costly. It is thus preferable to turn towards technologies producing marketable by-products.
• Adaptability of control technologies to fuel quality: control techniques must correspond to the fuel used. In this case, the technologies must be suitable for a low sulphur coal (sulphur content: 0,55% w/w).
• Pollution control efficiency: the efficiency of the equipment must comply with the limit values for the emissions set. The limit values taken into account are those indicating the orientation of future European standards. Given the present boiler characteristics, this means that the minimum efficiency to be achieved is 63%, 83% and 75% respectively, for particulate removal equipment, de-sulfurisation and de-nitrification.

The particulate removal, de-sulfurisation and de-nitrification equipment studied in Table 3. meet these four criteria.

Table 3 : Particulate removal equipment with a view of the determination of the particulate removal costs of power plants

Firms	Particulate removal	De-sulfurisation	De-nitrification
ABB	Electrostatic filter Fabric filter	Wet process Wet & Dry processes	SCR process
Haldor TopsØe			SCR process
ERC			SCR process
Rothemülhe	Electrostatic filter
FLS miljØ		Wet & Dry processes Combined Processes

Results :

In order to calculate the costs of air pollution control, we have drawn up air pollutant control cost functions for each type of equipment. These cost functions include on the one hand, the fixed costs, independent of the capacity factors of the thermal power plants and on the other hand, the variable costs, which are dependent on the number of operation hours of the station.

The technico-economic assessment is based on recent data received by retailers, for each type of air-pollution control equipment: particulate removal, desulfurization, denitrification and combined processes.

The costs given below are aggregated, i.e. basing matters on different equipment scenarios. We assessed the costs of complying, in parallel with, the emission limits for particulates, sulphur dioxide and nitrogen oxides.

Finally, in order to evaluate the extent of the expected consequences of the deregulation in the electricity sector, the notion of "stranded costs" is examined and applied to the costs of flue gas control. Two scenarios are analysed, i.e. the reduction of the number of operation hours and the premature closing down of these units. Only the stranded costs relative to the latter option are given in this executive summary.

The total air-pollutant control costs begin at a minimum of 4.075 million EUR/year up to a maximum of 8.25 million EUR/year, depending on the unit and equipment. The contribution of each type of air-pollutant control technology is as follows: 15 to 25% for the equipment for particulate removal, 45 to 50% for de-sulfurisation and 30 to 35% for de-nitrification.

The overall stranded costs rise from 25 million EUR to more than 40.6 million EUR, if we have to cut the use of the technologies short by 7 years (passing from an initially planned period of ten years to a real period of 3 years). These costs are in the region of 20 million to 25 million EUR in a case where the 10 years depreciation period is covered in only 5 years, and 12.5 to 17.8 million EUR for an operating period of 7 years instead of 10.

Person in charge of the search: V. LANDRAIN.

Contact address:

Professeur Walter Hecq, CEESE - ULB
44 avenue Jeanne
CP 124
B- 1050 Brussels
Tel: +32-2-650.33.77 Fax: +32-2-650.46.91