Power Targets for Heat Rate Improvement Projects

On August 31, 2018, the U.S. EPA published the proposed ACE rule to serve as a replacement to the Clean Power Plan (CPP), which EPA had proposed to repeal via Federal Register dated October 16, 2017. While the CPP represented a creative interpretation of the underlying Clean Air Act requirements and relied primarily on generation shifting to natural gas and renewables from coal for electricity generation, the proposed ACE rule approach is more consistent with prior §111(d) rulemakings and regulates via efficiency improvements at specific units.

The proposed ACE rule does not impose an overall emissions cap rather, the focus is on the "best system of emission reduction" (BSER), which shifts the approach to a plant-specific emissions reduction strategy. Specifically, under the ACE rule, BSER establishes heat rate or efficiency improvement projects as the proposed pollution control. However, one possible consequence for these more efficient units is that they may be predicted to increase their annual emissions which could potentially prompt permitting authorities to consider the efficiency improvement project to be a "major modification" triggering new source review (NSR). In the face of this potential risk, EPA is proposing to amend the NSR regulations as a part of the proposed ACE Rule to include an hourly emissions increase test for modifications at electric generating units (EGUs). Such an applicability test has been considered in previous NSR reform efforts and has also served as the subject of potential legislation in Congress.

Although the proposed ACE rule is technically directed to individual states; it is important for the power industry to be familiar with its proposed terms, as its provisions will direct what individual states include in their future state plans.  The ACE rule provisions are currently proposed within several parts of the Code of Federal Regulations (CFR).1

Rule Applicability

EGUs are any fossil fuel-fired electric utility steam generation units that are not integrated gasification combined cycle (IGCC) units in operation or had commenced construction as of the publication date of the rule that meet the following criteria:

  • The unit must serve a generator capable of selling greater than 25 MW to a utility power distribution system;
  • The unit must have a base load rating greater than 250 MMBtu/hour (260 GJ/hour) heat input (either alone or in combination with any other fuel); and
  • The unit is not a natural gas-fired simple cycle and combined cycle turbine. The proposal solicits comment on available systems of emission reduction for these units.

Core elements of the proposed ACE rule include:

  • A determination of the BSER for CO2 emissions from coal-fired power plants;
  • A list of "candidate technologies" that states can use when setting CO2 performance standards for affected plants;
  • A new preliminary applicability test for determining whether a physical or operational change made to a power plant may be a "major modification" triggering New Source Review (NSR); and
  • New implementing regulations for establishing emission guidelines under CAA Section 111(d).

BSER Candidate Technologies

Candidate technologies being proposed as BSER are energy efficiency or heat rate improvement (HRI) projects including:

  • Neural Network/Intelligent Sootblowers
  • Boiler Feed Pumps
  • Air Heater and Duct Leakage Control
  • Variable Frequency Drives
  • Blade Path Upgrade (Steam Turbine)
  • Redesign/Replace Economizer
  • Improved Operating and Maintenance Practices

The performance of these available HRI measures are based on the range of HRI potential efficiencies and costs reported in the Regulatory Impact Analysis document.2 All operating costs for HRI measures, which are capital-intensive, were converted to a capital cost equivalent assuming a typical size and capacity factor in each capacity bin.

Opportunities for HRI are source-specific and dependent upon the individual unit's design, configuration, age and operating and maintenance history. While a large number of HRI measures have been identified in a variety of studies conducted by government agencies and outside groups, some of those identified technologies have limited applicability and many provide only negligible HRI.

EPA believes that it would be overly burdensome to require States to evaluate the degree of emission limitation achievable from the application of every conceivable measure at each applicable source within their generating fleets. Therefore, EPA has identified this list of the "most impactful" HRI measures to serve as the "candidate technologies" or "checklist" of BSER technologies, equipment upgrades, and best operating and maintenance practices. States would consider these technologies in developing plans to establish standards of performance for existing coal-fired power plants based on the application of a range of efficiency improvement projects.

Proposed 1-Hour NSR Applicability Test

One of the more interesting provisions of the ACE rule includes a proposed amendment to the Federal NSR rules that would allow an "hourly" emissions increase test specifically for EGUs. Because the ACE rule is expected to promote efficiency improvement projects at power plants, EPA is proposing revisions to the NSR permitting program to give states the option to adopt into their state implementation plans (SIPs) rules establishing a new preliminary applicability test. Under this new test, sources would first look to see whether a physical or operational change made to an EGU would result in an increase in that EGU's hourly emissions rate.

Next Steps

Timing of the rule implementation is uncertain and is dependent on the outcome of the public comment period and the technical considerations that are raised. The public comment period on the rule ended on October 31, 2018 and, according to EPA's Rule Listed Status (last updated in fall 2018), they expected to finalize the rule in the spring of 2019. Recently, EPA has inferred at a public forum that a final rule may be issued by June 2019. States will have three years from the date of the final rule to prepare and submit state plans that establish a standard of performance. The EPA will then have 12 months to evaluate each state plan.

Based on these potential rule requirements, Trinity has engaged other stakeholders and discussed what efficiency measures have already been performed or evaluated at various utility assets. A management plan and compliance budget can be developed assuming that the proposed BSERs are adopted by the states implementing the rule. For more information, please contact your local Trinity office at (800) 229-6655 for assistance.

In addition, for more information, please use this link to download our most recent ACE Webinar presentation.

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1 40 CFR Part 51, Subpart I (Requirements for Preparation, Adoption, and Submittal of Implementation Plans - Review of New Sources and Modifications); 40 CFR Part 52, Subpart A (Approval and Promulgation of Implementation Plans - General Provisions); 40 CFR Part 60, Subpart Ba (Standards of Performance for New Stationary Sources - Adoption and Submittal of State Plans for Designated Facilities) - new; and 40 CFR Part 60, Subpart UUUUa (Emission Guidelines for Greenhouse Gas Emissions and Compliance Times for Electric Utility Generating Units) - new
2 Regulatory Impact Analysis for the Proposed Emission Guidelines for Greenhouse Gas Emissions from Existing Electric Utility Generating Units; Revisions to Emission Guideline Implementing Regulations; Revisions to New Source Review Program. U.S. EPA OAQPS Health and Environmental Impact Division, RTP, NC EPA-452/R-18-006, August 2018