COST ANALYSIS MANUAL
FOR
STANDARDS SUPPORT DOCUMENT
Prepared by
PEDCo Environmental, Inc
11499 Chester Road
Cincinnati, Ohio 45268
Prepared for
U.S. Environmental Protection Agency
Economic Analysis Branch
April 1979
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TABLES OF CONTENTS
Page
Figures iv
Tables vi
1. Introduction 1
2. Format of Section 8.2 -- Cost Analysis of Control Options 4
2.1 Section 8.2.I — Introduction 4
2.2 Section 8.2.2--New Facilities 9
2.2.1 Section 8.2.2.I—Capital Costs 11
2.2.2 Section 8.2.2.2—Annualized Costs 11
2.2.3 Section 8.2.2.3—Cost Comparison 21
2.2.4 Section 8.2.2.4—Cost-Effectiveness 21
2.2.5 Section 8.2.2.5—Base Cost of Facility 25
2.3 Section 8.2.3—Modified/Reconstructed Facilities 26
2.4 Docket 27
3. General Considerations 28
3.1 SIP Regulations 28
3.2 Model Plant Sizes 29
3.3 System Redundancy 30
3.4 Recovery Credits 32
3.5 Lost Production 32
3.6 Cost Element Impacts and Sensitivity Analysis 33
3.7 Negative Statements 35
4. Capital Costs 36
4.1 Direct Costs 37
4.2 Indirect Costs 43
4.3 Contingency Costs 44
4.4 Sources of Capital Cost Information 47
4.4.1 Vendor Information 47
4.4.2 Estimating Manuals 48
4.4.3 Published Reports 48
4.4.4 Industry Information 48
4.5 Techniques for Estimating Capital Costs 49
4.5.1 Average Unit Cost Estimates 49
4.5.2 Factored Estimates 50
4.5.3 Scaled Estimates 50
4.5.4 Cost Code Estimates 51
4.5.5 Capital Cost Escalation 51
11
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TABLE OF CONTENTS (continued)
Page
5. Annualized Costs 52
5.1 Development of Annualized Costs 55
5.2 Annual Capital Charges 58
5.3 Adjustment of AnnuaTized Costs of a Common Base 60
6. Further Information About New and Modified/Reconstructed
Facilities 61
6.1 Cost Comparison 61
6.2 Cost-Effectiveness 62
6.3 Base Cost of Facility 63
7. Other Cost Considerations 67
7.1 Costs Imposed by Water Pollution Control Regulations 68
7.2 Costs Imposed by Solid Waste Disposal Regulations 70
7.3 Costs Associated with OSHA Compliance 70
7.4 Compliance Testing (Air) Requirements 73
7.5 Regulatory Agency Manpower Requirements 76
7.6 Other Air Pollution Control Regulations 76
7.7 Composite Costs of Environmental Regulatory Requirements 77
References 79
Appendix A Example of a Discussion of Modified/Reconstructed
Facilities 80
m
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FIGURES
Number
1 Outline of Sections 8.2 (Cost Analysis of Control
Options) and 8.3 (Other Cost Considerations) 2
2 Example of a Graphical Display of Control Options 5
3 Example of a Tabular Description of Control
Options 6
4 Example of a Display of Raw Material Usage 7
5 Example of a Display of Exhaust Parameters for
Motor Vehicle Coating Facilities 8
6 Example of a Display of Exhaust Parameters for
Facilities Manufacturing Lead-Acid Batteries 10
7 Example of a Tabulation of Costs of Air Pollution
Control Devices 12
8 Example of a Display of Component Capital Cost
Factors 13
9 Example of Capital Cost Display for Facilities
Subject to SIP and NSPS Limitations 14
10 Example of Capital Cost Display for Facilities
Subject Only to NSPS Limitations 15
11 Example of Presentation of Annualized Cost
Breakdown 17
12 Example of Presentation of Annualized Cost Items 18
13 Example of Display of Annualized Costs for
Facilities Manufacturing Lead-Acid Batteries 19
14 Example of a Tabular Display of Annualized Costs 20
15 Example of a Graphical Display of Annualized
Costs 22
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FIGURES (continued)
Number Page
16 Example of Comparison of Installed Costs of
Fabric Filter Control Systems for Facilities
Manufacturing Lead-Acid Batteries 23
17 Example of Cost-Effectiveness Curves for Control
Options Applicable to Facilities Manufacturing
Lead-Acid Batteries 24
18 Example of a Display of Exhaust Gas Parameters 31
19 Example of a Display of Component Capital Cost
Factors for Wet Collector 34
20 Example of a Form Listing the Typical Elements of
a Capital Investment 38
21 Example of a Completed Capital Investment Form
for a Fabric Filter 39
22 Example of a Presentation of Annualized Costs for
an Electrostatic Precipitator 54
23 Example of a Tabular Display of Cost-Effectiveness 64
24 Example of a Tabular Display of Cost-Effectiveness
and Marginal Cost-Effectiveness 65
25 Example of a Display of Costs Associated with
Various Degrees of Water Pollution Control 69
26 Display of Costs Associated with Solid Waste
Disposal (Lime Neutralization) 71
27 Display of Costs Associated with Solid Waste
Disposal (Caustic Soda Neutralization) 72
28 Display of Typical Cost Factors for OSHA
Compliance 74
29 Display of Annualized OSHA Compliance Costs 75
30 Example of a Comparison of Annualized Costs of
Compliance with Various Environmental Regulatory
Requirements 79
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TABLES
Number Page
1 Typical Values for Indirect Capital Investment
Costs 45
VI
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SECTION 1
INTRODUCTION
Section 111 (b) of the Clean Air Act directs the Administra-
tor of the U.S. Environmental Protection Agency (EPA) to estab-
lish Federal standards of performance for new sources that, in
his judgment, cause or contribute significantly to air pollution
to the extent of endangering public health or welfare. These
standards are generally referred to as New Source Performance
Standards (NSPS).
An NSPS is not to be promulgated without regard to its
economic impact. Section 317 specifically requires the Adminis-
trator to prepare an economic impact assessment for every pro-
posed NSPS. The assessment must contain an analysis of the costs
of compliance, the potential inflationary or recessionary ef-
fects, and the effects on consumer costs, energy use, and on
competition with respect to small business. This mandate is
carried out through the preparation of an Economic Impact Chapter
that is included as Chapter 8 in the Background Information
Document (BID). The chapter includes the following:
0 Section 8.1—Industry Structure
0 Section 8.2—Cost Analysis of Control Options
0 Section 8.3--Other Cost Considerations
0 Section 8.4—Economic Analysis
0 Section 8.5—Socioeconomic and Inflationary Impacts
This manual is a guide for preparation of Sections 8.2 and
8.3 of the Economic Impact Chapter, which detail the costs of
compliance. Figure 1 presents an outline of the contents of
these two sections. Data from these sections are the bases for
the development of Sections 8.4 and 8.5, which assess economic
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8.2 Cost Analysis of Control Options
8.2.1 Introduction
8.2.2 New Facilities
8.2.2.1 Capital Costs
8.2.2.2 Annualized Costs
8.2.2.3 Cost Comparison
8.2.2.4 Cost-effectiveness
8.2.2.5 Base Cost of Facility
8.2.3 Modified/Reconstructed Facilities
8.2.3.1 Capital Costs
8.2.3.2 Annualized Costs
8.2.3.3 Cost Comparison
8.2.3.4 Cost-effectiveness
8.2.3.5 Base Cost of Facility
8.3 Other Cost Considerations
8.3.1 Costs Imposed by Water Pollution Control Regulations
8.3.2 Costs Imposed by Solid Waste Disposal Regulations
8.3.3 Costs Associated with OSHA Compliance
8.3.4 Compliance Testing (Air) Requirements
8.3.5 Regulatory Agency Manpower Requirements
8.3.6 Other Air Pollution Control Regulations
Figure 1. Outline of Sections 8.2 (Cost Analysis of Control
Options) and 8.3 (Other Cost Considerations).
. 2
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impacts. Details on the preparation of Sections 8.1, 8.4, and
8.5 are not included in this manual.
In the preparation of Sections 8.2 and 8.3 for any industry,
all applicable control alternatives are usually investigated.
Control alternatives may include process -or raw material changes,
as well as pollution devices.
The approach in determining the costs associated with
various control systems involves three steps: (1) selection of
representative model plant parameters to which the cost may be
related; (2) application of selected control alternatives (that
will have been discussed in Chapter 6 of the BID); and (3) prep-
aration of total control cost estimates for each control alter-
native. This three-step procedure is to be conducted for both
new and modified plants.
Subsequent sections of this manual describe in more detail
the objectives and considerations that lead to the satisfactory
preparation of BID Sections 8.2 and 8.3, including a detailed
discussion of both capital costs and annualized costs. Figure 1
presents a standardized format for Sections 8.2 and 8.3 that will
permit the Economic Analysis Branch to conduct an adequate review
of the costs prepared by the contractors responsible for the BID.
The format allows a direct comparison of various studies by
advisory committees, industry representatives, and other groups.
Consistency in format should be an important objective for
the cost analyst. Also, the Economic Analysis Branch expects the
analyst to include sufficient discussion of the effects of base-
line controls, model plants, recovery credits, system redundancy,
and lost production on costs. Other important items to consider
for possible inclusion are a sensitivity analysis and negative
statements about items excluded from the cost analysis. These
topics are discussed in Section 3 of this manual.
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SECTION 2
FORMAT OF SECTION 8.2—COST ANALYSIS OF CONTROL OPTIONS
2.1 SECTION 8.2.1—INTRODUCTION
Section 8.2.1 of the BID Economic Impact Chapter is to list
the control options and to describe each of them briefly. It is
also to set forth the characteristics of the model plant and to
outline the regulations including the State Implementation Plan
(SIP).
Because each control option is described in detail in
Chapter 6 of the BID, it is unnecessary to repeat this detail in
Chapter 8. A summary is necessary, however, with a supplemental
table or graph indicating each control option. Figure 2 shows
how five options were graphically displayed in the cost analysis
of a proposed NSPS for automobile body coating. Figure 3 shows
how a table was used to summarize the options in a study of
lead-acid battery manufacturing.
Methods such as these summarize the control options to be
considered throughout the remainder of the section.
The parameters of the model plants that should be specified
in Section 8.2.1 include plant sizes, production rates, capacity
utilizations, raw material consumptions, exhaust gas flow rates,
pollutant emissions, and pollutant reductions to be achieved.
Much of this material may be presented in tabular form (the
preferred method of presentation), but sufficient text must be
included to explain the basis for the values chosen. Figures 4
and 5 are examples of the presentation of raw material usage and
exhaust parameters. These parameters were developed for facil-
ities that emit hydrocarbons; the figures show tables only of
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OPTIONS
BASE
CASE
IA
IB-]*
IB-Ca
Il-T
II-C
VOC {MISSIONS
DEDUCTION. I
(KAMI
LACQUER
PRIM
COAT
SUIOC-COAT
SPRAT BOOTHS
OVENS
TOPCOAT
SPRAIT BOOTHS
OVENS
0
0
CLECTRO-
Of POSIT ION
1
UNCONTROLLED
1
UNCONTROLLED
1
UNCONTROLLED
1
UNCONTROLLED
II >'
H K
ELECTRO-
DEPOSITION
ELECTRO-
DEPOSITION
1 1
USE or
MATEABORNE
PAINT
UNCONTROLLED
1
use or
HAIERBORNE
PAINT
UNCONTROLLED
1 1
USE OF
MTERBORNE
PAINT
THERMAL
INCINERATOR
1
USE Of
HATERSORNE
PMHI
THERMAL
INCINERATOR
85
CLECIRO-
DEPOSITION
1
UNCONT ROLLED
I
UNCONTROLLED
i
CATALYTIC
INCINERATOR
1
CATALYTIC
INCINERATOR
90
ELECTRO-
DC POSIT ION
I
THERMAL
INCINERATOR
1
THERMAL
INCINERATOR
1
THERMAL
INCINERATOR
1
THERMAL
INCIWRATO"
90
90
ELECTRO-
DEPOSITION
CATALYTIC
INCINERATOR
CATALYTIC
INCINERATOR
CATALYTIC
CATALYTIC
INCINERATOR
Figure 8-1. Available options for control of VOC emissions
due to the painting of automobiles and light-duty trucks.
Emissions reductionc arc rounded and vary from automobile to light-duty truck facilities.
Figure 2. Example of a graphical display of control options
Source: Cost analysis of NSPS for automobile body coating.
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OPTIONS
BASE
CASE IAa !B-la IB-Ca II-T Il-C
VOC EMISSIONS
REDUCTION. I
ENAMEL 0 II tl " 90 90
LACQUER 0 n K B5 90 90
PRIME
ELECTRO-
DE POSIT ION
ELECTRO-
DE POSIT ION
ELECTRO-
DEPOSIT ION
FLECTRO-
Ot POSITION
ELECTRO-
DEPOSITION
ELECTRO-
DEPOSITION
1 1 1 1 1
BUIOE-COAT
SPRAY BOOTHS
OVENS
TOPCOAT
SPRAY BOOTHS
UNCONTROLLED
1
UNCONTROLLED
1
UNCONTROLLED
USE OF
MATERBORNE
PAINT
1
USE OF
MATERBORNE
PAINT
1
USE or
UATERBORNE
PAINT
UNCONTROLLED
1
UNCONTROLLED
|
THERMAL
1 NCI HERITOR
UNCONTROLLED
1
UNCONTROLLED
1
CATALYTIC
INCINERATOR
THERMAL
INCINCRATOR
1
THERMAL
INCINCRATOR
1
THERMAL
INCINERATOR
CATALYTIC
INCINERATOR
CATALYTIC
INCINERATOR
CATALYTIC
INCINERAIOR
1 1 1 1 1
OVENS
UNCONTROLLED
USE OF
MATERBORNE
PAINT
THERMAL
INCINERATOR
CATALYTIC
INCINERATOR
THERMAL
INCINfRMOR
CATALYTIC
INCINERATOR
Figure 8-1. Available options for control of VOC emissions
due to the painting of automobiles and light-duty trucks.
Emissions reductionc arc rounded and vary from automobile to light-duty truck facilities.
Figure 2. Example of a graphical display of control options
Source: Cost analysis of NSPS for automobile body coating.
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Table 8-5. SELECTED CONTROL ALTERNATIVES FOR
LEAD-ACID BATTERY MANUFACTURING INDUSTRY
Control
alternative
I
II
III
IV
V
VI
VII
VIII
Facilities*
A, a. F
C, E
a
0
B, C, E
F
A
C
0
C, E
A B F
G
D
A. B, C
E
F
G
0
A, B. C. F
E
C
0
A, B, C
E
G
A, 8. C. E
G
A, B. C
E
G
s
Control system
Fabric filter. 6/1 »/C
Fabric filter. 6/1 A/C
Hist eliminator
Fabric filter. 2/1 A/C
Fabric filter, 6/1 A/C
•c rubber
Impingement and entrainment
scrubber
Fabric filter, 2/1 A/CC
Fabric filter, 6/1 A/C
scrubber
Fabric filter, 2/1 A/C
Impingement and entrainment
scrubber
Fabric filter 6/1 A/C
Impingement and entrainment
scrubber
Mist eliminator
Fabric filter, 2/1 A/C
Impingement and entrainment
scrubber
Fabric filter, 6/1 A/C
Mist eliminator
Fabric filter, 2/1 A/CC
Fabric filter, 6/1 A/C
Fabric filter, 6/1 A/C
Mist eliminator
Fabric filter, 6/1 A/C
Mist eliminator
Impingeaent and entrairunent
scrubber
Fabric filter, 6/1 A/C
Mist eliminator
* Facilities key: A - Grid casting furnace: B - Grid casting
machines; C - Paste mixsr; D - Laad oxide manufacturing;
E * Three process operation and assembly; r - Lead reclaim
furnace; G - Formation.
All facilities are vented to common control systems as
shown.
c Snail (£ 500 bpd) plants are assumed to have no PbO manufac-
turing facilities.
8-17
Figure 3. Example of a tabular description of control options.
Source: Cost analysis of NSPS for the manufacture of lead-acid batteries
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TABLE 8-1. AVERAGE SOLVENT-BORNE PAINT USAGE FOR AUTOMOBILE AND LIGHT-DUTY TRUCK BODIES
Vehicle
Automobile
Light-duty truck
Coating
Enamel guide coat
Enamel topcoat
Lacquer guide coat
Lacquer topcoat
Enamel guide coat
Enamel topcoat
Lacquer guide coat
Lacquer topcoat
Solvent content,
percent by vol.
69
75
69
87
69
72
69
87
Paint usage per vehicle,
liters
2.0
11.2
2.0
25.3
2.0
12.2
2.0
31.1
gal
0.54
2.95
0.54
6.67
0.54
3.23
0.54
8.22
Figure 4. Example of a display of raw material usage,
Source: Cost analysis of NSPS for automobile,body coating.
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TABLE 8-5. TECHNICAL PARAMETERS USED IN DEVELOPING
COSTS OF INCINERATORS FOR CONTROL SYSTEM
Parameter
1. Temperature, °C (°F)
Ovens and flash tunnels
Spray booths
2. Volumetric flow rate,
NmVs (scfm) per vehicle/h
Guide coat spray booth
Guide coat ovens and flash tunnels
Topcoat spray booth, enamel
Topcoat ovens and flash tunnels,
enamel
Topcoat spray booth, lacquer
Topcoat ovens and flash tunnels,
lacquer
3. Hydrocarbon concentration, % LEL
Spray booths
Ovens and flash tunnels
4. Control efficiency, %
Valuea
149 ( 300)
21 ( 70)
0.645 ( 1,370)
0.087 ( 18.5)
3.82 ( 8,100)
0.105 ( 222)
10.0 ( 21,200)
0.273 (
1.0
10.0
90.0
580)
Reference 5
LEL - lower explosive limit
8-10
Figure 5. Example of a display of exhaust parameters
for motor vehicle coating facilities.
Source: Cost analysis of NSPS for automobile body coating.
8
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data that relate to such emissions. In contrast, Figure 6 pre-
sents a table of facilities that emit particulate matter. Each
of these tables must be supported by text to explain how these
data are related to the overall cost study.
Lastly, Section 8.2.1 should summarize the assumptions of
the cost analysis, briefly discuss the cost data sources used in
the analysis, and note particular areas such as a sensitivity
analysis or list of issues or considerations not covered in the
analysis.
2.2 SECTION 8.2.2—NEW FACILITIES
In Section 8.2.2 of the BID, costs that are applicable to
new construction are to be outlined. In almost all cases, con-
trol cost estimates will be based on model plant parameters.
Only in rare cases can the costs be based on actual installa-
tions. Model plants are used to get complete and consistent cost
information concerning a range of facilities, whereas the actual
installation cost data that may be obtained are likely to be
atypical. Information supplied by the industry usually includes
expenses that may be judged to be costs of compliance for legal
or tax reasons, but do not actually represent such costs. Indus-
try data may include, for example, lost production owing to
downtime even though the market for the product or the need for
routine plant maintenance is not considered. Industry data may
integrate the SIP control costs, include more than marginal costs
of water pollution control, or include costs from more than one
project. Comparative air pollution control costs cannot be
derived from such information. The cost analyst must therefore
base estimates on -model plants to obtain consistent data.
Plant sizes vary widely in most industries. The range
selected for the model plants in new construction must represent
the facilities that the industry is likely to build, even though
these may differ in size from existing facilities. Most new
facilities are larger than existing facilities. To estimate NSPS
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Table 8-6. TYPICAL UNCONTROLLED EXHAUST PARAMETERS FOR BATTERY .'lANUFACTURING
FACILITIES3 (METRIC UNITS)
Facility
code
letter
A
D
C
D
E
P
r
Facility
Grid caatin?
furnace**
Grid castinq
Machine**
Paste siixer
L*ad oxide
iftanuf acturin?
Three-process
operation
Lead reclaim
furnace
Formation
Temperature,
•c
MS
JS
11
115
27
US
J7
Moisture.
t
2-1
2-1
2-1
1-2
2-1
It. A.
Total partlculate
loadinq.
,21
<21
1)7
2l"
4«
.22.
4000C
Volume by plant site, m /min
100 bpd
27.5
27.5
(2.0
c
401
f
75.1
250 bpd
27.5
27.5
(2.0
c
40)
f
177
500 bpd
,1.7
11.7
(7.9
C
472
IM
147
2000 bpd
57.0
47.0
07.2
71)
"'
1166
(500 bpd
127
127
154
216
1517
It.
4020
fM««d on e«h*u*t data obtained from industry reaponcea to EPA's inquiries (Section 114 Letter*),
daaign calculations and vourc* teat report*.
The arid cait.n9 facility convista ol a furnace and a .machine. Some time a these elements are separate, as where one
furnace feeds many caitin9 machine*.
for purpoaea of this atudy. it !• aaaumed that plants makinq only SOO bpd or leas have no I bo manulrjctarin9 facil.ties.
Measured at outlet of baqhouae, which ia part of the process.
* Teat data (row outlet of fan aeparator tested at Plant 0 indicated
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costs for the smaller sizes presents a distorted picture of
control costs. The text in this section of the BID must explain
the basis for selecting the model plant sizes.
2.2.1 Section 8.2.2.1—Capital Costs
Section 8.2.2.1 should present capital cost estimates for
various model plants of compliance with regulations. All the
control options included in the technical portion of the BID must
be evaluated. All the parameters used for the cost estimates
should be presented in such a way that a comparison is made of
control costs for the model plants. Figure 7 is an example of
this presentation where control equipment costs are presented
with exhaust gas parameters. These tabular data should be sup-
plemented by other tables, such as that depicted by Figure 8, in
which the various capital costs are shown as a function of equip-
ment costs. If it is not practical to show all the data on one
table, several interrelated and cross-referenced tables or graphs
may be employed. A consistent presentation should be made for
each control system and for each facility. The method of presen-
tation, and in some instances the content, vary from industry to
industry.
After the parameters have been presented, the estimated
total capital investment for each of the control options should
be shown. If the facility is subject to SIP emission limita-
tions, it is necessary to compare SIP costs and emissions with
NSPS costs and emissions. Figure 9 is an example of a format
displaying this information, whereas Figure 10 shows the format
for a facility subject only to NSPS.
2.2.2 Section 8.2.2.2—Annualized Costs
Section 8.2.2.2 should be similar in form and content to
Section 8.2.2.1 and describe the elements included in the annu-
alized cost estimate. In all cases, the annualized cost of
capital is determined by a capital recovery factor, which is
based on equipment life and the interest rate on the capital.
11
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Table 8-8. AIR POLLUTION CONTROL EQUIPMENT COSTS FOR LEAD-ACID BATTERY
MANUFACTURING FACILITIES (METRIC UNITS)
Equipment type
Impingement and
entrainment scrubber
Fabric filter, (pulse-jet
with 6/1 A/C ratio)
Fabric filter, (shaker-type
with 2/1 A/C ratio)
Fabric filter, (shaker-type
with 3/1 A/C ratio)
OD Mist eliminator
I
KJ
OJ
Sized,
mVr.iin
28
425
142
1982
40
125
40
125
57
87
142
1982
Exhaust cjas oarameters
Temperature,
°C
27-115
27-115
27
27
115
115
115
115
27
27
27
27
Hoi sture ,
I
1-4
1-4
1-4
1-4
2-3
2-3
2-3
2-3
N.A.
N.A.
N.A.
N.A.
Particulate
loailinos, mq/m3
46-137
46-137
46-137
46-137
114-229
114-229
114-229
114-229
3663
3663
3663
3663
Cost,a
F.O.B. site
$ 7,200
20,000
10,500
100,600
6,900
12,100
5,600
10,400
4,371^
5,000
5 , 600
53,300
4th-quarter. 1977 dollars; includes cost of fans, motors, drives, pumps, pump motors, sludqe
injector, walkways, and ladders as is appropriate. All costs obtained from Reference 29 except
as otherwise noted and updated to 4th-quarter 1977.
Reference 30. Costs were updated to 4th-quarter 1977.
Figure 7. Example of the tabulation of costs of air pollution control devices.
Source: Cost analysis of NSPS for the manufacture of lead-acid batteries.
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Table 8-9. COMPONENT CAPITAL COST FACTORS FOR A
FABRIC FILTER AS A FUNCTION OF EQUIPMENT COST.'C
Component
Equipment
Ductwork
Instrumentation
Electrical
Foundations
Structural
Sitework
Painting
Total direct costs
Direct costs
Material
l.OOQ
0.04Q
0.04Q
0.11Q
0.03Q
0.0 3Q
0.02Q
0.004Q
1.27Q
Component
Engineering
Contractor's fee
Shakedown
Spares
Freight
Taxes
Labor
0.25Q
0.21Q
0.006Q
0.16Q
0.05Q
0.05Q
0.02Q
0.02Q
0.77Q
Indirect costs
Measure of costs
10% material and labor
15% material and labor
5% material and labor
1% material
3% material
3% material
Total indirect costs
Contingencies - 20%
Total capital costs
of direct and indirect co
8-26
Factor
0.204Q
0.306Q
0.102Q
0.013Q
0.038Q
0.038Q
0.696Q
sts 0.547Q
3.28Q
Figure 8. Example of a display of component capital cost factors.
Source: Cost analysis of NSPS for the manufacture of lead-acid batteries
13
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Table 8-25. CAPITAL COSTS OF LEAD EMISSIONS CONTROL FROM NEW
LEAD-ACID DATTERV MANUFACTURING FACILITIES, 500-BPD PLANT
Control
alternative
1
1 1
III
IV
V
LoaJ L>(« sstorts.
l"i/tfc»V
:iir
1.62
1.82
».82
i.a2
NSP!i
0.06i
0.0*7
o. m
Ib/djy
SIP
a. 42
a. 42
fl.«J
NtiPS
0.1)6
0.214
O.U8
0. 71B
Eft CCL» WIT
control
SIP
19
39
J9
H
*ss of |««i.l
pci cent
NbPS
99.0
»a.4
44.0
94. a
InstdlUd COtl. «th-qtr.
1977 Jolldf* N 1000
SIP
91
91
«|
91
91
:ISPS
2U
242
211
201
IfcO
lntt«LUd cost ol
control «lloc«bl« to
NSPS. 4th-qtr. |*77
dolUr* « tOOO
US
151
120
110
&9
Figure 9. Example of capital cost display for facilities subject
to SIP and NSPS limitations.
Source: Cost analysis of NSPS for the manufacture of lead-acid batteries.
-------
Ul
i
h-
Ov
TABLE 8-10. CAPITAL COSTS OF CONTROL OPTION II-C FOR SURFACE COATING OF AUTOMOBILES
(1000 dollars)
Type of coating
Vehicles per hour
Emission Source
Guide-coat spray booths
Guide-coat flash tunnels and
ovens
Topcoat spray booths
Topcoat flash tunnels and
ovens
Total capital costs (rounded)
Solvent-borne enamel
40
817
142
4,080
276
5,320
55
997
' 150
5,530
320
7,000
85
1,520
162
8,550
385
10,620
Solvent-borne lacquer
40
817
142
10,400
440
11,800
55
997
150
14,500
529
16,200
85
1,520
162
22,300
724
24,700
Figure 10. Example of capital cost display for facilities
subject only to NSPS limitations.
Source: Cost analysis of NSPS for automobile body coating.
-------
The assumptions of equipment life and interest rate should be
stated in the text. Certain usual elements not included (because
they are not required) in the annualized costs of a control
option should be noted in the text.
Pollutant recovery influences annualized costs and must be
discussed in Section 8.2.2.2. Depending upon the process con-
trolled and pollutant recovered, the total annualized cost may be
a debit or credit. The reasons for an overall debit or credit
should be clearly described. If a recovery credit is derived
from the heating value of the recovered pollutant, it should be
demonstrated that the recovered heat can actually be used. In
cases where the recovered energy is used to operate the control
system, the value of the energy directly influences the operating
costs of the control device and should not be shown as a separate
credit.
The bases for annualized cost estimates should be clearly
presented in the text, if possible in a tabular form. All
special cost considerations must also be discussed. The number
of operating hours assumed in the estimate must be stated, and
the rationale for this assumption must be explained. Where
operating shifts vary by plant size, or where power costs are
higher or lower than in other industries, the rationale for these
assumptions must be stated. Other special considerations may be
appropriate, such as lower-than-usual costs for water pollution
control. These data are usually best presented in tabular form
(Figures 11 and 12).
Other tables .should present the two basic components (direct
costs and annualized capital) of the annualized cost of each
control option and the degree of pollutant removal. The tabular
presentation allows the reader to make a direct comparison of the
control options at a glance. Figure 13 shows a table with data
for a number of control options applied to a plant of stated
size, and Figure 14 shows a table with data for only one option
applied to a range of plants. In addition to a tabular format, a
16
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Table 8-11. CALCULATION OF ANNUALIZED COSTS
OF AIR POLLUTION CONTROL SYSTEMS
Cost component
Direct operating costs
Utilities
Water
Electricity
Operating labor
Direct
Supervision
Maintenance and supplies
Labor and material
Supplies
Capital charges
Overhead
Plant
Payroll
Fixed costs
Capital Recovery
Insurance
Method of calculation
Amount used per year x S0.0625/m ($0.25/1000 gal)
Amount used per year x $0.03/kWh
Number of manhours per year x $5.00
,15% of direct labor
61 of total capital costs
15% of labor and material
503 of operating labor plus 501 of maintenance
and supplies
20% of operating labor
13.2% of total capital costs
0.'3* of total capital costs
Figure 11. Example of presentation of annualized cost breakdown.
Source: Cost analysis of NSPS for the manufacture of lead-acid batteries.
-------
Table 8-12. ITEMS USED IN COMPUTING TOTAL ANNUALIZED COSTS
Item
Operating factor
Operating labor
Utilities
Electric power
Process water
Solid waste disposal
Dust recovery credit
Capital recovery factor3
Unit value
2000 hours/year/operat'ing
shift
S5/man-hour
(S0.25/thous. gal)
S0.03/kWh
$0.0625/m3
0
0
13.2% of installed capital
cost
For all air pollution control equipment; 15 year
life, 10 percent interest assumed. .
8-32
Figure 12. Example of presentation of annualized cost items.
Source: Cost analysis of NSPS for the manufacture of lead-acid batteries,
18
-------
vo
Table 8-31. ANNUALIZED COSTS OF LEAD CONTROLS ALLOCABLE TO A NEW SOURCE
PERFORMANCE STANDARD FOP, A NEW 500 HPD PLANT
Control
I
II
III
IV
V
removal compared with
SIP requl jtions.
fe'l
9)6
9)4
910
875
675
Ib
20)0
2060
2050
19)0
19)0
costs,.
SlOOO/yr
27.6
32.2
27.7
10.5
6.5
capital
SlOOO/yr
19.9
24.7
19.9
19.7
12.9
costs ,
SlOOO/yi
47.5
56.9
47.6
30.2
19.4
Dollars
l>or unit of
lo.ul rt:;»uvo(1
k
-------
K)
O
TABLE 8-16. COMPARABLE COSTS OF CONTROL OPTION IA
FOR SURFACE COATING OF AUTOMOBILES
Type of convention*!
option If coop* red
Cn«Ml
t*cqu«r
v«hicl*i/h
40
SS
• S
40
55
• 5
Uncontrolled
Ng/yr
(tono/yrl
1260
11)101
1740
(1920)
2100
12970]
1010
(1)10)
4140
I4S60)
6)90
(7040)
efficiency.
percent
10. >
•0.7
• 0.7
tl.t,
tl.t
91. t
VOC e*U«lon
M,/yr
.i>
1.14
1.5S
2. It
Co.t-
-------
graphical presentation may be helpful; an example of this is
shown in Figure 15.
2.2.3 Section 8.2.2.3—Cost Comparison
The objective of Section 8.2.2.3 is to define and analyze
any differences between EPA estimates and cost data from the
industry being studied. Usually presented in tabular form, these
comparisons may use actual costs supplied by the industry, esti-
mates by vendors, or data from sources such as trade magazine
articles, other EPA studies, or industry data from other indus-
tries. Figure 16 is an example of a graph where total installed
cost estimates are compared.
2.2.4 Section 8.2.2.4—Cost-Effectiveness
Section 8.2.2.4 is to be a discussion of cost-effectivenss
based on data from the annualized cost tables. The purpose of a
cost-effectiveness analysis is to provide a means of comparison
with the relative costs of pollutant removal in other industry
studies. Cost-effectiveness is defined as the annualized cost of
a control option divided by the amount of pollutants removed by
that option.
Marginal cost-effectiveness is important in selecting an
option for a standard. Marginal cost-effectiveness is defined as
the incremental annualized cost per unit of pollutant removed for
a control option above some arbitrary baseline, usually the SIP
requirement. Normally, a plot illustrating total cost-effec-
tiveness and a presentation in the text of the calculations for
marginal cost-effectiveness are appropriate.
A graphic representation of normal cost-effectiveness curves
is given in Figure 17. This graph summarizes the relative merits
of each option and shows differences dependent upon plant size.
An explanation should be given in the text of unusual or un-
expected aspects of the curves. This plot may provide a quick
comparison of alternatives for any model plant size. For a
21
-------
30 40 50 60 70
LIME SPEED, v«hicl«i/h
80 to
Figure 8-2. Cost differential - control option IA
for guide coat and topcoat, waterborne enamel vs.
solvent-borne enamel .
Figure 15. Example of a graphical display of annualized costs,
Source: Cost analysis of NSPS for automobile body coating.
22
-------
300
200
100
£ SO
NOTES:
I. 0- REPRESENTS OAT* POINT FOR A
FABRIC FILTER.
2. LETTER INSIDE SYMBOL IDENTIFIES
REPORTING PLANT.
3 PIANT REPORTED COSTS MERE
UPDATED TO 4TH-OUARTER 1977
BASED ON H t S INDEX.
4. TO CONVERT EIHAUST GAS
VOLUME TO METRIC UNITS:
CF i O.OJ83 - m3
©-.
235 10 20 30
EIHAUST SAS. 1000 «cf«
Figure 8-6. Reported installed costs of fabric filter
control systems compared with estimated cost curves used
in this study (^th-quarter 1977 dollars).
3-28
Figure 16. Example of comparison of installed costs of fabric filter control
systems for facilities manufacturing lead-acid batteries.
Source: Cost analysis of NSPS for the manufacture of lead-acid batteries.
23
-------
1000
500
200
9 100
50
20
t, 10
ALTERNATIVE I:
ALTERNATIVE II:
-ALTERNATIVE III:
ALTERNATIVE IV:
ALTERNATIVE V:
ALTERNATIVE VI:
-ALTERNATIVE VII:
ALTERNATIVE VIII:
99 PERCENT
98 PERCENT
98 PERCENT
95 PERCENT
95 PERCENT
99 PERCENT
99 PERCENT
95 PERCENT
LEAD EMISSION
LEAD EMISSION
LEAD EMISSION
LEAD EMISSION
LEAD EMISSION
LEAD EMISSION
LEAD EMISSION
LEAD EMISSION
CONTROL
CONTROL
CONTROL
CONTROL
CONTROL
CONTROL
CONTROL
CONTROL
100 250 500 1000
PLANT SIZE, bpd
2000
6500
Figure 8-8.
Cost-effectiveness of Model Plant Control
Alternatives.
8-74
Figure 17. Example of cost-effectiveness curves for contol options
applicable to facilities manufacturing lead-acid batteries.
Source: Cost analysis of NSPS for the manufacture of lead-acid batteries
24
-------
detailed evaluation of the system to be selected, however, cal-
culation of marginal cost-effectiveness is still essential.
The cost-effectiveness of controlling different pollutants
should sometimes be plotted separately. If hydrocarbon and par-
ticulate cost-effectiveness curves are combined into a total
cost-effectiveness curve for the industry, the higher cost of
controlling hydrocarbons may dominate. By separating the data
for particulate and for hydrocarbon sources, the cost analyst can
show whether it might be effective to have stringent particulate
controls on all plants and only hydrocarbon controls on large
plants. Providing similar cost-effectiveness information about
other industries may also help.
2.2.5 Section 8.2.2.5—Base Cost of Facility
Section 8.2.2.5 presents the base cost and operating and
maintenance costs of a new facility for comparison with the cost
of controls allocable to NSPS regulations. Knowledge of the base
cost permits the economist who prepares Section 8.4 to determine
the economic feasibility of controls. The capital costs of
applicable SIP controls are included with the base cost. A base
cost is required for each plant size to which a control option is
applied in the analysis.
A brief description of the base facility should specify the
plant capacity, process equipment, building size, land area, and
ancillary manufacturing facilities, including storage, parking,
and the employee cafeteria. The estimates of base costs obtained
from various sources must be indexed to the same time period as
the estimates of the control option costs. If the base cost is
only determined for one plant size, it is necessary to explain
how that figure was used to estimate the base cost of plants with
different capacities. If reported base costs differ from each
other or from the estimated base cost, the difference must be
explained, and the base cost that most closely reflects the true
cost must be selected. Some likely causes of such differences in
25
-------
cost data are differences in geography, manufacturing process, or
plant size (i.e., economics of size).
Also important to the economist is descriptive information
concerning the operating and maintenance costs of the base
facility. These costs cover raw materials, labor, and utilities
as normal variables. Fixed costs, such as taxes, insurance,
administrative costs, selling expenses, and fringe benefits for
workers, should also be considered. To improve the value of this
cost information, the analyst should specify the utilization rate
of the base facility.
2.3 SECTION 8.2.3—MODIFIED/RECONSTRUCTED FACILITIES
Section 8.2.3 is identical in structure to Section 8.2.2,
but contains data about modified or reconstructed facilities.
When a facility is modified or reconstructed (as defined by Title
40, Parts 60.14 and 60.15, the Code of Federal Regulations), it
is designated "an affected facility" and becomes subject to NSPS.
An air pollution control system must then be retrofitted to meet
the NSPS requirements. Because an affected facility may comprise
only a portion of an existing plant, it may be necessary only to
upgrade the plant's existing control system.
The extra costs that are associated with retrofitted control
systems or with changes in production processes should be ana-
lyzed on a broad, not a site-specific, basis. These costs may
cover many items, including additional process equipment and duct
runs and special site preparation. The analyst must describe and
quantify the general retrofit problems that a facility may face.
An explanation of the estimated retrofit costs should be pre-
sented for each applicable cost function (see Figure 8). Because
such estimates cannot be site-specific, only a conceptual dis-
cussion can be written; but each cost function that may be
affected by retrofit installations should be addressed. A retro-
fit discussion from a previous cost analysis is given in Appendix A
26
-------
for guidance. Only the capital costs for retrofitted installa-
tions are likely to differ from those for new facilities. The
components that are functions of the capital costs (see Figure
11) must be modified accordingly.
2.4 DOCKET
The preparation of cost estimates requires the collection of
docket materials. A docket is an organized file of all informa-
tion considered by the EPA during the development of a proposed
rule or regulation.
This manual does not give instructions about docket organi-
zation. Such instructions appear in the Lead Engineer Contract
Administration Manual.
27
-------
SECTION 3
GENERAL CONSIDERATIONS
This section outlines the basic elements in any study of air
pollution control costs. These elements include SIP regulations,
model plant sizes, system redundancy, recovery credits, lost pro-
duction, cost element impacts and sensitivity analysis, and
negative statements. The remainder of the cost analysis manual
discusses each of these elements in detail. Although the model
plant selection and baseline determination are discussed in
Chapter 6 of the BID, these items are such key links in the
economic analysis that their discussion is important in Chapter 8.
3.1 SIP REGULATIONS
The distinction between the costs of complying with the
various SIP's and with a proposed NSPS is very important and must
be clearly presented. The SIP costs should be considered as a
basis, and only the costs of achieving controls beyond the SIP
level should be allocated to the NSPS. For example, the pressure
drop of an exhaust gas system may increase from 6 in. H^O under
an SIP to 40 in. H_0 under more rigid NSPS. Only the incremental
cost of the larger fan drive should be ascribed to the NSPS.
Some of the pollutants studied in a BID are not criteria
pollutants and are, therefore, not subject to SIP's. In these
cases SIP costs may be nonexistent, and that fact should be
stated. The failure of states to enforce SIP regulations should
also be considered, because such failure can reduce the actual
cost of pollution control.
Pollutants may be controlled stringently in some states and
loosely in others. For industries confined to one geographic
28
-------
area, SIP limitations can be specified. If the variation is
great and the industry is nationwide, a representative SIP level
must be selected as a basis. Choosing a representative SIP
emission level is essential because of its direct effect on NSPS
costs. The cost analyst should present the reasoning behind the
selection.
3.2 MODEL PLANT SIZES
Model plants are developed on the basis of difference in
size, process, or configuration. Cost estimates can be developed
for a number of model plants representing both new and modified
facilities. As an example, three plant sizes can be used for a
single process and configuration.
The process of deriving model plants should be coordinated
with the economist preparing Section 8.4, so that the cost
analysis describes accurately all potential impact areas for the
economic impact analysis. As an example, if a size cut-off is
anticipated in a specific industry, the economist may suggest
increased emphasis on new plants in lower size ranges.
The selection of model plant sizes is influenced most by the
character of the industry. In some industries, there are very
few facilities; the lead additive industry, for example, consists
of only four plants in the entire United States. If any new
plants are likely to be in the same size range as the existing
ones, it is preferable to use that range for the model plants.
Such a basis produces more accurate estimates because actual
process parameters are used.
The range of plant sizes in most industries is wide. The
cost analyst must select model plants that cover the range of
parameters to which NSPS regulations apply. The selected range
must also reflect current experience. If a particularly large
plant has proven to be uneconomical, further plants of this size
are less likely to be built, and this size should be excluded
29
-------
from the range of model plants. In evaluating an industry, the
cost analyst must use sound information and exercise judgment.
Some industries have segmented production facilities (i.e.,
some portions of the process are absent in certain plants). In
lead-acid battery manufacturing, it is assumed that the smaller
model plants cannot produce lead oxide and that the smallest
'model plants lack a lead reclaim furnace (Figure 18). Because
small plants have fewer processes to control, the economic impact
of NSPS may be less. If small plants are excluded from NSPS
standards, it is important to know where the cost breaks are.
When operating practices within an industry vary at plants of
different sizes, more than three sizes of model plants are needed
to represent these variations.
Both new and retrofit costs are required in BID cost esti-
mates. Trends in new plant sizes are applicable only to new
facilities. Existing facilities may come under the provisions of
the modification and reconstruction regulations, and the costs of
controlling these facilities must be based on representative
sizes of existing facilities.
3.3 SYSTEM REDUNDANCY
All air pollution control systems should be designed with
spare capacity to handle surges. Design engineers usually add a
margin of safety to their calculations to ensure that the system
can meet the minimum control requirements despite inexact design
data. The cost analyst must use the amount of redundancy typical
of systems in the field.
In flue gas desulfurization systems, it is common to over-
size equipment or add redundant equipment for limestone prepara-
tion, pumping, and oil waste disposal. Spare scrubbing modules,
however, are usually not added. The designer assumes that when
one module is down for repairs in multiple systems, the gas
velocity or liquid-to-gas ratio can be raised slightly to achieve
an acceptable removal efficiency. Electrostatic precipitators
30
-------
Table 3. TYPICAL UNCONTROLLED EXHAUST PARAMETERS FOR BATTERY
MANUFACTURING FACILITIES* (ENGLISH UNITS)
Facility
code
letter
A
»
C
o
e
F
a
Facility
Grid casting
furnace"
Grid casting
machineb
Paste mixer
Lead oxide
manufacturing
Three-process
operation
Lead reclaim
furnace
Formation
Temperature,
•C
115
18
18
115
27
115
27
Moisture.
2-1
2-1
2-4
2-1
1-2
2-1
H.A.
Total particulate
loading,
mq/mJ
<21
<21
117
2ld
46
>229
4000e
Volume by plant site, m /min
100 bpd
27.5
27.5
62.0
c
401
f
75.3
250 bpd
27.5
27.5
62.0
c
403
f
177
500 bpd
11.7
11.7
67.9
c
472
198
147
2000 bpd
57.0
S7.0
89.5
87.2
711
198
1366
6500 bpd
127
127
154
216
1517
198
4020
9aaed on eiihauat data obtained from industry responses to fPA's inquiries (Section 114 Letters),
design calculations and source test reports.
b
The qrld castinq facility consists of a furnace and a machine. Sometimes these elements are separate, as where one
furnace feeds many casting Machines.
roc purposes of this study, It is assumed that plants making only 500 bpd or less have no rbO manufacturing facilities.
d
Measured at outlet of baghouse, which is part of the process.
* Test data from outlet of fan aeparator tested at Plant G indicated <10 ppn H2SO4 (<38.9 mg/m ); assuming control device
was 99 percent efficient, uncontrolled emission approximates 4000 mq/ro1.
It is assumed for the purposes of this study that plants making <500 bpd have no lead reclaim furnace.
Figure 18. Example of a display of exhaust gas parameters
Source: Cost analysis of NSPS for the manufacture of lead acid-batteries.
-------
often have a spare section, so that compliance can be achieved
even when one section malfunctions. Large fabric filters also
are often designed with one or more extra modules, so that the
flowrate is not reduced when a module is down for cleaning or
repairs.
For the BID cost estimates, actual installations provide the
best information about redundancy. Newer installations should
serve as guides, because many older ones were undersized or built
at minimum cost before stringent regulations were enforced. Too
much redundancy, however, should not be included; vendor specifi-
cations are a good check on typical system redundancy.
3.4 RECOVERY CREDITS
Useful byproducts may be recovered from some control sys-
tems. A fabric filter on a cement storage silo prevents the loss
of valuable products, in addition to its primary function of pre-
venting air pollution. In some flue gas desulfurization systems,
elemental sulfur and sulfuric acid are recovered. These re-
covered credits should be calculated and used to reduce the
annualized costs of the control systems.
A captured emission product may be marketable at one loca-
tion, but of no value at another. Fly ash from coal-fired
boilers is an example; the market cannot absorb all that is made.
Similarly, there is no market for sulfuric acid in some sections
of the country. In these instances, recovery credits should not
appear in the annualized costs, although the potential for by-
product sales should be mentioned in the text.
3.5 LOST PRODUCTION
Lost production costs may occur when a control system is
tied into an existing process. Tie-ins, however, are usually
scheduled during routine maintenance periods, when production is
not possible. No lost production costs are incurred in such
cases. Because all systems must be shut down periodically for
32
-------
repair or maintenance, lost production costs are not normally
included in the cost estimates. If premium labor costs must be
paid for overtime to minimize the tie-in period and prevent
production losses, these charges should be added to the capital
cost of the system.
3.6 COST ELEMENT IMPACTS AND SENSITIVITY ANALYSIS
The cost analyst compiling study estimates lacks enough time
to define each element in detail. Priority should be assigned to
those elements having the most impact on a cost estimate. Feed-
back from the economist preparing Section 8.4 might provide help-
ful information about elements to be investigated in a sensitiv-
ity analysis. Such an analysis should be performed only when the
costs are of such magnitude to result in adverse economic impacts.
Equipment costs are important in all control options. The
relative importance of the other elements in the cost of a fabric
filter has been shown in Figure 8, and Figure 19 provides a
similar analysis for a wet collector. Piping is not included in
the cost of a shaker fabric filter, whereas it is significant in
the cost of a wet scrubber. On the other hand, ducting is more
important in the cost of a fabric filter than of a wet scrubber.
The boundaries of the air pollution control system must be
defined before the calculation of overall equipment costs. Items
such as solid waste disposal and water pollution control can be
significant with some control options.
The cost analyst can improve an estimate by carefully de-
fining the engineering details of those elements that signifi-
cantly affect costs. For a wet scrubber, a simple layout and a
detailed estimate of the piping improves the accuracy of the
total scrubber estimates. If the analyst has reason to believe
that piping is critical, he may want to establish a cost range
for this element similar to a sensitivity analysis. Such de-
tails, however, are unnecessary to define painting costs, because
painting has only a minor impact on the total estimate.
33
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Table B-10. COMPONENT CAPITAL COST FACTORS
COLLECTOR (SCRUBBER OR MIST ELIMINATOR) AS A
EQUIPMENT COST, Q
Component
Equipment
Ductwork
Instrumentation
Electrical
Foundations
Structural
Sitework
Painting
Piping
Total direct costs
FOR A WET
FUNCTION OF
Direct costs
Material
l.OOQ
0.03Q
0.04Q
0.11Q
0.03Q
0.03Q
0.02Q
0.004Q
0.150
1.41Q
Component
Engineering
Contractor's fee
Shakedown
Spares
Freight
Taxes
Total indirect costs
Contingencies - 20%
Total capital costs
Labor
0.250
0.130
0.006Q
0.16Q
0.050
0.050
0.02Q
0.02Q
0.160
0.850
Indirect costs
Measure of costs
lot material and labor
15t material and labor
St material and labor
1% material
3% material
31 material
of direct and indirect co;
Factor
0.2260
0.3390
0.113Q
0.014Q
0.042Q
0.0420
0.776Q
sts. 0.607Q
3.640
Figure 19. Example of a display of component capital cost
factors for wet collector.
Source: Cost analysis of NSPS for the manufacture of lead-acid batteries
34
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The same principle applies in the estimation of annualized
costs. Water costs are normally very low for utilities, whereas
electrical costs are high. Therefore, more effort should be
spent to determine power consumption than water usage. If
electrical costs are uncertain, a cost range aids the economist
in determining the upper limit of costs.
3.7 NEGATIVE STATEMENTS
Certain items may be purposely excluded from a particular
cost estimate. It is important to note these items in negative
statements defining the limits of the cost estimate, especially
when the costs for actual installations are compared.
For example, a pulse-jet fabric filter requires compressed
air to clean the bags. The cost estimates may show this air as
coming from an existing source or from a compressor included in
the fabric filter capital cost. In the first case, the capital
cost includes no charge for the compressed air, and the annu-
alized cost includes only a utility charge for the compressor.
In the second case, the capital cost estimate covers the air
compressor, and the annualized cost covers electricity, supplies,
maintenance, and a capital charge for the compressor.
When a fabric filter is retrofitted onto a coal-fired boiler
that already has a mechanical collector, some items need not be
included in the retrofit estimate. The ash silo and handling
systems, for example, are already in place. A fan may or may not
be changed when a new control device is added. Negative state-
ments should explicitly specify the limits of the retrofit cost
analysis.
If byproduct credits from recovered pollutants are absent
from the annualized cost estimate, a negative statement should
explain this absence. Such a statement prevents the estimate
from being questioned.
Finally, if the cost of an item is judged to be insignifi-
cant, a negative statement should explain that the item was not
inadvertently omitted.
35
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SECTION 4
CAPITAL COSTS
Capital investment estimates are generally classified ac-
cording to five levels of precision. The margin of error for
order-of-magnitude estimates may exceed +30 percent of the actual
investment cost, whereas that for study estimates may not. The
three other types of estimates, which usually apply to specific
installations at specific locations, are budget estimates,
project control estimates, and firm estimates; their respective
levels of precision are +20, 10, and 5 percent. The level of
accuracy for a BID is that of the study estimate (i.e., within
+30 percent).
To compile a study estimate, the cost analyst needs a rough
process flow diagram, as well as information about the prelim-
inary sizing of equipment and duct work, material and type of
construction, estimated utility needs, and approximate energy and
engineering requirements. These details can be obtained for
model plants that are not site-specific. For more precise esti-
mates, it is necessary to have site-specific data, such as a
general description of the area and its soil bearing properties,
a plan of the general layout of equipment, a preliminary struc-
tural design, a preliminary instrumentation list, and estimated
electrical substation sizes and specifications.
The capital investment cost of an emission reduction system
is defined as the direct and indirect expenses incurred to the
date that the facility begins commercial operation and major
startup problems have been solved. Direct costs are the costs of
equipment, as well as the labor and material needed to install
the system. Indirect costs are those incurred for the overall
36
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facility, but not for a specific equipment item; they include
engineering and supervisory fees, construction and field ex-
penses, the contractor's fee, startup expenses, and performance
test expenses. Contingencies are included as a separate cost
element.
Figure 20 is an example of a form listing typical direct and
indirect costs, and Figure 21 is a completed example of such a
form. For some industries, additional entries may be needed for
expenses that do not qualify as direct or indirect costs.
Investment for land may be included as a separate cost element if
it is normally necessary to purchase additional property on which
to build a control device. Another separate cost element for
some systems may be the capital invested in a working inventory
of a treatment chemical. These and similar costs are further
discussed in Section 4.3.
4.1 DIRECT COSTS
A complete list of the direct cost components of capital
investment estimates follows:
0 Equipment
0 Instrumentation
0 Duct work
0 Piping
0 Electrical work
0 Site work
0 Buildings
0 Painting
0 Insulation
0 Structural work
0 Foundations
0 Other items
Because all estimates do not include each of these items,
the cost analyst must specify what an estimate covers. The total
estimate for a fabric filter on a cement silo may include only
37
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Direct costs
Equipment cost
Basic equipment (includes freight)
Required auxiliaries
Total equipment cost
Installation costs, direct
Foundations and supports
Duct work
Stack
Piping
Insulation
Painting
Electrical
Total installation cost
Total direct costs (equipment cost
+ installation costs)
Indirect costs
Installation costs, indirect
Engineering and supervisory fees,
( X of total direct costs)
Construction and field expenses
( I of total direct costs)
Contractor's fees .
( S of total direct costs)
Startup expenses
( % of total direct costs)
Performance test expenses
Total indirect costs
Contingency costs
( % of total direct costs and total indirect costs)
GRAND TOTAL
Figure 20. Example of a form listing the typical
elements of a capital investment.
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INVESTMENT COST FOR A FABRIC FILTER MEETING A 0.1 Ib/MM Btu
PARTICULATE REGULATION WITH A 2.8 A/C RATIO
Direct Costs (includes installation)
Fabric filter S 1,349,000
Ash handling 566,000
Ducting 284,00
Subtotal, Direct Costs $ 2,199,000
Indirect Costs
Interest during construction 8% of direct costs $ 176,000
Contractor fee 10% of direct costs 220,000
Engineering 6% of direct costs 132,000
Freight 1.25% of direct costs 27,000
Offsite 3% of direct costs 66,000
Taxes 1.5% of direct costs 33,000
Spares - 1% of direct costs 22,000
Allowance for shakedown 3% of direct costs 66,000
Subtotal, Indirect Costs $ 742,000
Working capital 70* of Direct 4 Indirect S 528,000
and Contingency
GRAND TOTAL $ 3,529,000
Figure 21. Example of a completed capital investment
form for a fabric filter.3
Values shown .in this figure are examples only and are not necessarily
representative or preferred values.
39
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the equipment and installation components. Other control sys-
tems, such as flue gas desulfurization, may include all the
listed components. Each type of system is different and includes
its own set of components.
Equipment cost is the most important item of a capital
investment estimate. The minimum information needed to estimate
this item for an air pollution control system is a flow diagram
and the process exhaust parameters. The more accurate this
information, the better is the equipment cost estimate. The cost
analyst must list the exhaust gas parameters and other factors on
which the equipment cost is based.
Most equipment can be classified into three basic price
categories. Group I includes items with standard designs and
sizes, such as pumps, tanks, fans, and some air pollution control
devices. Group II includes partially standardized equipment,
such as heat exchangers, clarifiers, and fabric filters. Group
III consists of equipment with special design or size require-
ments, such as distillation columns, pressure vessels, reactors,
and pollution control equipment for large systems.
Price lists for Group I equipment are available from fab-
ricators or vendors, and Group II equipment costs can usually be
calculated by a correlation analysis. No standard price lists,
however, are available for Group III equipment; after preliminary
process criteria are established, price estimates should be
secured from several sources.
One suggested approach to equipment costing when process
data are insufficient during the conceptual stage of a project is
to use the type, weight, volume, and thickness of the materials
of construction as the basis for the development of equipment
cost data. Because this is the least accurate method of esti-
mating equipment costs, it should be used only when other sources
of data are unavailable.
Many pollution control devices require auxiliary items, such
as pumps and fans, dust hoppers, screw conveyors, sprinklers,
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oiling trucks, mist eliminators, and exhaust gas coolers. Be-
cause these equipment items are directly related to capturing and
handling the pollutant, they must be included in the equipment
cost.
Where the control option requires a process change, equip-
ment costs may cover conveyors, reactors, mixers, steam oper-
ators, and material handling. For example, if a control option
for road dust reduction calls for decreased vehicle speed, the
cost of additional haul trucks should be included in equipment
costs.
Also included in the equipment cost is the cost of freight,
sales taxes, unloading, and rigging.
The instrumentation cost covers recorders, sensors, trans-
mitters, and control room equipment. Control valves are also
normally considered under the instrumentation cost, not the
piping cost. The total instrumentation cost also includes in-
stallation labor, auxiliary equipment, and materials. For con-
trol systems that do not contain instrumentation, the estimate
must state why the instrumentation costs are omitted.
Duct work comprises the hooding, ducts, dampers, and stack
of an exhaust system. In the absence of an NSPS, some facilities
have no exhaust system, and the control option cost must include
the expense of adding one.
A process change may also involve costs that reflect changes
or additions of duct work. Facilities that need only an add-on
control device may still incur some duct work costs, especially
in retrofit situations, because the device may not fit directly
and may thus require duct work modifications. In addition, the
cost of such auxiliary items as wear plates and refractory
linings must be included under duct work.
The piping cost includes the costs of the hangers, fittings,
and valves that comprise a completed piping installation. A
large amount of this cost item is the labor required for instal-
lation. The piping cost may be a large percentage of the fixed
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capital investment for process changes and for such pollution
control systems as scrubbers. For fabric filters, storage bins,
and dust handling systems, piping costs may be negligible.
The electrical cost includes the costs of wiring, starters,
switchgear, and circuit breakers, as well as the labor to install
such equipment. Most pollution control systems have some elec-
trical cost, which varies considerably from system to system.
The site work cost covers road grading, clearing, railroad
sidings, parking areas, and piers. It is a direct cost that de-
pends largely on whether the installation is new or retrofitted.
In many retrofit applications there is no site work because the
control system can be installed upon a building roof. At the
other extreme, site work is a major factor for flue gas desul-
furization systems because of the large areas required for chem-
ical handling and sludge disposal.
The building cost covers administrative buildings, main-
tenance shops, process buildings, and any other structure di-
rectly related to the air pollution control system. This cost
component varies according to the process characteristics. Some
control systems have no building costs, whereas others, espe-
cially those associated with process changes, require extensive
expenditures. Structures also may be needed for raw material
storage, locker rooms, and cafeteria space for new employees.
Painting encompasses regular painting and coating, as well
as special coating to protect the components of the control
system from weathering or corrosion. This is usually a minor
cost component. If it is not included in the cost estimate, its
omission should be explained.
The insulation cost includes the costs of steam tracing and
other means of freeze protection, as well as associated installa-
tion costs. This component does not include the cost of insula-
tion or heaters on the control device itself, which should be
included with the equipment cost. The insulation varies among
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control systems. For some outdoor applications, insulation can
be a significant part of the cost estimate.
The structural cost is the cost of the steel structure on
which a pollution control device is mounted. If the device is
retrofitted on some existing structure, the cost for reinforcing
the existing structure is a structural cost. In industries where
retrofitted systems will probably be mounted on existing struc-
tures, a typical estimate of the cost of reinforcement should be
included in the capital cost. When a control device is light-
weight and can be mounted directly to an existing structure
without reinforcement, structural costs are omitted from the
estimate with a note of explanation.
The foundation cost includes the costs of excavation, re-
inforcing steel, concrete, backfill, and labor. In some retrofit
applications, the control device needs no foundation, but founda-
tions may still be required for fans, pumps, tanks, and other
equipment.
The category of other items includes the costs of equipment
or facilities not directly related to the removal or capture of
the pollutant, such as the oil storage facilities for an oil-
fired incineration system or the lime storage facilities for a
flue gas desulfurization (FGD) system. All items included in
this category must be clearly specified. Depending on their
costs in proportion to the total estimate, these items may even
be listed as separate items, such as a mill to grind limestone in
an FGD system.
4.2 INDIRECT COSTS
Indirect costs are those not directly related to a specific
equipment item, but necessary to complete the design, construc-
tion, and startup of a pollution control system. They include
engineering and supervisory fees, construction and field expenses,
the contractor's fee, startup expenses, and performance test
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expenses. Table 1 lists guidelines for the selection of appro-
priate allowances for indirect cost items.
The size of the project usually determines the engineering
and supervisory fees. Smaller projects incur a relatively higher
percentage of total cost for this category than do larger pro-
jects.
Construction and field expenses are the costs of maintaining
a labor force and purchasing commodity items in the field.
The contractor's fee covers payroll additions/ supervision
of subcontractors, risk insurance, and taxes. This fee is a
percentage of the direct cost and depends on the particular in-
stallation.
Startup expenses are those incurred after the facility has
been completed. They include the costs of labor, materials,
equipment, and other modifications needed to put a control system
or process operation into good working order.
Performance test expenses can vary widely. Table 1 indi-
cates the range of such variation.
4.3 CONTINGENCY COSTS
As mentioned in the introduction to this section, contin-
gency costs may apply to certain estimates. Contingency costs
are investments of capital that are economically equivalent to
capital cost, but do not appear as hardware or permanent construc-
tion.
Contingency costs of about 20 percent of the total direct
and indirect costs are normally included in a study estimate,
although they may vary from 10 to 30 percent. The contingency
costs are not added to compensate for an incomplete estimate, but
are real costs experienced as a result of such unforeseen cir-
cumstances as storms, floods, price changes, strikes, unproduc-
tive labor, design errors, small design changes, and incomplete
engineering.
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TABLE 1. TYPICAL VALUES FOR INDIRECT CAPITAL INVESTMENT COSTS
4,5
Cost item
Range of values
Engineering and supervisory
fees
Construction and field expenses
Contractor's fee
Startup expenses
Performance test expenses
8 to 20 percent of total direct costs;
high value for small projects; low value
for large projects
7 to 20 percent of total direct costs
10 to 15 percent of total direct costs
1 to 6 percent of total direct costs
Normally a fixed price item; the minimum
cost of a simple compliance test for par-
ti cul ate matter is in the range of $3000;
complicated compliance tests for sulfur
dioxide, nitrogen oxides, and particulate
matter can cost as much as $100,000 for
large utility boilers
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The raw material inventory cost, sales taxes/ land costs,
shipping costs, and the interest on construction capital are
usually included in a single listing as working capital costs.
This listing also includes the interest on capital reserved for
payment of salaries, utility bills, and similar month-to-month
expenses.
The raw material inventory cost is usually estimated as the
total value of a 1-month supply of the raw materials.
Sales taxes depend on the location of the plant, but they
are usually computed at 2 to 6 percent of the equipment and
material costs. In some cities and states, pollution control
equipment is exempt from sales taxes.
Land costs may range from 1 to 5 percent of the capital
investment. Local conditions, the type of industry, and the type
of control have a large effect on land requirements. Although
land costs can be estimated as a percentage of the capital in-
vestment, it is preferable for the cost analyst to estimate the
additional acreage needed to implement the control option and
then to apply a value to the land. Some control systems have no
land requirements, whereas others (e.g., an FGD system with a
sludge pond) require considerable space. Land costs in urban :•
locations are much higher than in rural locations, and this
aspect must be taken into account when the industry under study
is typically located in a particular area. If companies of an
industry normally own unused land around the plants, this fact
must also be considered in evaluating land costs.
Shipping costs and the interest on construction capital are
usually not calculated as separate items for study estimates.
The capital cost estimates for individual items should be high
enough to allow for transportation and interest and such other
items as incidental insurance and minor local services.
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4.4 SOURCES OF CAPITAL COST INFORMATION
Useful information for estimating capital costs can be
obtained from a variety of sources. Some of these sources and
their particular limitations are presented below. Because the
cost estimate of an air pollution control option is based on
information from several sources, the cost analyst must document
his information and clearly define the scope of data obtained
from each source.
4.4.1 Vendor Information
Equipment costs may be obtained from vendors, fabricators,
and suppliers. Verbal quotations, properly documented, are
normally used in preparing NSPS study estimates. Written quo-
tations are preferred because the scope of the equipment or
control device is better defined than in oral quotations. When
using oral quotations, the analyst should obtain several to
cross-check the costs and project scope. Because equipment is
normally discounted from list prices, quotations used for NSPS
estimates should reflect the full discount. Several useful
sources containing the names of equipment vendors are the
Chemical Engineering Equipment Buyers Guide, the classified
section of the telephone directory, and various trade journal
advertisements.
A turnkey facility is a complete, installed facility sup-
plied by a single system vendor. These facilities are common in
air pollution control, especially for carbon bed adsorption, flue
gas desulfurization, and electrostatic precipitation. Many
process modifications (e.g., the use of waterborne paints for
automobile manufacturing) are also installed on this basis.
Turnkey estimates may vary widely in scope. For an electrostatic
precipitator, one vendor may cover only equipment erected "flange-
to-flange" under the turnkey cost, whereas another may also
include the foundations. Because of these variations, the cost
analyst must determine the scope of the project when employing
turnkey costs.
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4.4.2 Estimating Manuals
Estimating manuals are commonly used for capital cost
analysis. Two popular manuals are published by Richardson and
3 4
Means. ' Both present problems for estimating NSPS costs,
because they are not designed for preparing pollution control
cost estimates. Richardson is useful in preparing cost estimates
for process facilities, and Means is geared to the construction
industry. The manuals are written to provide costs for indi-
vidual components rather than total systems.
4.4.3 Published Reports
Many of the reports that are written for technical journals
and symposia about different pollution control systems contain
cost information. Typical are such examples as the CARD Manual,
Control Techniques Guidelines Documents, and BID's. As with all
sources, the cost analyst should take care in extracting capital
costs from published information to define the scope of the
project clearly. Operating, raw material, and maintenance costs
are usually accurate, because these reports are written about
actual systems.
4.4.4 Industry Information
Cost information can be obtained from various industry
sources, such as Section 114 letters, plant surveys, and pub-
lished reports. The EPA issues Section 114 letters to gather
mandatory cost and process information from industrial sources.
Where possible, such information should be verified with the
source to ascertain that the scope and limits of the project are
properly defined. Replies to Section 114 letters are of limited
value, because they may not be available early in a study or
contain data broken down adequately for direct use. The industry
source may also cite equivalent, rather than actual, cost data.
Only if these problems are resolved can the information be used
for cost estimating. Otherwise, it should only be used for
comparison purposes, with appropriate notations as to its accuracy,
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Other sources of industry information include inspection
reports by the EPA, plant surveys, and published reports. Prob-
lems encountered in using these sources include poor project
definition and data information. In many cases, the cost in-
formation is unclear or unknown or cannot be adjusted to a common
base.
4.5 TECHNIQUES FOR ESTIMATING CAPITAL COSTS
The accuracy of a capital cost estimate depends on many
factors. A clear definition of project scope is of prime impor-
tance, especially in evaluating data that are gathered from
different sources. Occasionally, problems with equipment pricing
can lower the overall accuracy of an estimate. Most significant,
however, are errors resulting from omissions in the list of
equipment items or auxiliary facilities. To guard against these
deficiencies, a cost analyst must first compile a complete
checklist of the items that must be present to make a realistic
cost evaluation of the project. After these items have been
established, several cost estimating techniques can be applied.
The major ones are discussed in the following paragraphs and are
listed in the order of increasing accuracy.
4.5.1 Average Unit Cost Estimates
This method of estimating costs is based on the equipment
variables that have the greatest effect on equipment costs, such
as equipment size and treated gas volume. The basis of cost
estimates for fabric filters may be dollars per 1000 scfm of
treated gas, and for FGD systems, dollars per kw of boiler size.
Average unit costs for major control systems are rough and are
best used for comparison only. Average unit costs, however, are
sufficiently accurate for auxiliary systems (e.g., compressed air
or refrigeration), which are minor components of the total cost
investment estimate.
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4.5.2 Factored Estimates
A factored estimate is a total capital investment cost
estimate based on only one or two items. The analyst estimates
some equipment costs and then applies appropriate multiplication
factors to them to compute the other costs and the total capital
investment. The multiplication factors are derived from ex-
periences with previous plant construction costs.
In Lang's method, the costs of the major process equipment
items are multiplied by a factor between 3 and 6 to estimate
total capital investment. Although this method is easy to apply,
it is too inaccurate for estimating NSPS costs.
Guthrie's method is more accurate for estimating the costs
of different installations. This method separates labor and
material costs and applies individual factors to each major
process item.
Factored estimates must rely upon good estimates of equip-
ment costs, because all other costs are derived from them. The
factors vary widely among different control systems. If factored
estimates are used for NSPS costs, the cost analyst must identify
each factor. If some equipment cost components are not included
in the factor, this should be stated.
4.5.3 Scaled Estimates
Methods have been developed for determining the costs of
various sizes of equipment or control systems from cost data for
a given size. The "power rule" is a technique for scaling of
cost data; if the factor used in the power rule is 0.6, then the
rule is called the "six-tenths factor."
The first scale factor used for estimating the logarithmic
relationship between equipment size and total equipment cost is
the six-tenths factor. This factor is most accurate for single
equipment items and less so for total control system costs. The
six-tenths technique may err by as much as 50 percent because of
differences in size, location, construction methods, or auxiliary
facilities.
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Power rule costs are predicted from actual cost data. For
example, if a data source indicates that electrostatic precipita-
tors are scaled at a power rule factor of 0.85, this indicates
that actual cost data were used to determine the scale factor.
4.5.4 Cost Code Estimates
Cost code estimates are refined factored estimates, based on
computerized accounts of actual installations. The cost code
technique assigns cost items to standard code numbers (cost
code). Accumulated costs from similar projects provide the
feedback for new estimates. A library of cost data can be
gathered and stored in the computer. The code also provides a
checklist for items that must be considered in costing various
systems. If multiple estimates of the same control device are
required, a cost code estimate provides greater accuracy than a
factored estimate.
4.5.5 Capital Cost Escalation
The capital cost estimate must be escalated for inflation,
so that it reflects the most probable capital investment needed
for a particular time and location. Cost data from various times
must be adjusted to a constant cost base. Capital cost indices
are used for estimating the up-to-date costs. The primary func-
tion of a cost index is to provide a method for upgrading the
cost of an old facility to match present or future estimates,
without having to do in-depth studies of individual project
items. It does not account, however, for technological changes
or differences in locality.
Different indices are used for different types of control
systems. The Chemical Engineering Plant Index may be used for
FGD scrubbing systems, and the Bureau of Labor Statistics Fabri-
cated Metal Index may be used for fabric filters. The cost
analyst should state the index used in preparing the NSPS cost
estimates, the reasons for selecting it, the date of the index,
and how to use it to update costs.
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SECTION 5
ANNUALIZED COSTS
The annualized cost of an air pollution control installation
is the total annual expenditure required to build, operate/ and
maintain the facility. The annualized cost of an emission re-
duction system is the sum of operating costs and capital charges.
Operating costs are the day-to-day expenditures required to
operate a system. Capital charges are those items associated
with owning the equipment and include depreciation, taxes, in-
surance, and interest on borrowed capital.
Most operating cost estimates cover the following:
0 Utilities—including the water for process use and
cooling; steam; electricity to operate controls, fans,
motors, pumps, valves, and lighting
0 Raw materials—including any chemicals needed to
operate the system
0 Byproduct or waste disposal—including salable by-
products (which produce credits), as well as wastes
0 Fuel—including incremental fuel, where more than the
normal supply is used
0 Operating labor—including supervision and the skilled
and unskilled labor needed to operate, monitor, and
control the system
0 Maintenance and repairs—including the manpower and
materials to keep the system operating efficiently
(maintenance is both preventive and corrective, to keep
outages to a minimum)
Another component of the operating cost is the overhead
cost, which is not charged directly to a particular part of the
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process, but allocated to it. Overhead is usually divided into
payroll and plant overhead and includes:
0 - Administrative, safety, engineering, legal, and medical
services
0 ~ Payroll and employee benefits
0 Recreation
0 Public relations
Figure 22 shows how the operating costs may be displayed.
Some of these items have only a small overall effect, but each is
important to the total cost estimate and must be considered.
When the effects of an item are minor, the analyst should state
this. Particular attention must be paid to major items to ensure
that the estimates are realistic. The analyst must also provide
the proper documentation for each cost basis.
The capital investment for an emission reduction system is
generally translated into annual capital charges on the basis of
100 percent debt financing. These charges, along with the annual
operating costs, represent the total revenue requirements for a
given system.
The annual capital charges cover capital recovery, adminis-
tration, taxes, and insurance. The capital recovery factor is a
function of the interest rate and the overall life of the equip-
ment. This factor is a combination of depreciation and interest
charges. Depreciation represents the money put aside each year
to replace a system at the end of its useful life. Interest
charges are the costs associated with borrowing money to pay for
the air pollution system.
Administrative costs are general company administrative
expenses. They are included in separate cost centers, but
applied across all projects.
The tax cost is the product of the total capital investment
multiplied by the tax rate. This rate can vary for different
plants.
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ANNUAL OPERATING COSTS FOR AN ESP MEETING A 0.1 Ibs/MM Btu
PARTICULATE REGULATION FOR A COAL WITH 1.0 PERCENT SULFUR
Utilities
Electricity
Operating Labor
Direct Labor 0.S
Supervision 15%
Maintenance
Labor and materials
Supplies
Overhead
Plant 50%
man/shift $9.00/hr
of direct labor
2% of fixed investment $
15% of labor and materials $
of operational labor and
maintenance
Payroll 20% of operating labor
Subtotal
Administrative
Insurance
Taxes
Capital recovery factor
Total capital
GRAND TOTAL
50,000
39,000
6,000
74,000
11,000
65,000
9,000
254,000
40% of fixed investment S 147,000
11.35% of fixed investment S 418,000
charges $ 565,000
S 819,000
Figure 22. Example of a presentation of annualized
costs for an electrostatic precipitator.3
a Values shown in this figure are examples only and are not necessarily
representative or preferred values.
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The insurance cost is the product of the total capital
investment multiplied by the insurance rate for the system.
5.1 DEVELOPMENT OF ANNUALIZED COSTS
Each of the items that comprise the annualized cost must be
estimated either by using developed data from reliable sources or
by employing factors developed from prior operating experience at
similar plants. Some items, such as the costs of utilities, raw
materials, byproduct or waste disposal, and fuel, vary in direct
proportion to the exhaust gas flow rate. Other items, however,
are related to the size and cost of the facility and are not
directly dependent upon exhaust gas volume.
Utility costs include outlays for process and cooling water,
steam, and electricity to operate controls, fans, motors, pumps,
valves, refrigeration, and lighting. Raw material costs cover
the materials directly related to the operation of the control
system, such as. lime, limestone, and soda ash in an FGD system;
associated transportation costs are also placed in this compo-
nent. Fuel costs are directly related to the operation of the
control system; in an FGD system, natural gas is used both as a
reductant and as a fuel to reheat the stack gases.
Several sources of cost information are available for these
items. Cost estimates for utilities and raw materials are most
reliable when they are based on developed process flow sheets.
Electric power charges can be computed by contacting the utility
companies. Suppliers of materials can be contacted for accurate
cost information; more than one supplier should be contacted for
estimates of each material.
The cost of maintaining and operating a waste disposal
system is a direct cost. Any usable byproduct from the system
should be counted as a credit.
Direct labor costs include those for personnel to operate
and monitor an air pollution control system. Some control sys-
tems may have no operating labor. The basis for choosing a
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certain number of operators should be clearly explained in the
NSPS estimate. Reasonable values must be assigned for direct
labor costs, because some other annualized costs depend upon
them.
Supervisory labor is normally estimated at a percentage of
the direct labor and varies according to the size of the system
and the skill levels of the personnel required. It is necessary
to state the percentage used to estimate supervision costs and to
justify this selection.
Maintenance and repair costs include charges for the labor,
materials, and supervision to maintain the system. The most
reliable maintenance estimates are based upon user and vendor
data, although they may also be derived as a percentage of
capital investment.
Information from the plant can be very helpful in deter-
mining maintenance costs. Section 114 letters contain cost and
process information, but the data should be verified before being
used; some companies may not understand the scope of the estimate
or may follow different techniques for recording maintenance cost
data.
Plant surveys are another source of user data for main-
tenance cost estimating. Survey forms must be carefully planned
to cover all the manpower and material costs needed to keep the
system operating efficiently. Books, magazines, and technical
papers also contain information that can be used for plant main-
tenance estimates.
Certain vendors can supply maintenance cost estimates for
their equipment units or for total modules. The data are usually
reliable, but the vendor must know the scope of the pollution
control system to give an accurate maintenance cost estimate. If
a number of vendors submit annual maintenance costs for their
particular equipment, the reliability of the estimates is im-
proved .
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Factored estimates are sometimes adequate for a preliminary
BID estimate. The factors are usually based on total plant
costs. Maintenance costs vary widely among control systems, and
if a percentage method is used to prepare the cost estimate, the
percentage should be given and the reasons for using it justified.
Maintenance costs can also be estimated as a function of process
flow or production rate. For instance, maintenance on air pollu-
tion control devices can be based upon the volume of air treated.
The typical maintenance estimates are expressed in dollars per
m /s (cents per acfm), and they correlate relatively well with
other factored data and source estimates.
The best operating and maintenance estimates are derived
from similar or identical operations, although most companies
with extensive records of their operations consider this informa-
tion proprietary. As already discussed, users and vendors can
provide information about operating and maintenance costs. Other
sources include published reports and estimating manuals. Pub-
lished reports provide much information; in many cases the data
represent actual operating systems. Estimating manuals are not
intended to help estimate annualized costs of pollution control
systems, but can be used for estimating costs of raw materials,
wages, and employment. The manuals often contain nomographs for
calculating cost estimates.
The overhead charges are subdivided into payroll and plant
overhead. Payroll overhead consists of the salaries of super-
visory personnel from the plant manager down to line supervisors,
as well as those of plant guards and janitors. Plant overhead,
estimated as a percentage of the operating labor and maintenance
cost, includes costs of administrative buildings, cafeterias,
change houses, medical facilities, and other structures, plus the
auxiliary services needed for plant operation. These costs are
not charged directly to the process functions, but are allocated
to them. Overhead costs are normally given as percentages of the
other annual cost items, and these percentages are adequate for
57
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NSPS estimates. Cost estimates made at individual plants, how-
ever, would use actual overhead costs that are specific to each
source.
The basic tenet of estimating is to obtain the most accurate
data for those items that contribute most significantly to the
total annualized costs. The analyst should place special emphasis
on maintenance costs when evaluating control options reported to
have a high incidence of maintenance problems. If a more ex-
pensive raw material, such as ammonia or caustic soda, is em-
ployed in a control option, accurate calculation of quantities
and accurate unit cost determination are essential.
A common error in annualized cost estimating is the erro-
neous assessment of the market for a byproduct from a pollution
control system. In some regions of the country, for example,
byproduct sulfuric acid is not a marketable commodity or must be
sold at a loss because of high transportation costs. The rela-
tive purity of a byproduct may also limit its marketability and
result in low recovery credits.
5.2 ANNUAL CAPITAL CHARGES
Annual capital charges, which should be applied with con-
sistency on all estimates, represent the cost of owning the
pollution control system. They include administrative costs, the
capital recovery factor (CRF), taxes, and insurance costs.
Administrative costs consist of plant overhead and payroll
overhead. The former should be expressed as a function of oper-
ating labor and maintenance labor and supplies, whereas the
latter is to be based, as the name implies, on operating labor
only. The percentages used may vary among plants, control
options, and types of process operation. The analyst should
select the appropriate percentages and explain the basis for his
selection.
58
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The CRF is a function of the interest rate and useful equip-
ment life. Capital charges can be estimated by multiplying this
factor by the total capital investment for the system. The
equation for the capital recovery factor is:
where i = interest rate, expressed as a decimal
n = economic life of the system, years
The capital recovery factor combines interest on borrowed funds
and depreciation on equipment into a single factor. Use of this
factor is the approved method of costing interest and deprecia-
tion in an NSPS cost analysis.
Current interest rates have a small range of variation and
are not usually a source of inaccuracy in a capital recovery
factor. On the other hand, useful equipment life can vary widely
and have major impact on an annualized cost estimate. If a
control system is rated at 10-year life versus a 30-year life,
the capital recovery factor changes by 60 percent, thereby
causing a 20 to 30 percent change in the total annualized cost.
Because of its importance, the cost analyst must use a realistic
value for the useful equipment life. This value varies from 8 to
25 years or more, depending on the usual life of a control system
in a specific industry.
Property taxes are a percentage of the fixed capital invest-
ment. Some jurisdictions exempt pollution control equipment from
property taxes. Whether a tax cost is included in the estimate
depends on the regional location of the industry being studied.
Tax estimates vary from 1 to about 4 percent of the fixed
capital investment. Ad valorem taxes can be determined easily,
because the tax data are available from local governments.
Federal income tax varies with the profits of a company and is
accounted for in Section 8.4 of the BID; it is not considered in
estimates made for Sections 8.2 and 8.3 of the BID.
59
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Insurance rates vary according to the type of process system
and the safety measures that are applicable. Because inflation
has caused insurance prices to increase dramatically in recent
years, care should be taken in making the cost estimate. The
annual insurance charges are calculated by multiplying the in-
surance rate for the system by the total capital cost. Escala-
tion of insurance rates is normally not considered in a BID
estimate.
5.3 ADJUSTMENT OF ANNUALIZED COSTS TO A COMMON BASE
Annualized cost data can be adjusted to a common time base
by applying the proper cost indices. Different indices are
appropriate for different elements of annualized cost estimates
to compensate for inflation, geographic location, and the date of
the estimate. It is always preferable to gather current cost
data when available, especially in the case of raw materials.
Careful use of the cost indices results in accurate annu-
alized cost estimates. The accuracy of the data depends on the
number of data sources and the time base of the data to be ad-
justed. The cost analyst should indicate which indices have been
used in the estimate.
60
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SECTION 6
FURTHER INFORMATION ABOUT NEW AND
MODIFIED/RECONSTRUCTED FACILITIES
After the capital and annualized cost estimates, the eco-
nomic impact chapter of a BID must contain sections on cost
comparison, cost-effectiveness, and base cost of the facility.
These sections are discussed below.
6.1 COST COMPARISON
The comparative cost sections for new and modified/recon-
structed facilities present the analyst's estimates with values
from actual industrial sources. The best comparison is one of
the total turnkey costs. If the data are available, annualized
costs should also be compared.
The main sources for actual industrial data are:
0 Replies to letters sent under authority of Section 114
of the Clean Air Act and other regulatory surveys
0 Industry surveys
0 Published sources
0 EPA reports
Information should be gathered from as many of these sources as
possible to generate the best EPA cost estimate. It is important
that an attempt be made to compare an EPA estimate with an in-
dustry estimate, particularly for actual installations, to
answer public criticism of EPA cost estimates.
The primary sources of industry estimates are replies to
Section 114 letters. These letters can elicit good data if the
61
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cost analyst carefully defines what he wants in the information
request. Also, the cost engineer or analyst has the authority to
ask for clarification on any items.
In comparing estimates with actual costs, the analyst should
attempt to resolve all differences. He may reject a cost esti-
mate as inaccurate or set aside an actual cost from an industry
as atypical.
Industry surveys during any BID project are useful in ob-
taining cost information for comparisons. Because the plants are
visited soon after the start of a project, cost information can
be obtained from the industries at that time. Such surveys are
the best source of independent total system costs to be used for
comparison purposes.
Published reports from books, magazines, and technical
presentations are a primary source of information. Technical
articles often compare the costs of different processes, but have
deficiencies of which the cost analyst should be aware. The
information may be obsolete, and its scope may not be well de-
fined. Dated information must be updated to the time of the
study estimate.
Reports prepared by the EPA are also useful. They may
contain data that can be used directly in making cost compari-
sons. In addition, these reports often list references that may
be searched for additional data. As with other published sources,
EPA reports are limited by the age of the information and the
scope of the cost estimates.
6.2 COST-EFFECTIVENESS
For illustrative purposes, the cost-effectiveness of a
pollution control system may be defined in a BID as the quotient
derived by division of the annualized cost of the control system
by the annual amount of emission reduction realized by the sys-
tem. The term "marginal cost-effectiveness," by contrast, is
62
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defined in comparative terms as the quotient of the difference in
annualized cost of one control system from that of another system
divided by the difference of emission reduction of said control
system from the other.
The concept of cost-effectiveness is valuable for comparing
various proposed control options for a given industrial pollution
source with controls on other industrial sources. It not only
affords a relative comparison of the unit pollutant removal cost
for the control options considered, but also can serve as a tool
in selecting a control option where a decision on the basis of
plant affordability is not clear-cut. Examples of cost effec-
tiveness and marginal cost-effectiveness are presented in Figures
23 and 24. Figure 23 shows a table in which Alternative Controls
2 and 3 were preferable because of the high marginal cost of
particulate removal ($1.77 per Ib) for Alternative Control 4,
although all options would have been affordable. Figure 24
presents a table in which Control Systems 1, 2, and 6 would be
rejected because of the high marginal cost of achieving an annual
emission reduction of 69,000 tons or more of pollutant. To con-
struct tables of marginal cost-effectiveness properly, the
analyst should rank alternatives in order of increasing emission
reduction, as illustrated by the examples given in Figures 23 and
24.
6.3 BASE COST OF FACILITY
Because the cost of the air pollution control system is
sometimes a large percentage of the base cost of the production
facility itself, it is important to consider the relationship
between the two costs. This requires the cost analyst to make a
broad estimate of the base cost of the manufacturing facility
itself. Such an estimate should be based on the model plant
sizes used to calculate the air pollution control costs. A basis
for the estimate should be presented. For example, if the
building cost is estimated for a given floor area, the analyst
63
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Table 8-25. COST-EFFECTIVENESS FOR 1000 TPD HILL (DIRECT CONTACT RECOVERY FURNACE)
PARAMETERS
Increnental TRS reduction
(lt>/yr)
Incremental TRS control
costs (S/yr)
Avg. cost per unit of TRS
reduction (S/1b)
a Cost per A Ib TRS
reduction ($/lb)
ALTERNATIVE CONTROLS
2345
361.352 353,139 353.139 361,352
296,200 290,200 290,200 389,500
0.820 0.822 0.822 1.078
0.731 -- -- 12.09
Incremental Particulate
reduction (Ib/yr)
Incremental Particulate
control cost ($/yr)
Avg. cost per unit of
particulate reduction (S/lb)
& cost per 4 Ib particulate
reduction ($/lb)
886,950 . 886,950 995,355 995,355
171,800 171,800 363,900 363,900
0.194 0.194 0.366 0.366
1.77
'Alternative 1 is the baseline of control, which represents compliance with states' regulations.
Figure 23. Example of a tabular display of cost-effectiveness
64
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CTl
Ul
TABLE 8-15. COST-EFFECTIVENESS DATA FOR ALTERNATIVE CONTROL SYSTEMS
Control
system
5
4
3
6
2
1
A
National
emission
reduction,
tons/yr
65,000
67,200
67,600
69,000
71,500
77,700
T
Marginal
emission
reduction,
tons/yr
65,000
2,200
400
1,400
2,500
6,200
C
Industry
annual i zed
control
costs,
$1000/yr
69,000
93,600
94.300
200,000
237,000
441,000
D
Marginal
annual i zed
control
costs,
$1000/yr
69,000
24,600
700
105,700
37,000
204.000
E
Annuali zed
costs per
ton removed
(Ch(A),
$/ton
1 ,060
1,390
1,395
3,000
3,315
5,675
F
Marginal
annual i zed
cost per ton
removed,
(0);(B), $/ton
1.060
11.180
1,750
75.500
14,800
32.900
Figure 24. Example of a tabular display of cost-effectiveness and marginal cost-effectiveness.
Figure 24. Example of a tabular display of cost-effectiveness and marginal cost-effectiveness,
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should show how the area was determined. Also, the analyst
should show the rationale for the size of the employee service
facilities, such as the cafeteria, parking area, and dispensary,
In general, the base facility cost estimate should include the
cost of:
0 Buildings—
Manufacturing space
Raw material storage
Finished product storage
Employee services
Offices
0 Land--
Building
Storage
Parking
0 Production equipment—
Machinery
Process vessels
Conveyors
66
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SECTION 7
OTHER COST CONSIDERATIONS
Section 8.3 of the BID discusses the costs that are not
directly associated with NSPS air pollution control. These costs
are those incurred by the industry to comply with water pollution
control regulations, solid waste disposal regulations, Occupa-
tional Safety and Health Administration (OSHA) requirements,
compliance testing (air) requirements, regulatory agency manpower
requirements, and other air pollution control regulations. Even
though cost estimates may not be available, each of these items
should be mentioned in Section 8.3, including the time phasing of
the enforcement of other regulations.
The annualized costs of compliance with other regulations
are illustrated by tables from previous studies, which are
usually not prepared by the cost analyst. If such annualized
costs are not available from previous studies, however, the cost
analyst must prepare them and show the factors upon which they
are based in the BID. This report discusses both the use of
established estimates and the provision of new ones.
The purpose of Section 8.3 is to provide a context for NSPS
air pollution control costs. Estimates of other costs, however,
cannot be as precise as those related to the NSPS control.
Because equal precision requires an inordinate expenditure
of effort, the cost analyst has to rely on previous cost studies
and past experience. Where no previous data are available,
estimates must be based on good engineering judgment. In either
case, the same model plants must be used to illustrate other
costs as are used for the costs of compliance with air pollution
control regulations.
67
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7.1 COSTS IMPOSED BY WATER POLLUTION CONTROL REGULATIONS
An industry may incur the costs of controlling pollution
from wastewater that is discharged from the production processes.
This expenditure for wastewater treatment is independent of the
cost of air pollution control. For example, when manufacturing
plants discharge waste streams to surface waters, they are sub-
ject to effluent limitations specified by National Pollutant
Discharge Elimination System (NPDES) permits. These limitations
require the employment of the best practicable technology (BPT)
currently available through July 1977 and the best available
technology (BAT) economically achievable thereafter.
Existing plants that discharge to publicly owned treatment
works are subject to Federal pretreatment standards reflecting
the BPT, and new plants must meet standards that are even more
stringent. New plants that discharge waste to surface waters are
subject to NSPS, which are identical to BAT levels. The number
of plants treating wastewater will increase rapidly as Federal
effluent limitations become effective, and the cost of this
control must be considered in the BID.
Figure 25 shows a method of displaying the costs of various
degrees of water pollution control for model plants in the lead-
acid battery manufacturing industry. In these plants, water
dumped from batteries and water used to hose down machinery at
night must be treated before discharge. Other manufacturing
plants produce different types of wastewater. The costs depend
on the amount of wastewater treated and the type of treatment.
If the design of the air pollution control system adds to
the cost of wastewater treatment, these costs are included among
those of air pollution control. Such costs should not be added
to, or confused with, the cost of controlling wastewater from the
production process.
68
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vo
00
I
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00
Table 8-43. ANNUALIZED COSTS ASSOCIATED WITH WATER POLLUTION CONTROL
(4th-Quarter 1977 Dollars)3
Degree of control
Pre-NPDEsd
Best Practicable Technology,
(BPT)e
Best Available Technology,
(BAT)e
Annualized costs by plant size, $1000
100 bpdb
2.2
18.6
24.0
250 bpdb
4.5
30.6
40.5
500 bpdc
19.9
81.5
116
2000 bpdc
60.5
169
262
6500 bpdc
162
314
510
Costs obtained from references were updated per the Chemical Engineering (CE) Index
for Plant Costs.
Based on 0.075 m-* (20.0 gal) water per battery. This represents the mix of wet
and dry units typical for snail (less than 500 BPD) plants reported to U.S. EPA.
c Based on 0.25 n3 (66.5 gal) water per battery.40
Reference 41.
Reference 42.
Figure 25. Example of a display of costs associated with various
degrees of water pollution control.
Source: Cost analysis of NSPS for the manufacture of lead-acid batteries.
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7.2 COSTS IMPOSED BY SOLID WASTE DISPOSAL REGULATIONS
A manufacturing plant incurs costs from the disposal of
solid waste, which may be generated by production processes,
administrative functions, or the treatment of production waste-
water. The cost analyst must estimate the costs of disposing of
these solid wastes or sludges. (The solid wastes generated by
air pollution control are not included in this discussion.)
For example, a lead-acid battery manufacturing plant must
dispose of old battery cases, crates, office wastepaper, mis-
cellaneous garbage, and wastewater treatment sludge. In 1972, 60
lead-acid battery manufacturing plants were disposing of sludges
from wastewater treatment. Figures 26 and 27 give examples of
the display of annualized costs associated with solid waste
disposal at lime and caustic treatment facilities. These figures
are only examples; the method of displaying these costs varies
according to the industry and the methodology of the cost analyst
7.3 COSTS ASSOCIATED WITH OSHA COMPLIANCE
The costs of complying with OSHA regulations at the manufac-
turing plants must also be estimated, although they are not air
pollution control costs. The costs of employee care (blood
tests, laundry and shower facilities, and protection against
hazards in the plant) can be estimated per employee per month.
Also included in OSHA compliance costs are the costs of the
makeup facility for plant air exhaust, the heat required for
makeup air (in cold climates), cooling (in warm climates), and a
good ventilation system. The equipment and machinery in the
manufacturing facility also may require an expenditure for noise
control.
Figure 27 shows a display of typical factors used to cal-
culate the cost of complying with OSHA requirements in a lead-
acid battery manufacturing plant. In this case, OSHA costs
included employee care, heat for makeup air, exhaust hoods and
ducts, electricity, fans, and motors. This example is different
70
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00
I
Table 8-44. ANNUALIZED COSTS ASSOCIATED WITH SOLID WASTE DISPOSAL
FOR PLANTS USING LINE NEUTRALIZATION
(4t!i Quarter-1977 Dollars)*
Type of disposal
On- site land storage
On-site land storage with
leachate collection and
treatment system
Chemical fixation and landfill
Annual i zed costs by plant size, $1000
100 bpd
4.4
6.5
15.0
250 bpd
8.7
13. G
30.5
500 bpd
14.7
23.5
51.4
2000 bpd
41.2
67.6
150
6500 bpd
106
176
382
a Costs for 1800 bpd were obtained from Reference 43 and scaled to various plant
sizes using the t°-6 law and updated to 4th quarter-1977 costs per the Chemical
Engineering (CE) Index for Plant Costs.
Figure 26. Display of costs associated with solid waste
disposal (lime neutralization).
Source: Cost analysis of NSPS for the manufacture of lead-acid batteries.
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-J
to
09
I
OB
o
Table 8-45. ANNUALIZED COSTS ASSOCIATED WITH SOLID WASTE DISPOSAL
FOR PLANTS USING CAUSTIC SODA NEUTRALIZATION
(4th Quarter-1977 Dollars)*
Type of disposal
On-site landfill
Off-site landfill (contractor)
Off-site landfill
Secured landfill
Annualized costs by plant size, $1000
100-500 bpd
<0.5
<0.5
<0.5
<0.5
2000 bpd
2.2
0.9
0.9
1.6
6500 bpd
5.3
2.0
2.0
4.0
a Costs for 1800 bpd were obtained from Reference 44 and scaled to various plant
sizes using the t°-6 law and updated to 4th quarter-1977 costs per the Chemical
Engineering (CE) Index for Plant Costs.
Figure 27. Display of costs associated with solid waste
disposal (caustic soda neutralization).
Source: Cost analysis of NSPS for the manufacture of lead-acid batteries.
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from the examples for water pollution control and solid waste
disposal. Those examples contained data from previous studies,
whereas the costs of OSHA compliance were not available and had
to be estimated. For this reason, the basis for the estimate is
displayed. In other industries, the basis may be different;
for example, the cost of employee blood tests may be nonexistent.
Figure 28 is shown to illustrate the format.
Based upon these cost factors and assumptions, the annu-
alized costs are estimated and displayed in tabular form as shown
in Figure 29. This figure gives an example of overall OSHA
compliance costs on an annualized basis for different sizes of
model plants. The cost analyst must use discretion in calculat-
ing the annualized costs. In this example, the annualized cost
of the fans and motors to comply with OSHA regulations is esti-
mated at 30 percent of capital costs of the equipment (Figure 28),
7.4 COMPLIANCE TESTING (AIR) REQUIREMENTS
In addition to installing and operating an air pollution
control system, the facility must also bear the costs of compli-
ance testing to certify that the system meets the requirements
of the construction permit. These costs are more sensitive to
the number of test sites than to the size of the process. They
are also very sensitive to the type of pollutant and the grain-
loading of the vent. For example, some very clean vents may re-
quire a test run of 16 to 24 hours to obtain just one sample.
The analyst must thus consider the following when estimating
compliance test costs:
0 Number of test sites
0 Type of pollutant
0 . Test method
0 Length of test run
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Table 8-46. COST FACTORS AND ASSUMPTIONS FOR
OSHA COMPLIANCE (METRIC UNITS)
OSHA Factor
Assumptions upon which
estimate is made
Employee care
Heat for makeup air
25 batteries/man-day
$3S/employee/mo .
4600 degree-days/year
$3.00/GJ
Air volumes as follows:
600 m3/min, 8
730 m3/nin, 8
1160 nVmin, "
2530 n3/min , 16
6360 m3/inin, 24
Exhaust hoods and ducts
Electricity
Fans 6 motors
hr/day
hr/day
iir/day
hr/day
hr/day
100-bpd plant
250-bpd plant
500-bpd plant
2500-bpd plant
6500-bpd plant
457 meters/min velocity
122 m ductwork/plant
annualized costs * 20% of capital
costs
$0.03/kWh
Pressure loss: 1.6 Pa/m duct
Each plant has four separate systems
with overall AP of 100 Pa.
(including fittings t dampers, etc.)
Four equal sized units per plant
Annualized costs * 30% of capital costs
8-81
Figure 28. Display of typical cost factors for OSHA compliance.
Source: Cost analysis of NSPS for the manufacture of lead-acid batteries,
74
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Table 8-47. ESTIMATED OSHA COMPLIANCE COSTS FOR
LEAD-ACID BATTERY MANUFACTURING PLANTS
OS HA factor
Employee care
Heat for makeup air
Exhaust hoods and ducts
Electricity
Fans and motors
Totals
Annualized costs, $1000
100
bpd
1.7
4.1
1.6
0.1
4.6
12.1
250
bpd
4.2
5.2
2.0
0.1
4.8
16.3
500
bpd
8.4
3.2
2.4
0 . 2
5.6
24.3
2000
bpd
33.6
39.4
3.G
1.1
8.3
86.5
6500
bpd
109.0
132.0
5.5
4.1
13.7
269.3
Figure 29. Display of annualized OSHA compliance costs.
Source: Cost analysis of NSPS for the manufacture of lead-acid batteries,
75
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7.5 REGULATORY AGENCY MANPOWER REQUIREMENTS
Estimating the cost of regulatory agency manpower require-
ments can be difficult because so many variables are involved.
One of the biggest factors is the number of affected facilities
in the jurisdiction. If the affected facilities are associated
with copper smelting, they can have a great impact on nearby
agencies, but no impact on agencies in large metropolitan areas.
On the other hand, such facilities as terminal grain elevators
generally are found in large metropolitan areas and have no im-
pact on rural areas.
One method of estimating the cost of regulatory agency man-
power requirements is based on the percentage of workload. If
sulfur oxide control requires 30 percent of an agency's resources
and if a proposed NSPS concerning sulfur oxides increases the
resource needs for sulfur oxide control by 15 percent, the pro-
posed NSPS can be estimated to increase the overall resource re-
quirements of the agency by 4.5 percent (i.e., 0.30 x 0.15 x 100)
For an agency with an annual budget of $1.5 million, the annu-
alized cost of the NSPS would therefore be roughly $70,000.
It is necessary that the cost analyst show the basis for
this estimated cost of the regulatory agency manpower require-
ments. He must consider the following:
0 Location and number of affected facilities
0 Complexity of affected facilities
0 Size and budget of air pollution control agencies
typically concerned with such facilities.
7,6 OTHER AIR POLLUTION CONTROL REGULATIONS
Because NSPS regulations relate to new sources, the analyst
must consider the cost of obtaining a construction permit vis-
a-vis air quality. Obtaining a permit often requires monitoring
the ambient air, producing air quality models, compiling an
emission inventory, and processing extensive data. Also, other
76
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sources of pollutants must sometimes be controlled to offset
emissions from an original source. It is difficult to assess the
costs of all these items accurately. The cost of obtaining a
construction permit, however, depends on such things as the
type of pollutant, the location of the industry in question, and
the size of a typical facility.
7.7 COMPOSITE COSTS OF ENVIRONMENTAL REGULATORY REQUIREMENTS
Section 8.3 covers costs of compliance with regulations
other than NSPS for the purpose of fixing a context for all
pollution control costs. After the other costs are estimated,
the cost analyst provides a composite cost statement by comparing
them with the costs of air pollution control for the same model
plants. The latter costs are divided into two parts: compliance
with the SIP, and compliance with NSPS. Figure 30 gives an
example of this comparison; annualized costs of compliance with
various regulations are compared with SIP and NSPS compliance
costs. This presentation of the data is very useful in judging
the relative impact of the costs of complying with environmental
control regulations. This summary should be presented in an in-
troductory subsection to Section 8.3 as an executive summary.
77
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00
oo
I
09
Table 8-49. ANNUALIZED COSTS OF COMPLIANCE WITH ENVIRONMENTAL
REGULATORY REQUIREMENTS FOR TYPICAL NEW LEAD-ACID BATTERY MANUFACTURING PLANTS
Environmental
regulatory requirements
Water pollution control
Solid waste disposal
OS HA
Air pollution control
NSPSd
Totals
Annualized costs by plant size,
$1000 4th quarter-1977 dollars
100 bpd
24.0
6.5
12.1
12.9
36.6
92
250 bpd
40.5
13.6
16.3
12.9
43.7
127
500 bpd
116
23.5
24.8
36.0
67.5
263
2000 bpd
262
67.6
86. 5
41.0
158
615
6500 bpd
510
176
269
47.5
379
1,300
Based on BAT controls.
Assumes lime neutralization of waste and on-site land storage with leachate
collection and treatment system.
c ISIP-related capital costs * NSPS-related capital costs) x (NSPS-related
annualized costs!.
Control alternatives I and VI.
Figure 30. Example of a comparison of annualized costs of compliance with
various environmental regulatory requirements.
Source: Cost analysis of NSPS for the manufacture of lead-acid batteries.
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REFERENCES
Lead Engineer Contract Administration Manual. U.S. Environ-
mental Protection Agency, Office of Air Quality Planning and
Standards, Research Triangle Park, North Carolina, October
1978.
Perry, R.H., C.H. Chilton, and S.D. Kirkpatrick. Chemical
Engineers' Handbook. 4th edition. McGraw-Hill Book Company,
New York, 1963.
Robert Snow Means Company, Inc. Building Construction Cost
Data. Duxbury, Massachusetts, 1974.
Richardson Engineering Services, Inc. International Con-
struction Analysts. Process Plant Construction Estimating
Standards: The Richardson Rapid System. Solana Beach,
California, 1977.
Chemical Engineering 1977-1978 Equipment Buyer's Guide
Issue. McGraw-Hill Book Company, New York, July 18, 1977.
CARD, Inc. GARD Manual. Capital and Operating Costs of
Selected Air Pollution Control Systems. December, 1978.
Guthrie, K.M. Process Plant Estimating, Evaluation and
Control. Craftsman Book Company of America, Solana Beach,
California, 1974.
79
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APPENDIX A
EXAMPLE OF A DISCUSSION OF MODIFIED/RECONSTRUCTED FACILITIES
8.2.2 Modified/Reconstructed Facilities
8.2.2.1 Capital Costs—
The cost for installing a control system in an existing
plant that has been modified, reconstructed, or expanded (given
the same exhaust gas parameters) is greater as a result of
special design considerations, more complex piping requirements,
etc. Estimating this additional installation cost or retrofit
penalty is difficult because of many factors peculiar to the
individual plant. In preparation of this section, such factors
as lack of space, additional ducting, and additional engineering
were considered.
Configuration of equipment in the existing plant governs the
location of the control system. Depending on process or stack
location, long ducting runs from ground level to the control
device and to the stack may be required. A sizable increase in
costs may be incurred if the control equipment must be placed on
the roof, which may require steel structural support. Other cost
components that may be increased because of space restrictions
and plant configuration are contractor's fees and engineering
fees. These fees, estimated at 15 percent and 10 percent under
normal conditions, can be expected to increase to 20 percent and
15 percent for a retrofit. These fees vary from place to place
and job to job depending on the difficulty of the job, the risks
involved, and current economic conditions. The fees cited are
PEDCo's estimates.
The requirement for additional ducting can vary consider-
ably, depending on plant configuration. For purposes of this
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study, it is estimated that approximately 50 percent more ducting
may be required to install a control system in an existing plant.
If the space is tight within the plant, it may be necessary
to install the control equipment on the roof. It is estimated
that a roof-top installation can double the structural costs.
The additional labor costs are determined by assuming that 10
percent of the labor is required to tie the system into the
process. This work would most likely have to be done at premium-
time wage rates in accordance with governmental regulations
and/or union agreements. These rates are assumed to be double
the straight-time pay.
Applying these additional cost factors to those in Tables
8-9 and 8-10 shows that the cost of retrofit installations runs
approximately 20 percent higher than the cost of new installa-
tions. Breakdowns of retrofit cost factors are shown in Tables
8-35 and 8-36 for fabric filters and wet collectors.
8.2.2.2 Annualized Costs--
The annualized costs of control systems for modified/recon-
structed facilities are calculated similarly to those for new
facilities. The cost components that are proportional to capital
costs (see Table 8-11) are approximately 20 percent higher than
those for new facilities.
8.2.2.3 Cost Comparison—
The costs of the eight control alternatives listed in Table
8-5 are calculated on the same basis as those applicable to new
facilities (see Section 8.2.1.3). Tables 8-37 through 8-41
show the net capital and annualized costs for the eight control
alternatives applicable to existing facilities that have been
reconstructed or modified;. Table 8-42 shows the costs of sulfuric
acid mist control. The additional wastewater costs resulting
from use of a fan separator have been added. For estimating
purposes, it was assumed that these costs are double those in-
curred for a new plant. It is important to note that these costs
are estimates. Retrofit situations vary over a broad range,
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because some are reconstructions and others are expansions. Thus
it is unlikely that the new plant exhaust parameters fit all the
retrofit applications. For estimating purposes, it must be
assumed that exhaust parameters remain constant. Additionally,
plants that reconstruct or modify their facilities are not
likely to change all their facilities at the same time. Con-
sequently, the overall capital and annualized costs shown in
Tables 8-37 through 8-42 are not likely to be incurred at the
same time. All the costs, however, must be incurred at some
time, as each of the facilities becomes an affected facility.
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