The good old days
The survey data also revealed that deviations from average installation costs correlate strongly with project timing, especially for those units installed after 2003 (Figure 4). The significantly higher construction labor costs for later projects most likely reflect increased project complexity—"easier" projects were already completed—but also perhaps increased competition for skilled labor resources as the number of SCR installation projects under way in the U.S. skyrocketed.
graph
Source: EUCG Inc.
4. Timing affected costs. The deviation of category costs as a function of SCR project completion date shows that early adopters paid less than those that lagged behind.
Interestingly, the variation in material costs was constant over the survey period, most likely reflecting increased competitiveness among SCR suppliers. By contrast, PMEC costs showed higher variability, which—as in the case of construction labor costs—reflected the greater complexity of later projects. Average cost variation by cost category is summarized in the table.
One survey, many conclusions
Although the survey results provide useful insight into expected installed costs, they also confirm that there is no one-size-fits-all SCR design. What the data also make clear is that site-specific characteristics of units and plants can drive a project's cost much higher than anticipated. Together, these conclusions suggest that "retrofit difficulty" is indeed relative. Units with a capacity of 600 to 900 MW appear to be more difficult to retrofit than those in other size ranges.
Variation of surveyed cost categories by unit size. Source: EUCG Inc.
Because SCRs are unitized, greater economies of scale were expected from the survey results. Some possible explanations for the modest advantage of scale include:
- The impact of newer plants' tighter layouts, which often necessitate much more complex duct installations, which raises costs).
- Plants' limited ability to use the most cost-effective method of equipment transportation. Some 41% of the units surveyed in the 600- to 900-MW range are close to navigable waters, versus 76% of units larger than 900 MW.
- The increasingly modular design of SCR systems, which reduces their capital costs but still requires them to be delivered by sea or river.
—Mark Marano is VP, financial planning–corporate planning and budgeting for AEP. George Sharp is a senior member of AEP Generation's Business Planning Group. For more information about the EUCG, contact Pat Kovalesky, executive director, at 623-572-4140 or visit www.eucg.org.
Email
Comments
Print
Reuse
