Compliance with the Environmental Protection Agency’s (EPA’s) Mercury and Air Toxics Standard (MATS) by April 2015 will require coal generators in the Midwest to install retrofits at a pace and scale that exceeds “historical demonstrated capability,” and it will impose taxing bottlenecks on the nation’s power sector labor, equipment, and supply chain, a new study suggests.
The study prepared for the Midwest Independent Transmission System Operator (MISO) by the Brattle Group says upgrades such as activated carbon injection (ACI) and dry sorbent injection (DSI) can be implemented “without difficulty,” within approximately a year and a half, in time for the 2015 deadline. However, most projects will need at least three to four years, including wet and dry flue gas desulfurization (FGD), baghouse, electrostatic precipitator (ESP), and selective catalytic reduction (SCR), as well as new gas combustion turbines (CTs) and combined cycles (CCs).
Some long-lead upgrade projects will be able to come online before the MATS compliance deadline, the study says, as many are already under development. But, it cautions, several more projects are still in the scoping phase.
Meanwhile, retrofit projects that will need cost recovery approval from state commissions to move forward could see added delays because the regulatory bodies will be evaluating a large number of projects at once. "These long lead times introduce a substantial concern for any long-lead projects that are initiated late, both due to the timing constraint and due to the potential for difficulty in obtaining the necessary engineering and construction support during a period of very high demand," the study says.
MISO asked The Brattle Group to evaluate the scale of the retrofit and new build requirements for MATS by 2015/2016 relative to the capability of the retrofit and construction industry and to identify potential labor supply chain bottlenecks to meeting those requirements.
The study says 93 GW to 248 GW of coal-fired capacity (measured in wet FGD equivalent GW) will require environmental controls upgrades. In the Midwest alone, MISO has projected that 51 GW to 58 GW of wet FGD equivalent GW will require upgrades. Already around the U.S., announcements have been made to retire nearly 30 GW of coal capacity. To maintain reliability, the Brattle Group suggests 30 GW to 84 GW of new capacity may be needed nationally, 5 GW to 26 GW in MISO alone.
Assuming that capital costs reasonably indicate the demands that a particular retrofit will impose on the labor and equipment supply sector, the group finds that MATS will require retrofit and new build activities that "exceed historical industry maximum in the Midwest by 51%-162%." Nationwide, "the needs imposed by MATS could be substantially below historical maximums if the EPA’s projections are correct, or up to 93% above historical maximums if industry estimates are more accurate," the group says. "We believe that the EPA estimates may be optimistic while industry estimates may be pessimistic, especially in the highest retrofit cases."
A ramp-up in labor, engineering, equipment, and construction will likely mitigate expected bottlenecks locally or nationally, the study also concludes. "These bottlenecks are likely to introduce delays or cost escalation, for example, if certain craft labor categories or qualified engineering, procurement, and construction (EPC) firms are in short supply," the study says. Efforts to mitigate these concerns, such as increasing labor supply with training, relocation, and overtime, will be "costly and time-consuming," it warns.
The craft most likely to be in high demand with little availability—possibly causing project delays—is boilermaking. The study says that as many as 7,590 boilermakers (or about 40% of those employed around the nation) will be needed to complete the projected retrofits and new generation construction by 2015. "This potential demand is more than four times the number of boilermakers (1,850) currently employed [only] in the Utility System Construction Industry," the study says.
Concerning MATS’ impact on MISO’s outage scheduling process, the Brattle Group suggests that most construction and installation associated with retrofits could be completed while the plant is operating—although final tie-in to major plant systems will warrant a longer-than-typical plant outage. Upgrades such as dry FGD, DSI, SNCR, and ACI require that the outage duration "need only be extended a few days or a week," but wet FGD, baghouse, and SCR retrofits "are likely to require outages be extended by approximately three weeks," it estimates.
As a result, MISO will likely have to schedule about 45% more coal outages per season for MATS compliance by fall 2015, assuming that many plants will get a one-year compliance extension. This could reduce MISO’s ability to absorb more outages, considering that a "substantial fraction" of the region’s coal plants will likely retire rather than comply with MATS.
The foremost challenge for the industry, states, and MISO will be timing, the study concludes. "The industry will need to install retrofits at a pace and scale that exceeds the historical demonstrated capability, while the system operator is likely to experience a substantial operational challenge in the transition."
Sources: POWERnews, MISO, The Brattle Group