Loading...
Water and Resource Recovery Center_Cogeneration ProjectMasterpiece on the Mississippi TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Water & Resource Recovery Center - Cogeneration Facilities DATE: July 23, 2011 Dubuque Prigtd All- America City 111' 2007 On November 1, 2010, the City Council approved the engineering services agreement between the City and Strand to provide planning, design, and construction phase engineering services for the cogeneration project. Strand has completed the planning phase and is nearing completion of the design phase of the project. The project currently includes the installation of electrical generation equipment (microturbines) that will use biogas from the anaerobic digestion facilities and produce electricity, as well as heat recovery equipment that will further recover energy as heat to improve the overall alternative energy recovery efficiency from the biogas. On January 27, 2011, Strand provided the attached Water & Resource Recovery Center Cogeneration Facilities report to the City. Strand has recommended that three 200 - kilowatt (kW) microturbines (600 kW total) be installed in lieu of the initially proposed 400 -kW system (two 200 -kW microturbines). If a 400 -kW system were installed initially, a future 200 -kW microturbine would cost approximately $390,000 ($1,950/kW)). In comparison, the additional cost to initially install a 600 -kW versus a 400 -kW system is approximately $181,000 ($905 /kW), or roughly 50% Tess expensive on a "per kW" basis. The 600 -kW system would not have significant additional structural, mechanical, electrical, or HVAC costs compared to the 400 -kW system because the cogeneration room and piping would basically be the same except for an additional hot water pump, piping, and electrical work needed for the third heat recovery module. The Iowa DNR has informed the City that there is a potential that this project may receive principle forgiveness of 20% of the project costs, which could reduce the project cost by about $500,000. At this time, however, there is no guarantee for this grant funding. In addition, a $200,000 rebate from Alliant Energy is likely for the project. One additional consideration is that the current major W &RRC project only included one boiler for process and building heat — normally, two boilers are provided. That project assumed that this cogeneration project would be implemented and the heat recovery from the cogeneration project would provide the required process and building heat, and the original boiler would be used as a back -up source of heat. Should the cogeneration project not be implemented, a second boiler at the W &RRC is strongly recommended, which would cost in the range of $150,000 to $250,000 to install. On a cash flow basis, assuming the 600 -kW system is installed and the 20% principle forgiveness and $200,000 rebate applies, the project's cash flow is slightly positive at about $15,000 per year. Full utililization of the capabilities of three microturbines would provide a positive cash flow of $126,500 per year. To fully utilize the available generation capacity, the City would need to develop partnerships to receive additional biodegradable material, for instance, the Dubuque Metropolitan Area Solid Waste Agency, grocery stores, hospitals, etc. The funding plan for the up to $2.7 million capital project was intended to be any left over funds from the approximately $5 million project contingency. The results of the arbitration to determine the allocation of costs related to the mercury spill at the plant will go a long way to determining the possible availability of those funds. The reason to begin the process now is to increase the chances the City will qualify for forgiveness of 20% of the SRF loan through the EPA. Water Pollution Control Plant Manager Jonathan Brown recommends City Council approval of the April 2011 Water & Resource Recovery Center Cogeneration Facilities report submitted by Strand Associates, Inc., approval to submit the plan to the Iowa Department of Natural Resources for possible low- interest loan funding through the State Revolving Fund, and approval to complete the design services for bidding of the cogeneration in the fall of 2011. This submittal would not require the City to borrow funds through the State Revolving Fund, nor would the City be obligated to bid the project or award a contract. However, submittal of this information is required if the City wishes to be eligible for State Revolving Fund low- interest borrowing and a potential 20% principle forgiveness for the project. concur with the recommendation and respectfully request Mayor and City Council approval. Michael C. Van Milligen MCVM:jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager Jonathan Brown, Water Pollution Control Plant Manager 2 •1 Masterpiece on the Mississippi TO: Michael C. Van Milligen, City Manager FROM: Jonathan Brown, W &RRC Manager SUBJECT: Water & Resource Recovery Center — Cogeneration Facilities DATE: July 15, 2011 INTRODUCTION Dubuque bikd AA- AmedcaCity Hill, 2007 This purpose of this memorandum is to seek concurrence with the April, 2011 Water & Resource Recovery Center (W &RRC) Cogeneration Facilities report submitted by Strand Associates, Inc. (Strand), to approve its submittal to the Iowa Department of Natural Resources (Iowa DNR) for possible low- interest loan funding through the State Revolving Fund (SRF), and to approve the continuation of the project to complete the detailed design phase of the project to enable the project bidding documents to be completed by the fall of 2011. This submittal would not require the City to borrow funds through the SRF, nor would the City be obligated to bid the project or award a contract. However, submittal of this information is required if the City wishes to be eligible for SRF low- interest borrowing and a potential 20% principle forgiveness for the project. BACKGROUND On November 1, 2010, the City Council approved the engineering services agreement between the City and Strand to provide planning, design, and construction phase engineering services for the cogeneration project. Strand has completed the planning phase and is nearing completion of the design phase of the project. The project currently includes the installation of electrical generation equipment (microturbines) that will use biogas from the anaerobic digestion facilities and produce electricity, as well as heat recovery equipment that will further recover energy as heat to improve the overall alternative energy recovery efficiency from the biogas. DISCUSSION On January 27, 2011, Strand provided the attached Water & Resource Recovery Center Cogeneration Facilities report to the City. Strand has recommended that three 200 - kilowatt (kW) microturbines (600 kW total) be installed in lieu of the initially proposed 400 -kW system (two 200 -kW microturbines). If a 400 -kW system were installed initially, a future 200 -kW microturbine would cost approximately $390,000 ($1,950/kW)). In comparison, the additional cost to initially install a 600 -kW versus a 400 -kW system is approximately $181,000 ($905 /kW), or roughly 50% Tess expensive on a "per kW" basis. The 600 -kW system would not have significant additional structural, mechanical, electrical, or HVAC costs compared to the 400 -kW system because the cogeneration room and piping would basically be the same except for an additional hot water pump, piping, and electrical work needed for the third heat recovery module. The opinion of probable project cost for the project depends on whether a 400 -kW or 600 -kW system is installed, as well as the level of principle forgiveness and utility rebates that may be applicable to the project. The Iowa DNR has informed the City that there is a potential that this project may receive principle forgiveness of 20% of the project costs, which could reduce the project cost by about $500,000. At this time, however, there is no guarantee for this grant funding. In addition, a $200,000 rebate from Alliant Energy is likely for the project. The range of potential project costs and anticipated annual debt service payment (20 -year loan at 3.0% interest is assumed) is summarized in the table below. Scenario Principle Forgiveness + Rebates Total Loan Amount Annual Debt Payment 400 -kW System $0 $2,500,000 $168,000 400 -kW System $700,000 $1,800,000 $123,000 600 -kW System $0 $2,700,000 $181,000 600 -kW System $740,000 $1,960,000 $134,000 The annual value of electrical production in the early years of operation is estimated to be approximately $223,000 based on an average electrical production of about 400 kW and 7 cents /kWH. The estimated annual maintenance costs are $87,000. One additional consideration is that the current major W &RRC project only included one boiler for process and building heat — normally, two boilers are provided. That project assumed that a near future cogeneration project would be implemented (the subject of this memorandum), and the heat recovery from the cogeneration project would provide the required process and building heat, and the original boiler would be used as a back- up source of heat. Should the cogeneration project not be implemented, a second boiler at the W &RRC is strongly recommended, which would cost in the range of $150,000 to $250,000 to install On a cash flow basis, assuming the 600 -kW system is installed and the 20% principle forgiveness and $200,000 rebate applies, the project's cash flow is slightly positive at about $15,000 per year (see below): Electrical Savings: $223,000 Annual Debt Service: ($134,000) Annual Maintenance: ($87,000) Boiler Cost Avoidance (debt service): $13,000 Net Cash Flow: $15,000 /year 2 If only the $200,000 rebate is available and the 600 -kW system is installed, the cash flow is slightly negative at $22,000 /year. However, the electrical savings should increase over time as the City finds additional sources of waste that can be digested to provide more biogas and electricity. Therefore, the net cash flow should improve within a few years. Full utilization of the capabilities of three microturbines at 600 -kW would offer the following cash flow Electrical Savings: Annual Debt Service: Annual Maintenance: Boiler Cost Avoidance (debt service): Net Cash Flow: $334,500 ($134,000) ($87,000) $13,000 $126,500 /year The following table was as presented to council in June 2010 which shows the impact of plant improvements on the rate structure. These projections were made using the production from the use of two microturbines at 400 -kW. Impact of Plant Upgrade and Operating Budget on Sanitary Sewer Rates FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Base Bid 11% 15% 15% 15% 15% 3% Alternate 1B — Final Clarifiers 0% 0% 0% 0% +1% 0% Alternate 2 — HPO System 0% 0% 0% 0% -1 % 0% Alternate 6 — Septage Receiving 0% 0% 0% +1% +1 % 0% Microturbine System 0% 0% +1% +2% +1% 0% Total Rate Increase of Plant Upgrade 11% 15% 16% 18% 17% 3% i As an option, to constructing the cogeneration project now, the City could wait until the end of the current project and then determine how much of the contingency is still available to fund the cogeneration project. This is a viable alternative, but Council should be aware that the 20% principle forgiveness funds may not still be available. In addition, the plant would need to rely on only one boiler, which would not have a backup. Should an emergency situation materialize at the plant that necessitates bringing in a portable boiler, these costs would be in the "tens of thousands of dollars" range per event. Related to green house gas (GHG) impacts, the estimated GHG reduction resulting from the conversion from incineration to anaerobic digestion at the W &RRC is about 830 tons /year of CO2 equivalent. The additional GHG reduction resulting from 3 1 cogeneration, which typically is calculated as electrical energy cost avoidance, is about 2,200 tons /year of CO2 equivalent. This is based on 400 kW of electrical generation, operating 90% of the time, as well as a conversion of 1.37 Ibs CO2 equivalent per kWH. Based on review of the study findings, I concur with Strand's findings. We also concur that it is in the City's best interest to bid the cogeneration facilities project as a 400 kW system (two 200 kW microturbines), with the third 200 kW microturbine (600 kW system) as a bid alternative. This will provide some flexibility should the project bid costs be higher than anticipated. In order to secure the necessary funding prior to project initiate, Strand recommends that this report, along with the forms included in the attached packet of information, be submitted to the Iowa DNR to put the City in a position to be eligible for a low interest loan funding. ACTION REQUESTED This memorandum requests City Council approval of the April 2011 Water & Resource Recovery Center Cogeneration Facilities report submitted by Strand Associates, Inc., approval to submit the plan and required forms to the Iowa DNR for potential SRF funding, and approval to complete the design services for bidding of the cogeneration in the fall of 2011. As discussed in the introduction this submittal would not require the City to borrow funds through the SRF, nor would the City be obligated to bid the project or award a contract. However, submittal of this information is required if the City wishes to be eligible for SRF low- interest borrowing and a potential 20% principle forgiveness for the project. If desired, Strand is agreeable to presenting its findings to the City Council at either a work session or a future Council meeting. Attachments cc: Gus Psihoyos, City Engineer Jenny Larson, Budget Director Ken Tekippe, Finance Director Steve Sampson Brown, Project Manager 4 STRAND ASSOCIATES, INC. E N G I N E E R S 910 West Wingra Drive Madison, WI 53715 Phone: 608- 251 -4843 Fax: 608 - 251 -8655 Office Locations Madison, WI Joliet, IL Louisville, KY Lexington, KY Mobile, AL Columbus, IN Columbus, OH Indianapolis, IN Milwaukee, WI Cincinnati, OH Phoenix, AZ www,strand.com April 22, 2011 Mr. Steve Sampson Brown, P.E. City of Dubuque 50 West 13th Street Dubuque, IA 52001 Re: Water Pollution Control Plant Cogeneration Facilities Dear Steve, Enclosed are five copies of the final Water Pollution Control Plant (WPCP) Cogeneration Facilities report, which is being submitted to the Iowa Department of Natural Resources to qualify this project for low interest loan funding. Based on the recommendations of this report and the City's concurrence with the direction of the project, we are proceeding with detailed design of the microturbine cogeneration system at the Dubuque WPCP. Please call with any questions. Sincerely, STRAND ASSOCIATES, INC,® Randall A. Wirtz, 'Ph ./D,f, P.E. Enclosure: Repor R:\MAD \Documents'Reports \ Archive \201 I \Dubuque, IA\WPCP Cugen .Fac,1154.033.raw.jan \Rcpoll \Cogeneration Reporl.rev.4 -2I -I I.docx \4/22 /201 I Report for City of Dubuque, Iowa Water Pollution Control Plant Cogeneration Facilities �. .s <t; Q E� • o , sl ���o�tilfsia +U► ►,�l� off• °• °•• °• ••� <�/ �'• • <•y. v\IIFIfZ A. a ° j6137 -, /' n�i.iii. \N\ \`` I hereby certify that this engineering document was prepared by me or under my direct personal supervision and that I am a duly licensed Professional Engineer under the laws of the State of Iowa. FOR STRAND ASSOCIATE . , INC.® / /� ZZ Randall Number 6E/,7 Date My license renewal date ~is - ecember 31, 2011 Pages or sheets covered by this seal: Entire Study Prepared by: STRAND ASSOCIATES, INC.® 910 West Wingra Drive Madison, WI 53715 www.strand,com April 2011 STRAND ASSOCIATES, INC.' f; hl( NF.ERtl TABLE OF CONTENTS Page No. or Following WATER POLLUTION CONTROL PLANT COGENERATION FACILITIES Introduction 1 Projected Biogas Production 1 Electrical Generation Alternatives 1 Generation Device Evaluation 2 Opinions of Cost 3 Recommendations 5 TABLES Table 1 Biogas Production Estimates 1 Table 2 Microturbine Nonmonetary Considerations 2 Table 3 Engine Generator Nonmonetary Considerations 2 Table 4 Energy Balance for Microturbines and Engine Generators 3 Table 5 Total Present Worth Summary (20 Year) 5 FIGURE Figure 1 Solids Processing Building 5 APPENDIX —TOTAL PRESENT WORTH APPENDIX i City of Dubuque, Iowa Water Pollution Control Plant Cogeneration Facilities INTRODUCTION The City of Dubuque Water Pollution Control Plant (WPCP) incinerators will be decommissioned, and new anaerobic digestion facilities will be constructed as part of the current 2010 WPCP Modifications Project. The anaerobic digestion process at the WPCP will produce significant quantities of biogas that can be used as a renewable fuel. Three common end uses for digester gas are in a microturbine combined heat and power (CHP) system, an engine generator CHP system, and in a boiler system. The 2010 WPCP project included a boiler to utilize the biogas. This report further evaluates the microturbine and engine generator alternatives. The majority of municipal wastewater treatment plants (WWTPs) that employ anaerobic digestion use biogas to replace or supplement natural gas for the heating needs of the digestion process as well as for space heating in buildings. However, this typically only uses a portion of the total biogas produced in the digestion process. CHP systems utilize all, or nearly all, of the biogas on a year -round basis to generate electricity. During cold months, waste heat from the generators is captured and used to heat the digesters and other buildings. During warm months, some of the waste heat would not be utilized. PROJECTED BIOGAS PRODUCTION The microturbines and engine generator alternatives were sized based on current average and future design (year 2030) biogas production estimates of 165,000 cubic feet per day (f3 /day) and 303,000 f3 /day, respectively. The estimated biogas production rates for the current average, future design, and future design with food residuals are shown in Table 1. ELECTRICAL GENERATION ALTERNATIVES A. Microturbines Microturbines are gas turbines that burn methane mixed with compressed air. The hot pressurized gases that result from combustion are forced out of the combustion chamber and through the turbine wheel, causing it to spin and turn the generator. Microturbines provide relatively clean combustion and low exhaust emissions, particularly of nitrogen oxide (NOx) components. Microturbines require a fuel with a lower heating value (LHV) >450 British Thermal Units /standard cubic feet (BTU /scf) and at pressures between 75 and 80 pounds per square inch (psi). B. Engine Generators Reciprocating gas engine generators for anaerobic digester gas are essentially natural gas engines that have been modified to handle larger volumes of fuel because of the greater percentage of carbon dioxide (CO2) in digester gas, and to accept higher levels of contaminants. A reciprocating, or internal combustion (IC), engine converts the energy contained in a fuel to mechanical power. This mechanical power is used to turn a shaft in the engine. A generator is attached to the IC engine to convert the mechanical motion into power. Prepared by Strand Associates, Inc. ' 1 R:\ MAD \Documents \Reports\Archive\2011 \Dubuque, IA \WPCP Cogen.Fac.1154,033,raw.jan \Report \Cogeneration Report.rev.4- 21- 11,docx\4/22/2011 Current Average Gas Production (f3 /day) L 165,000 Future Design Future Design With Food Residuals 379,000 303,000 Table 1 Biogas Production Estimates ELECTRICAL GENERATION ALTERNATIVES A. Microturbines Microturbines are gas turbines that burn methane mixed with compressed air. The hot pressurized gases that result from combustion are forced out of the combustion chamber and through the turbine wheel, causing it to spin and turn the generator. Microturbines provide relatively clean combustion and low exhaust emissions, particularly of nitrogen oxide (NOx) components. Microturbines require a fuel with a lower heating value (LHV) >450 British Thermal Units /standard cubic feet (BTU /scf) and at pressures between 75 and 80 pounds per square inch (psi). B. Engine Generators Reciprocating gas engine generators for anaerobic digester gas are essentially natural gas engines that have been modified to handle larger volumes of fuel because of the greater percentage of carbon dioxide (CO2) in digester gas, and to accept higher levels of contaminants. A reciprocating, or internal combustion (IC), engine converts the energy contained in a fuel to mechanical power. This mechanical power is used to turn a shaft in the engine. A generator is attached to the IC engine to convert the mechanical motion into power. Prepared by Strand Associates, Inc. ' 1 R:\ MAD \Documents \Reports\Archive\2011 \Dubuque, IA \WPCP Cogen.Fac.1154,033,raw.jan \Report \Cogeneration Report.rev.4- 21- 11,docx\4/22/2011 City of Dubuque, Iowa GENERATION DEVICE EVALUATION A. Microturbines Water Pollution Control Plant Cogeneration Facilities The microturbine analysis includes two initial 200 - kilowatt (kW) Capstone microturbines with a potential build -out to 1,000 kW (5 units at 200 kW each). The turbines and heat recovery units would be installed in the Structure 75 (Solids Processing Building) Cogeneration Room. The 2010 WPCP Modifications Project will provide a biogas cleaning and conditioning system, which includes moisture removal, hydrogen sulfide removal, and siloxane removal facilities installed at the Anaerobic Digestion (Structure 70) complex. For the microturbine alternative, a gas compression skid would be installed in Structure 70 (Digester Building) to meet fuel pressure requirements for the microturbines. A summary of the nonmonetary considerations related to microturbines is shown in Table 2. An energy balance of the 400 -kW microturbine system is shown in Table 4. Positives Modular capacity expansion (flexibility). Potential build -out to 1,000 kW within current space. Unison is located in Dubuque and offers maintenance contract for microturbines. Microturbines and heat recovery modules will fit in Cogeneration Room. Negatives Few manufacturers. Requires_gascompression (electrical load). Table 2 Microturbine Nonmonetary Considerations B. Engine Generators Similar to the microturbines, engine generators would be installed in the Structure 75 Cogeneration Room. Engine generators do not require gas cleaning or conditioning in addition to that provided in the WPCP Modifications Project. Therefore, the gas compression skid is not required. Initially, one engine generator would be installed. The space available will accommodate two engine generators. The engine requires an after - cooler radiator and engine jacket water radiator located outside for cooling. Two gas engine generator options that operate at different speeds were evaluated. The Caterpillar G3508 gas engine is a low speed, 1,200 revolutions per minute (rpm), heavy -duty engine. The Caterpillar G3412 gas engine is a 1,800 rpm, normal -duty engine. The heavy -duty engine and normal -duty engine have an electrical output rating of 390 kW and 450 kW, respectively. The nonmonetary evaluation of these engine generators is summarized in Table 3. The engine generator energy balance is shown in Table 4. Positives Negatives Competitive suppliers Cater•illar, Jenbacher, Waukesha, and others). Remote - mounted after - cooler radiator and engine -water radiator located outside; difficult to site at the WPCP. Install one unit now at 390 or 450 kW with potential build -out to two units. Requires two 500- gallon oil storage tanks for fresh and waste oil in the basement. Robust and proven technology. Greater overall efficiency than microturbines. Space is very limited for generators and removal of equipment would be difficult. Table 3 Engine Generator Nonmonetary Considerations Prepared by Strand Associates, Inc.® 2 R:\ MAD \Documents\Reports\Archive\2011 \Dubuque, IA \WPCP Cogen.Fac. 1154 .033.raw.Jan \Report\Cogeneralion Report.rev.4- 21- 11.docx \4/22/2011 City of Dubuque, Iowa Water Pollution Control Plant Cogeneration Facilities C. Performance Evaluation Table 4 compares the energy balances for the microturbines and engine generators at the current average gas production. The energy input available to each device, based on the estimated current average gas production rate and a 600 BTU /scf lower heating value, is 4,120 thousand British thermal units per hour (MBH). The engine generators have greater heat recovery than the microturbines because of heat recovery from the engine jacket water and exhaust, while the microturbines can only provide heat recovery from the exhaust. The heating demand of 1,320 MBH includes biosolids heating for the anaerobic digestion process as well as the heating load for Structures 70 and 75 during the winter. If heat recovery were not employed, the heating demand would need to be provided through burning of natural gas. During winter operations, the monthly value of natural gas would be approximately $10,000 per month at a value of $1.00 per therm. The annual natural gas cost would be approximately $90,000 without heat recovery on the cogeneration system. Since all of the cogeneration devices provide adequate heat recovery for the anticipated heating loads, the anticipated natural gas usage is zero under nearly all conditions. The electrical output is greater for the normal duty engine because of the higher electrical efficiency and higher rated output. OPINIONS OF COST A. Microturbines The installed opinion of capital cost for a 400 kW microturbine system is approximately $823,000. Additionally, the gas compression skid system has an opinion of capital cost of approximately $265,000 installed. The opinion of annual operation and maintenance (O &M) cost is approximately $87,000 and includes routine maintenance (9 -year factory protection plan), overhauls, and the compression skid electrical use. The gas cleaning costs for sulfur, siloxanes, and moisture removal were not included in this annual O &M cost because the cost will be equal for the three generator alternatives. Annual O &M costs for the microturbine system assume that a Tong -term maintenance contract is entered into with an authorized Capstone service provider. Preliminary proposals for a maintenance contract were obtained and included in the annual O &M costs. The maintenance contract includes routine maintenance as well as major equipment overhauls approximately every 5 years or Prepared by Strand Associates, Inc.® 3 R:\MAD\ Documents \Reports\Archive\2011\Dubuque, IA MRCP Cogen,Fac. 1154.033. raw.jan\Report\Cogeneration Report.rev.4- 21.11.docx \4122/2011 i Heavy -Duty Engine Generator (390 kW) Normal -Duty Engine Generator (450 kW) Microturbines (Two 200 kW) Electrical Generation Potential (kW) 390 422 398 Gas Production Energy Available (MBH) 4,120 4,120 4,120 Heat Recovery (MBH) 1,770 1,980 1,650 Average Heating Demand (MBH) 1,320 1,320 1,320 Adequate Heat Recovery Yes Yes Yes Electrical Efficiency 33% 35% 33% Thermal Efficiency 44% 48% 40% Table 4 Energy Balance for Microturbines and Engine Generators C. Performance Evaluation Table 4 compares the energy balances for the microturbines and engine generators at the current average gas production. The energy input available to each device, based on the estimated current average gas production rate and a 600 BTU /scf lower heating value, is 4,120 thousand British thermal units per hour (MBH). The engine generators have greater heat recovery than the microturbines because of heat recovery from the engine jacket water and exhaust, while the microturbines can only provide heat recovery from the exhaust. The heating demand of 1,320 MBH includes biosolids heating for the anaerobic digestion process as well as the heating load for Structures 70 and 75 during the winter. If heat recovery were not employed, the heating demand would need to be provided through burning of natural gas. During winter operations, the monthly value of natural gas would be approximately $10,000 per month at a value of $1.00 per therm. The annual natural gas cost would be approximately $90,000 without heat recovery on the cogeneration system. Since all of the cogeneration devices provide adequate heat recovery for the anticipated heating loads, the anticipated natural gas usage is zero under nearly all conditions. The electrical output is greater for the normal duty engine because of the higher electrical efficiency and higher rated output. OPINIONS OF COST A. Microturbines The installed opinion of capital cost for a 400 kW microturbine system is approximately $823,000. Additionally, the gas compression skid system has an opinion of capital cost of approximately $265,000 installed. The opinion of annual operation and maintenance (O &M) cost is approximately $87,000 and includes routine maintenance (9 -year factory protection plan), overhauls, and the compression skid electrical use. The gas cleaning costs for sulfur, siloxanes, and moisture removal were not included in this annual O &M cost because the cost will be equal for the three generator alternatives. Annual O &M costs for the microturbine system assume that a Tong -term maintenance contract is entered into with an authorized Capstone service provider. Preliminary proposals for a maintenance contract were obtained and included in the annual O &M costs. The maintenance contract includes routine maintenance as well as major equipment overhauls approximately every 5 years or Prepared by Strand Associates, Inc.® 3 R:\MAD\ Documents \Reports\Archive\2011\Dubuque, IA MRCP Cogen,Fac. 1154.033. raw.jan\Report\Cogeneration Report.rev.4- 21.11.docx \4122/2011 City of Dubuque, Iowa Water Pollution Control Plant Cogeneration Facilities 40,000 hours. The present worth costs for the microturbine alternative includes these future major overhauls over the 20 -year design life of the facilities. Microturbines have a nominal life expectancy of approximately 10 years. However, the maintenance contract approach essentially provides new equipment as the microturbines reach the end of their useful life. To sell electricity to the local power utility in the future, electrical paralleling switchgear will be required. The switchgear is not required to operate the microturbines for plant electrical use and, therefore, was not included in the project cost opinion. For future grid connection, space for this gear is available in the Cogeneration Room or below this room in the basement. B, Engine Generators The opinion of installed costs for the heavy -duty and normal -duty Caterpillar engines are $1,119,000 and $844,000, respectively. Annual O &M costs for the heavy -duty engine and normal -duty engine system alternatives are estimated to be $81,000 and $123,000, respectively, based on information provided by the manufacturer and local representative. The normal -duty engine has a greater O &M cost than the heavy -duty engine because it operates at higher speeds, which requires more frequent overhauls and routine maintenance. As with the microturbines, the gas cleaning and conditioning costs were not included in the O &M costs. The engine generators require a paralleling switchgear for plant electrical use, which adds approximately $204,000 to the opinion of capital cost. This switchgear for the engine generator could also allow for a future connection to the electrical grid. Annual O &M costs for the engine generator alternatives are based on "$ per kilowatt hour (kWh)" level costs provided by equipment suppliers. These O &M costs are $0.025 /kWh for the heavy -duty engine and $0.035 /kWh for the normal -duty engine. These annual costs include routine maintenance as well as engine overhauls approximately every 5 to 7 years and are included in the 20 -year present worth costs for these alternatives. With proper maintenance and overhauls, the engine generators have a life expectancy of 15 to 20 years or more, especially the heavy -duty generators. We have assumed the generators would not need to be replaced within the 20 -year design life for these facilities. C. Total Present Worth The 20 -year total present worth (TPW) analysis for the evaluated devices is included in the Appendix and summarized in Table 5. The engine generators have greater structural, mechanical, and electrical costs than the microturbines because of the remote - mounted heat exchangers, paralleling switchgear, switchgear control room, and engine cooling water piping. The heating, ventilating, and air conditioning (HVAC) costs are greater for the microturbines because these require supply fans and ductwork to provide the cooling and combustion air. The electrical savings for each device is based on $0.07 kWh and the estimated current average gas production rate. This is expected to be a conservative estimate of electrical savings since biogas production is expected to increase throughout the life of the facilities. In addition, the cost of electricity may increase at a faster rate than the overall inflation rate accounted for in the total present worth analysis, which employs an effective discount rate of 4.375 percent. If the cost of electricity increases at a rate faster than inflation, the electrical savings would be higher. Prepared by Strand Associates, Inc.® 4 R: 1MAD \Documents\Reports\Archlve\2011 \Dubuque, IA\WPCP Cogen.Fac.1154.033.raw.jan \Report\Cogeneration Report .rev.4- 21- 11.docx14/22/2011 City of Dubuque, Iowa Water Pollution Control Plant Cogeneration Facilities Each alternative is expected to operate 8,000 hours a year to account for maintenance downtime. Based on this analysis, the microturbine alternative has the lowest TPW and the normal -duty engine generator has the second lowest TPW, though these values are considered approximately equal at this stage of planning. Total Project Cost Annual O &M Annual Electrical Savings Total Present Worth (20 year) Heavy Duty Engine Generator ,(390 kW) $2,387,000 $81,000 ($218,000) $585,000 Normal Duty Engine Generator X450 kW) $1,745,000 $123,000 ($236,000) $259,000 1 See attached TPW of each alternative (Appendix) for details Table 5 Total Present Worth Summary (20 Year) Microturbines J400 kW) $1,921,000 $87,000 ($223,000) $197,000 RECOMMENDATIONS A. Generation Device Based on the evaluations of the microturbines and engine generators, microturbines are recommended for digester gas utilization at the Dubuque WPCP. The microturbines and normal -duty gas engine have similar opinions of total present worth. However, space constraints and system layout within the Solids Processing Building favor microturbines over engine generators. In addition, service for the microturbines is anticipated to be provided from a local service firm, which should improve service response for future equipment issues and decrease downtime. B. Preliminary Design Figure 1 presents a preliminary layout for the microturbines in the Solids Processing Building (Structure 75) Cogeneration Room. The microturbine room is required by code to have a 2 -hour fire -rated wall to separate this space from the rest of the building. A stud wall inside the Cogeneration Room will separate the microturbine air intake on the south side of the room from the heat exchanger side. Combustion and cooling intake air will be ducted down from the existing louvers at the top of the structure to the intake space. On the heat exchanger side, an exhaust fan will control the room temperature. The microturbines will be accessible with a manufacturer - provided cart, which allows for removal of microturbines during servicing or overhauls. Additional 200 kW microturbines and heat exchangers can be added as gas production increases. At the estimated gas production rate for future design with food residuals, the microturbines could generate approximately 930 kW, which matches the build -out space of five 200 kW units, Prepared by Strand Associates, Inc.® 5 R:WIAD1 Documents \Reports\Archlve\2011 \Dubuque, IA \WPCP Cogen.Fac.1154.033.raw.jan \Report \Cogeneration Report.rev.4- 21- 11.docx \4/22/2011 City of Dubuque, Iowa Water Pollution Control Plant Cogeneration Facilities C. Recommended Alternative Considerations The following alternatives are provided for the City's consideration. 1. With respect to the microturbine system, there is a relatively significant cost incentive to install 600 kW of generation capacity (three 200 kW units) rather than 400 kW of generation capacity (two 200 kW units). The total opinion of capital cost of the 400 kW system is approximately $1,921,000, or $4,800 /kW. In comparison, the total opinion of capital cost for the 600 kW system is approximately $2,149,000, or $3,600 /kW. The addition of the third 200 kW microturbine adds approximately $228,000 to the capital costs, or $1,140/kW of added capacity. The 600 kW system would not have significant additional structural, mechanical, electrical, or HVAC costs compared to the 400 kW because the Cogeneration Room and piping would largely be the same except for an additional hot water pump, piping, and electrical work for the third heat exchanger. In addition, having a third microturbine will reduce the overall maintenance downtime on the cogeneration system, since a standby unit can be brought online when another unit is down for maintenance. We recommend requesting a Bid Alternative in the Bidding Documents to include a third 200 kW microturbine. 2. Locating the microturbines and heat recovery modules outdoors would reduce structural and HVAC costs of the project. However, this alternative would provide a less ideal location for maintenance and servicing. 3. Rather than a 2 -hour fire -rated wall constructed at full height to the roof, a 2 -hour fire -rated structural ceiling over the Cogeneration Room could be considered. This option would provide additional usable space above the Cogeneration Room. To support the ceiling, structural columns may be required. These may have service clearance and layout conflicts, and this option would increase the cost of the project. 4. Even though it is not required by code, the City may elect to install a fire suppression system in the Cogeneration Room to protect the high -cost equipment. Prepared by Strand Associates, Inc.' 6 R:\ MAD\ Documents \ReportsArchive\2011\Dubuque, IA\WPCP Cogen,Fac.1154.033.raw.jan \Report\Cogeneration Report.rev.4- 21- 11.docx\4/22/2011 APPENDIX TOTAL PRESENT WORTH City of Dubuque WPCP Heavy -Duty Caterpillar Engine Discount Rate 4.375% 20 year TPW ITEM Initial Capital Future Capital Service Replacement 20 yr Salvage Salvage Value Cost Cost Life Cost (P.W.) Value (P.W.) Heavy Duty Engine 1,119,000 1,119,000 20 Oil Storage Tanks 14,000 14,000 20 Paralleling Switchgear 204,000 204,000 20 Subtotal $ 1,337,000 Structural 122,000 Mechanical 160,000 20 Electrical 200,000 20 HVAC 68,000 20 Subtotal $ 1,887,000 Contractors General Conditions @ 10% 189,000 Construction Costs 2,076,000 Contingencies @ 15% 311,000 Total Capital Costs $ 2,387,000 $ $ $ Present Worth $ 2,387,000 $ $ Operation Costs (Annual)* 81,000 Electrical Savings (Annual)* (218,000) Total $ (137,000) Present Worth of O &M $ (1,802,000) Summary of Present Worth Costs Capital Cost 2,387,000 Replacement O &M Cost (1,802,000) Salvage Value - TOTAL PRESENT WORTH $ 686,000 * Based on current annual average conditions S;\ MAD \1100 -- 1199 \1154 \033 \Spr \Total Present Worth Analysis- DBQ.xisxA -1 ALT ENG1 390 kW City of Dubuque WPCP Normal -Duty Caterpillar Engine Discount Rate 4,375% 20 year TPW ITEM Initial Capital Future Capital Service Replacement 20 yr Salvage Salvage Value Cost Cost Life Cost (P.W.) Value (P.W.) Normal Duty Engine 611,000 611,000 20 Oil Storage Tanks 14,000 14,000 20 Paralleling Switch Gear 204,000 204,000 20 Subtotal $ 829,000 Structural 122,000 Mechanical 160,000 20 Electrical 200,000 20 HVAC 68,000 20 Subtotal $ 1,379,000 Contractors General Conditions @ 10% 138,000 Construction Costs 1,517,000 Contingencies @ 15% 228,000 Total Capital Costs $ 1,745,000 $ - $ $ Present Worth $ 1,745,000 $ $ Operation Costs (Annual)* 123,000 Electrical Savings (Annual)* (236,000) Total $ (113,000) Present Worth of O &M $ (1,486,000) Summary of Present Worth Costs Capital Cost 1,745,000 Replacement O &M Cost (1,486,000) Salvage Value - TOTAL PRESENT WORTH $ 259,000 * Based on current annual average conditions S;\ MAD \1100 -- 1199 \1154 \033 \Spr \Total Present Worth Analysis- DBQ.xlsxA -2 ALT ENG2 450 kW City of Dubuque WPCP Capstone Microturbines Discount Rate 4.375% 20 year TPW ITEM Initial Capital Future Capital Service Replacement 20 yr Salvage Salvage Value Cost Cost Life Cost (P.W.) Value (P.W.) Microturbines 823,000 823,000 20 Compression Skid 265,000 265,000 15 139,000 177,000 75,000 Subtotal $ 1,088,000 Structural 72,000 20 - Mechanical 100,000 20 Electrical 160,000 20 HVAC 98,000 20 Subtotal $ 1,518,000 Contractors General Conditions @ 10% 152,000 Construction Costs 1,670,000 Contingencies @ 15% 251,000 Total Capital Costs $ 1,921,000 $ 139,000 $ 177,000 $ 75,000 Present Worth $ 1,921,000 $ 139,000 $ 75,000 Operation Costs (Annual)* 87,000 Electrical Savings (Annual)* (223,000) Total $ (136,000) Present Worth of O &M $ (1,788,000) Summary of Present Worth Costs Capital Cost 1,921,000 Replacement 139,000 O &M Cost (1,788,000) Salvage Value (75,000) TOTAL PRESENT WORTH $ 197,000 * Based on current annual average conditions 5;\ MAD \1100 -- 1199 \1154 \033 \Spr \Total Present Worth Analysis - DBQ.xlsxA -3 ALT MT 400 kW