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Parts 222 and 200 Revised Rural Area Flexibility Analysis

Distributed generation (DG) sources are engines used by host sites to supply electricity outside that supplied by distribution utilities. This on-site generation of electricity by DG sources is used by a wide-range of commercial, institutional and industrial facilities either in non-emergency situations when electricity costs are high or to reduce demand on the electric grid, or in emergency situations when the usual supply of power from central station power plants becomes unavailable.

DG sources emit nitrogen oxides (NOx), a precursor to ground-level ozone, which has been linked to adverse public health impacts. The increasing use of uncontrolled DG sources, if left unchecked, will exacerbate public health impacts and make it very difficult for New York to meet its obligations under the Clean Air Act (CAA) to attain the 2008 and 2015 8-hour ozone National Ambient Air Quality Standards (NAAQS).

The Department of Environmental Conservation (Department or DEC) adopted 6 NYCRR Part 222, "Distributed Generation Sources", along with attendant revisions to 6 NYCRR Part 200, "General Provisions", on November 1, 2016. The new rule took effect on December 1, 2016. On March 1, 2017, an Article 78 petition was filed challenging various aspects of Part 222. On July 26, 2017, a Stipulation and Order was issued whereby the Department agreed to propose a new rule to replace the adopted rule pursuant to the State Administrative Procedure Act (SAPA). The purpose of this rule making is to promulgate a new Part 222 along with the attendant changes to Part 200. The new rule will apply to economic dispatch sources located in the New York City metropolitan area (NYMA)1 which are not currently regulated under Subpart 227-2. In addition, the Department may initiate a new rule to develop a minor source new source review regulation in accordance with Section 110(a)(2)(C) of the Clean Air Act to address NOx emitting sources not covered under Subpart 227-2 or the new Part 222.

Types and Estimated Numbers of Rural Areas Affected

This rule will apply in the NYMA which includes the counties of Rockland, Westchester and Suffolk. A few towns in these counties could be considered rural areas. However, at this time, we do not anticipate that new Part 222 and attendant revisions to Part 200 will apply to any current facilities in these rural areas.

Reporting, Recordkeeping and Other Compliance Requirements; and Professional Services

Reporting & Recordkeeping:

An owner or operator of a DG source that will operate as an economic dispatch source must notify the Department in writing by March 15, 2021 or 30 days prior to operating the source as an economic dispatch source, whichever is later.

Emissions test reports demonstrating compliance with subdivision 222.4(b) of new Part 222 must be submitted to and approved by the Department before a distributed generation source may be operated as an economic dispatch source on or after May 1, 2025. The purpose of the emissions testing requirements in new Part 222 is to ensure that sources subject to the rule meet the emission standards set forth in the rule.

In addition, facilities subject to Part 222 must maintain records regarding hours of operation and fuel use for a period of five years.

Compliance Requirements:

The following provisions will apply to economic dispatch sources effective May 1, 2021:

  1. combustion turbines firing natural gas: must be of model year 2000 or newer or must have a NOx emission rate less than or equal to 2.96 pounds per megawatt-hour as certified in writing by a professional engineer;
  2. combustion turbines firing oil: must be of model year 2000 or newer or must have a NOx emission rate less than or equal to 2.96 pounds per megawatt-hour as certified in writing by a professional engineer;
  3. compression-ignition engines: must be of model year 2000 or newer or must have a NOx emission rate less than or equal to 2.96 pounds per megawatt-hour as certified in writing by a professional engineer;
  4. lean-burn engines: must be of model year 2000 or newer or must have a NOx emission rate less than or equal to 2.96 pounds per megawatt-hour as certified in writing by a professional engineer; or
  5. rich-burn engines: must be equipped with three-way catalyst emission controls.

The following NOx emission limits will apply to economic dispatch sources effective May 1, 2025:

  1. combustion turbines firing natural gas: 25 parts per million on a dry basis corrected to 15 percent oxygen;
  2. combined cycle turbines firing oil: 42 parts per million on a dry basis corrected to 15 percent oxygen;
  3. spark ignition engines firing natural gas: 1.0 grams per brake horsepower-hour;
  4. compression-ignition engines firing distillate oil (solely or in combination with other fuels) with nameplate ratings less than 750 hp: 0.30 grams per brake horsepower-hour; or
  5. compression-ignition engines firing distillate oil (solely or in combination with other fuels) with nameplate ratings greater than or equal to 750 hp: 0.50 grams per brake horsepower-hour.

Professional Services:

The services of an engineering consultant may be required in order to complete a permit application. A stack testing company would be required to conduct the emissions testing required in Section 222.5.

Costs

There are several pathways facilities subject to Part 222 may follow in order to comply with the emission limits set forth in Section 222.4 of Part 222:

  1. replace a DG source with a new source;
  2. install post-combustion NOx controls on an existing source; or
  3. limit the use of non-compliant sources to emergency uses only.

The costs for post-combustion control systems are presented in the following sections for 1,200 hp and 2,000 hp engines as a possible compliance option for existing sources operating on or beyond May 1, 2025. As a point of comparison, replacement costs for new 1,200 hp or 2,000 hp engines that meet the New Source Performance Standards2 requirements range from $525,000 to $1,000,000.3,4 The compliance costs for relegating a source to emergency-only status as defined in subdivision 200.1(cq) are lost income from capacity payments and generation payments during DR events.

Selective Catalytic Reduction (SCR) Systems

Selective catalytic reduction (SCR) systems can reduce the NOx emissions from lean-burn natural gas fired-engines and diesel-fired engines by up to 90 percent.5 The capital cost (installed) of SCR control systems are presented in Table 1.

Table 1: Capital Costs for SCR Systems
Cost Component 1200 hp Engine 2000 hp Engine
SCR System6 $108,300 $180,500
Installation $65,000 $108,300
Taxes $8,700 $14,500
Testing7 $8,000 $8,000
Total Cost $190,000 $311,300

Operational costs vary depending upon several factors. The primary driver is the reagent (urea) cost. The other operational factors DEC considered in developing cost estimates for SCR systems are insurance, maintenance and labor costs.

Non-Selective Catalytic Reduction (NSCR) Systems

Non-selective catalytic reduction (NSCR) systems can reduce the NOx emissions from rich-burn natural gas fired-engines engines by up to 98 percent.8 The capital cost (installed) of NSCR control systems are presented in Table 2.

Table 2: Capital Costs for NSCR Systems
Cost Component 1200 hp Engine 2000 hp Engine
SCR System $23,500 $39,200
Installation $14,100 $23,500
Taxes $1,900 $3,200
Testing9 $8,000 $8,000
Total Cost $47,500 $73,900

NSCR catalysts need to be replaced every five years.10 Replacement catalysts are estimated to cost 7 percent of the original NSCR system cost. In DEC cost analyses, the cost of installing the replacement catalyst was assumed to be 60 percent of the cost of the new catalyst. Annual costs for operating NSCR include insurance, maintenance and labor.

Compliance Testing

The emission testing costs are estimated to be $8,000.11 This is a one-time cost for sources operating on or after May 1, 2025.

Minimizing Adverse Impact

The Department has taken the following steps to minimize the adverse impacts of Part 222 on facilities subject to the rule:

1. The provisions that take effect on May 1, 2021 mirror the tariff provisions governing the demand response programs sponsored by Con Edison and Orange & Rockland Utilities. Sources enrolled in those programs will not be affected by this rulemaking until 2025, at which time most sources will be impacted by Section 24-149.6 of the New York City Air Pollution Code. This rule is anticipated to impact approximately 35 MW of DR sources enrolled in the NYISO's DR programs beginning May 1, 2021. This amounts to approximately 7.7 percent of the capacity enrolled in the Special Case Resources program in NYISO Zones I, J and K.12

2. The provisions limiting DR enrollment and price-responsive generation sources to model year 2000 or newer do not take effect until May 1, 2021 in order to provide DR sponsors, energy services companies (ESCOs) and source owners sufficient time to adjust to the new rule.

3. The emissions testing requirements have been reduced significantly compared to the rule adopted in November 2016. PM testing will not be required. Only one emissions test per source is required - and this only applies to economic dispatch sources operating on or after May 1, 2025.

Rural Area Participation

Drafts of a proposed replacement rule were released to stakeholders on November 3, 2017, February 26, 2018 and June 5, 2018. Stakeholder meetings were held on November 13, 2017 and March 12, 2018.

Initial Review

The initial review of this rule shall occur no later than in the third calendar year after the year in which the rule is adopted.

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1 The term 'New York City metropolitan area' is defined in Part 200.1(au) as all of New York City and Nassau, Suffolk, Westchester and Rockland Counties.
2 40 CFR 60, Subparts IIII (compression-ignition engines), JJJJ (spark-ignition engines) and KKKK (turbines).
3 E-mail from Joe Suchecki (Truck & Engine Manufacturers Association) to John Barnes (DEC) dated November 8, 2013.
4 Replacement costs as well as the costs for pollution control systems could be higher than the costs presented in this section in cases where there are space limitations or building or fire code requirements that must be met.
5 "NOx Control for Stationary Gas Engines," Wilson Chu (Johnson-Matthey), Advances in Air Pollution Control Technology, MARAMA Workshop, May 19, 2011.
6 Sources: CARB 2010. Regulatory Analysis for Revisions to Stationary Diesel Engine Air Toxic Control Measure. Appendix B. Analysis of Technical Feasibility and Costs of After-treatment Controls on New Emergency Diesel Engines; and (2) Producer Price Index, U.S. Department of Labor, Bureau of Labor Statistics.
7 Testing costs include NOx and PM tests (diesel engines). For natural gas-fired engines, the estimated cost is $8,000 for NOx tests only.
8 "NOx Control for Stationary Gas Engines," Wilson Chu (Johnson-Matthey), Advances in Air Pollution Control Technology, MARAMA Workshop, May 19, 2011.
9 Emissions tests for NOx only since the PM standard does not apply to natural gas engines.
10 E-mail from Wilson Chu (Johnson Matthey) to John Barnes (DEC) dated January 24, 2008.
11 Stack testing costs are based upon an informal Department survey of several stack testing companies.
12 "Semi-Annual Reports on New Generation Projects and Demand Response Programs," Attachment II, New York Independent System Operator, June 1, 2017


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