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Home My WebLink About05.f. Authorize transfer of funds for Plant Energy Optimization Project, District Project 7320, and amend contract with Carollo Engineers, Inc. for design services for the projectCentral Contra Costa Sanitary District BOARD OF DIRECTORS POSITION PAPER 5.f. Board Meeting Date: November 3, 2016 Subject: AUTHORIZE THE GENERAL MANAGER TO TRANSFER FUNDS AND EXECUTE A PROFESSIONAL AGREEMENT WITH CAROLLO ENGINEERS FOR DESIGN SERVICES FOR THE PLANT OPTIMIZATION PROJECT, DISTRICT PROJECT 7320 Submitted By: Initiating Dept./Div.: C. Shima, Senior Engineer Operations/Plant Maintenance REVIEWED AND RECOMMENDED FOR BOARD ACTION: E. Lopez — Capital Projects Division Manager JM. Petit — Director of Engineering and Technical Services 460.0 4 74) ,.► Roger S. Bane 9 Y General Manager ISSUE: Board authorization is required to transfer funds withine Capital Improvement Budget in amounts greater than $500,000. Authorization is also required for the General Manager to execute a professional engineering agreement in the amount above $100,000. BACKGROUND: The project aligns with the District's Strategic Plan Goal 6, Strategy 4, to optimize energy efficiency and meets the recently adopted Energy Policy. The District received a notice of violation from the Bay Area Air Quality Management District in April 2016 for carbon monoxide (CO) emissions for the cogeneration gas turbine (GT) engine, which is the main power generation unit for the treatment plant. The cogeneration system (Cogen) must operate within site specific Title V Permit pollutant mass limits at all times. The Title V limits are 118 pounds per day for nitrogen oxides (NOx) and 157 pounds per day for CO. The GT engine and gearbox was overhauled in December 2015 under a maintenance agreement with Solar Turbines. Prior to the overhaul, the GT engine was operating at an average load of about 90 percent. Therefore, to meet these regulated mass limits, staff has reduced fuel throughput by approximately six percent less than normal, which increases the amount of electricity imported and results in less energy savings from operating the Cogen. To reserve our contract rights, in August 2016, the District submitted a warranty claim to Solar Turbines related to the performance of the GT engine. Solar Turbines promptly responded by sending technicians to retune the GT engine on several occasions to improve the emissions performance. A third -party air quality service verified that the GT engine meets the Solar Turbines' Centaur 40 engine technical specification concentration limits of 42 parts per million (ppm) of NOx corrected to 15 percent oxygen, Page 1 of 3 POSITION PAPER Board Meeting Date: November 3, 2016 Subject: AUTHORIZE THE GENERAL MANAGER TO TRANSFER FUNDS AND EXECUTE A PROFESSIONAL AGREEMENT WITH CAROLLO ENGINEERS FOR DESIGN SERVICES FOR THE PLANT OPTIMIZATION PROJECT, DISTRICT PROJECT 7320 and 50 ppm of CO, which matches industry standard for this GT engine type. These types of GT engines can operate at full Toad within the Title V concentration and mass permit limits, but not consistently. Due to limitations in air testing equipment accuracy (Le., a repeatability of plus/minus 7 percent in general), the only means to ensure full regulatory compliance, while maximizing the output of the Cogen, is through improved emissions control technology. Staff researched various alternatives to modify the Cogen to meet compliance and increase efficiency. Two improvements were identified. First, oxidation catalyst (CO catalyst) technology can reduce CO by approximately 50 to 75 percent, which when combined with injection water will provide Title V Permit compliance at full load. Second, evaporative cooling technology appears promising from a fuel efficiency standpoint. Carollo Engineers, Inc. was hired to provide a technical memorandum evaluating installation costs and payback duration. Carollo was selected based on their past experience in designing the original 1995 installation of the Cogen, the repairs in 2012, and the the control modifications in 2014. The purpose of the Plant Energy Optimization Project, District Project 7320, is to increase energy efficiency and decrease greenhouse gas emissions at the treatment plant. District staff has identified a project that will add evaporative cooling equipment to the inlet of the Cogen and a CO catalyst to the exhaust ducting. These modifications will increase operational flexibility and electricity generation by allowing operation at full Toad, while decreasing emissions. Continued operation at the current reduced Toad will cost the District approximately $150,000 to $200,000 per year in additional electrical import costs. The evaporative cooler and CO catalyst alternative has a payback period of approximately three years as detailed in Attachments 1 and 2, Project Business case Analyses. This project has been coordinated with the Comprehensive Wastewater Master Plan team to ensure that the potential future replacement of the Cogen does not negatively impact the benefit of these improvements. The replacement of the District's Centaur 40 engine falls within the ten-year timeframe of the Comprehensive Wastewater Master Plan. Staff is recommending that the agreement with Carollo be revised to include design services for this project. Carollo has unique knowledge and understanding of the Cogen, and it is in the best interest of the District to retain their professional engineering service. The agreement revision will include detailed field investigation, project specifications and drawings for bid and other related professional services to design the project. Page 2of3 POSITION PAPER Board Meeting Date: November 3, 2016 Subject: AUTHORIZE THE GENERAL MANAGER TO TRANSFER FUNDS AND EXECUTE A PROFESSIONAL AGREEMENT WITH CAROLLO ENGINEERS FOR DESIGN SERVICES FOR THE PLANT OPTIMIZATION PROJECT, DISTRICT PROJECT 7320 ALTERNATIVES/CONSIDERATIONS: Continue to operate the Cogen as -is and import electricity from Pacific Gas and Electric. Other options reviewed as part of the Business Case Analysis include Selective Catalytic Reduction (SCR), SoloNOx, and a chiller unit. These other options are more costly and are not recommended. FINANCIAL IMPACTS: The total Fiscal Year (FY) 2016-17 project cost is anticipated to be $600,000, which includes planning, design, consulting fees, bid price, and construction management. This project is listed on page 133 of the FY 2016-17 District Budget. The approved budget for this project in FY 2016-17 is $50,000. Additional funds of $550,000 will need to be transferred from projects in the treatment plant program to complete the work this fiscal year. The following budget transfers are recommended: • Transfer $ 50,000 from District Project 7297. • Transfer $ 25, 000 from District Project 7310. (Project Closing) • Transfer $188,000 from District Project 7324. • Transfer $137,000 from District Project 7312. • Transfer $150,000 from District Project 7341. (Delayed to FY 2017-18) Transfer $550,000 to District Project 7320. COMMITTEE RECOMMENDATION: The Engineering and Operations Committee reviewed this subject at the October 21, 2016, meeting and recommended approval of the budget transfer and project. RECOMMENDED BOARD ACTION: 1. Authorize the General Manager to transfer up to $550,000 budgeted for other projects in the current fiscal year treatment plant program to the Plant Energy Optimization Project, District Project 7320; and 2. Authorize the General Manager to execute a revision to Agreement 044520 with Carollo Engineers, Inc. to increase the cost ceiling from $29,495 to $120,000 for design services under the Plant Energy Optimization, District Project 7320. 3. Attached Supporting Documents: 1. Business Case Analysis No. 1 2. Business Case Analysis No. 2 Page 3 of 3 Date: Project: Prepared By: Capital Costs For 1st Year: Planning/Design Costs Direct Equipment Costs Construction Costs CM Costs •• O&M Costs For ist Year: District Staff Time Cost Solar Turbine PM Contract Additional Cost* Chemical Costs PG&E Costs Natural Gas Costs 8/16/2016 Cogen Exhaust Upgrades Clint 5hima 'Checked By: Sarwan Wason BUSINESS CASE ANii ATTACHMENT 1 Typical Alternative 1 Alternative 2 Alternative 3 Alternative 4 Baseline Do Nothing CO Catalyst SCR SoloNOx C40 $0 $0 $95,000 $220,000 $410,000 $0 $0 $150,000 $350,000 $650,000 $0 $0 $245,000 $560,000 $1,030,000 $0 $0 $60,000 $130,000 $250,000 $25,000 $25,000 $30,000 $45,000 $25,000 $0 $0 $0 $0 $47,280 0 0 $11,000 $0 $390,000 $600,000 $390,000 $390,000 $290,000 $1,920,000 $1,880,000 $1,920,000 , $1,920,000 $1,920,000 O&M Costs for Year 1 $2,335,000 Capital Costs for Year 1 Net Present Value for 10 years Assumptions: :Discount Rate, % -O&M Cost Inflation Rate, % -Capital Costs Inflation Rate, % N/A 50 $2,505,000 $2,340,000 $2,366,000 • $2,282,0.00 $0 $550,000 $1,260,000 $2,340,000, $24,108,000 $22,988,000 $24,002,000 524,032,000" Recomn111149191 e Not Recommended 4.00% 2.60% 2.50% Not Recommein. Based upon CWMP Basis of Cost TM 3 Based on 2011-2015 Average CPI Based on 2011-2015 Average ENR CCI Based on 2012-2016 normalized PG&E Average Total Rate PG&E Cost Inflation Rate, % 4.72% ($/KWh) Natural Gas Cost Inflation Rate, % 0.00% (-0.42%) inflation from 2002-2016 Lifecycle period, years 10 years * Solar Turbines PM Contract Cost is currently $216,000 annually _**Alternatives are compared using an average plant load of 2.9 MW Typical Baseline from 2015 Cogen operating conditions Alternative 1 Run Cogen as -is producing —2.3MW and continue increased PG&E import Alternative 2 Alternative 3 Alternative 4 ;Add a CO catalyst to the exhaust stack with increased water injection to 'produce 2.7 MW while keeping Nox and CO emissions below Title V limits Insert a Selective Catalytic Reduction system using urea to lower NOx emissions while running cogen to produce 2.7 MW, removing water injection system, and reducing CO emissions Replace existing conventional combustion engine to a low emission engine that reduces emissions and is able to produce 3 MW at the same fuel rate... Date: :Project: •Prepared By: Capital Costs For ist Year: Planning/Design Costs Direct Equipment Costs Construction Costs -CM Costs 08:.11/1 Costs For lst Year: District Staff Time Cost Chemical Costs PG&E Costs Natural Gas Costs L O&M Costs for Year 1: Capital Costs for Year 1 Net Present Value for 10 years Assumptions: Discount Rate, % O&M Cost Inflation Rate, % Capital Costs Inflation Rate, % PG&E Cost Inflation Rate, % Natural Gas Cost Inflation Rate, % Lifecycle period, years Alternative 1 10/13/2016 Cogen Improvements Chathu Abeyrathna Checked By: Sarwan Wason BUSINESS CASE ANALYSIS Alternative 1 Do Nothing so Alternative 2 Evaporative Cooler $0 sol $600,000 $1,880,000 $2,480,000; $0 $22,049,000 Not Recommended Recommended $15,0001 $43,000 $37,000 $13,000 $i0,000 $3,000 $524,000 $1,912,000 $2,449,000 $108,000 $21,765,000 Recommended 4.00% 2.60% 2.50% 4.72% 0.00% 10 years ATTACHMENT 2 Based upon CWMP Basis of Cost TM 3 Based on 2011-2015 Average CPI Based on 2011-2015 Average ENR CCI Based on 2012-2016 normalized PG&E Average Total Rate ($/KWh) (-0.42%) inflation from 2002-2016 Run Cogen as -is producing —2.3MW and continue increased PG&E import Alternative 2 Add an Evaporative cooler to reduce cogen intake air temperature.