BOARD MEETING DATE: May 2, 2008
AGENDA NO. 4

RECOMMENDED ACTIONS:

Authorize the Chairman to execute a contract with Fossil Energy Research Corporation to identify and demonstrate the most advanced control technologies that would reduce PM2.5 emissions while not increasing ultrafine emissions from natural gas-fired power plants in an amount not to exceed a total of $3,493,800 from the Rule 1309.1 Priority Reserve Mitigation Fees Fund (36), based on positive findings in the Task One research study at a cost not to exceed $220,700.
 

Barry R. Wallerstein, D.Env.
Executive Officer

Background

At the August 2007 Board meeting, the Board amended Rule 1309.1 – Priority Reserve to allow prospective new power plants conditional access to the Priority Reserve account to purchase emission reduction credits to offset their emissions for certain pollutants which are in short supply in the open market. New natural gas-fired power plants have to meet stringent emission limitations as a pre-condition to access the Priority Reserve. The Board also directed that $4 million of mitigation fees be used to identify and demonstrate the most advanced PM2.5 control technologies that would further reduce PM2.5 and ultrafine emissions from electric generating facilities. To date, approximately $34.5 million have been collected by AQMD and deposited in the Rule 1309.1 Priority Reserve Mitigation Fee Fund.  Of that total amount, $27.1 million have been expended by AQMD on contracts and projects or committed, leaving a balance of approximately $7.4 million.  Previously funded projects include diesel engine replacements/repowering, and diesel particulate filter retrofits.

To address the concerns relative to PM2.5 and ultrafine emissions from natural gas power plants, on November 2, 2007, the Board released RFP #P2008-09 to solicit bids from proposers with proven technical experience in emission control technologies of PM2.5 and ultrafines. This effort will result in the development and implementation of a research study to explore the feasibility of utilizing existing and new control technologies to further reduce PM2.5 emissions while not increasing ultrafine emissions from these sources. In addition, the research study would involve coordinating pilot-scale testing of control technologies at natural gas-fired power plants and preparation of a final report.
 

Outreach

In accordance with AQMD’s Procurement Policy and Procedure, a public notice advertising the RFP/RFQ and inviting bids was published in the Los Angeles Times, the Orange County Register, the San Bernardino Sun and Riverside County Press Enterprise newspapers to leverage the most cost-effective method of outreach to the entire South Coast Basin.

Additionally, potential bidders may have been notified utilizing AQMD’s own electronic listing of certified minority vendors. Notice of the RFP/RFQ has been mailed to the Black and Latino Legislative Caucuses and various minority chambers of commerce and business associations, the State of California Contracts Register website, and placed on the Internet at AQMD’s Web site (http://www.aqmd.gov. Information is also available on AQMD’s bidder’s 24-hour telephone message line (909) 396-2724.
 

Proposal Evaluation

Twenty-nine copies of the RFP were e-mailed by AQMD to qualified potential bidders from staff experience and previous interaction with these experts. One bid was received by AQMD in response to the RFP when final bidding closed at 5:00 p.m. on February 12, 2008. The proposal evaluation panel consisted of one AQMD Assistant Deputy Executive Officer for Science and Technology Advancement, one AQMD Program Supervisor for Best Available Control Technology, one mechanical engineering professor emeritus from UC Berkley and consultant on environmental and energy issues, one Manager from CARB’s Emission Control Technology Research Group, and one Project Manager from the California Energy Commission Energy Research and Development Division responsible for the Advanced Reciprocating Engine program. Of these five panelists, two are Asian, two are Caucasian, and one is Hispanic; five are male. The panel evaluated the proposal based on technical criteria and gave an average score of 60.6 out of a maximum possible score of 70. A minimum score of 56 was needed for the proposal to be deemed qualified for award. The consensus of the panel was that the proposal presented a good phased approach and demonstrated a thorough understanding of the scope of work. In regards to the contractor qualifications, the panel noted the consultant and the team of subcontractors possessed excellent qualifications with a fundamental understanding of the formation, capture, control and testing of PM2.5 and ultrafine emissions. The panel agreed that the proposal brought together a team of organizations and individuals with extensive experience in particulate matter emissions research, testing and control technologies. The panel further believed the promising technologies in the proposal were a step in the right direction in identifying control technologies to reduce PM2.5 emissions while not increasing ultrafine emissions from natural gas-fired power plants. Although there was only one response to the request for proposals, this did not detract from the panel’s positive assessment and recommendation to fund this strong proposal.
 

Proposal

Although only one proposal was submitted by Fossil Energy Research Corporation (FERCo), the evaluation panel’s consensus was that the proposal was extremely strong with four highly qualified subcontractors with technical expertise and experience. These subcontractors include University of California at Irvine Department of Mechanical Engineering, University of California at Riverside College of Engineering-Center for Environmental Research and Technology, General Electric Environmental Service, and Environ. A thorough understanding of PM2.5 and ultrafine emission characteristics and measurements is key to identifying technologies capable of reducing measured emissions from natural gas-fired sources. This proposal brings together a unique team with the right background and expertise needed to conduct the study and demonstration of control technologies for PM2.5 and ultrafine particulates from natural gas-fired gas turbine engines.

FERCo’s proposal is to accomplish the project in five tasks. In the first task, at a cost not to exceed $220,700, FERCo and its subcontractors would conduct an extensive research study to identify and evaluate PM2.5 and ultrafine control technologies and recommend the types of technologies to be demonstrated and tested. Based on the findings in the research study, AQMD will determine whether to proceed and fund the demonstration projects. If the project proceeds, the next tasks will be as follows:

• Prepare a test plan at a cost not to exceed $70,500. The test plan will identify gas turbine host sites and establish agreements with the host sites for the demonstration of control technologies. It will also detail measurements to be made, test techniques, frequency and overall duration of demonstrations.
• Obtain AQMD permits for the demonstration and testing of up to five control technologies at a cost not to exceed $50,600. Under this task the project team will prepare and submit applications, and pay the fees for all required air quality permits to construct or permit modifications for each control technology demonstration.
• One-year demonstration and testing of up to five control technologies at a cost not to exceed $2.9 million. The technologies to be evaluated will be determined by AQMD from the Task One assessment, FERCo’s proposal tentatively identified the following control technologies to be considered: fabric filter with membrane bags (regular or pleated, straight fabric and hybrid mode); fabric filter with membrane bags, sorbent injection and catalytic bags (straight fabric and hybrid mode); sulfur removal from the natural gas; and Emerachem EMx multi-pollutant control technology that does not use ammonia.
• Project management and reporting at a cost not to exceed $252,000. This task includes the general management of the project, reporting which will include monthly and quarterly status reports, quarterly progress meetings, visual documentation of the project, a written final report and a two-page summary for the AQMD annual report.

Because the proposal was responsive to the RFP, received sufficient technical points, and presented a well-planned phased approach with a thorough understanding of the scope of work, staff recommends executing a contract with Fossil Energy Research Corporation in an amount not to exceed $3,493,800, pending positive findings in the Task One research study.
 

Benefits to AQMD

The proposed research study and demonstration of the most advanced PM2.5 add-on control technologies that would further reduce PM2.5 from natural gas-fired power plants will provide valuable knowledge for future rule development and emission mitigation projects.
 

Resource Impacts

Funding for this contract is available from the AQMD Rule 1309.1 Priority Reserve Mitigation Fee fund.