Siting & Permitting

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Siting and Zoning

For all CHP projects, pre-construction (see below for New Source Review and Reforms), construction and operating approvals must be obtained from local jurisdictions. The more involved approval procedures are those required by the local planning and building departments and the air district. Local planning and building departments must ensure that a CHP project complies with:

  • Local ordinances (e.g., noise, aesthetics, set-backs, general plan and zoning, land use), and
  • Standards and codes (e.g., fire safety, piping, electrical, structural, etc.).

Approvals may be in the form of a permit or license issued after an agency has verified conformance with requirements, or may be in the form of a program (e.g., landscaping, noise monitoring) that must be developed to ensure the environmental impacts are mitigated. Approval processes such as siting and zoning are not onerous tasks for most CHP projects, and even less of one for a large district energy system. However, three obstacles can sometimes slow down siting and zoning, according to John Moskal from the U.S. EPA New England Regional Office:

  • Codes often don't yet address many newer CHP technologies
  • Zoning issues such as noise and esthetics may arise
  • Local code officials are sometimes unfamiliar with new technologies.

Environmental regulatory and local government agency approval costs, for which project planning has not been mapped out, may approach 15-30% of project costs and need to be considered as part of any CHP project economic feasibility study. The general approval process includes fee payment; paper work concurrent with fee payment, agency review and approval. These costs may include:

  • Air pollution control equipment
  • Noise abatement equipment or structures
  • Landscape-related mitigation, and
  • Agency review and approval fees.

Permitting for Water, Air, Fuel and Discharge

The number of permits and approvals will vary depending on project characteristics such as the size and complexity of a project, the geographic location, the extent of other infrastructure modifications (e.g., gas pipeline, distribution), and the potential environmental impacts of construction and operations.

Site selection will determine the agencies (and local community) involvement. This includes such entities as the city or county planning agency, the fire marshal at the respective fire department/authority, the city or county building department, the environmental health department, and the air district. US EPA is developing a Permitting Guide to assist CHP developers and end-users with permitting steps.

According to environmental permitting expert Shirley Rivera from Resource Catalysts, the primary approvals that CHP sources must obtain include:

  1. Local jurisdiction pre-construction (see below for New Source Review) and construction approvals
  • Planning department land use, zoning and environmental assessment/review. A conditional use permit may be issued that identifies additional mitigation such as landscaping plans, air pollution control, architectural treatments and noise abatement. Project impacts evaluated for conformance and environmental impactsó which could include esthetics, agriculture resources, cultural resources, geology / soils, hazards and hazardous materials, mineral resources, noise, recreation, transportation / traffic. Noise impacts evaluated by this agency. Jurisdiction defined by city or county limit. Contributing factors to the differences in agencies' reviews include: nearby affected communities, local ordinances, nearby affected plant and wildlife species, understanding of CHP technology environmental impacts, and inter-agency coordination efforts.
  • Building department review and approval of project design and engineering. Approvals issued for projects in conformance with building code requirements. The local building department is responsible for ensuring that a CHP project's design and operation will conform to building codes, e.g., local and national building codes; in addition, conformance with fire codes is also reviewed. Also ensures project design is consistent with industrial and worker safety. Jurisdiction typically defined by city or county limit.
  • Air district approval for construction. For both small and large generation sources, the air regulatory and permit requirements continue to evolve throughout the nation, with particular emphasis on state-of-the-art technologies, precedent setting permit actions, and Best Available Controls Technology (BACT) guidance documents/policies. Compliance demonstration is required for meeting and record keeping of emissions, fuel usage, operating times, and emissions source testing. Primary area is the control of air pollution to protect public health. Issues that an air agency considers include: exemption thresholds (e.g., capacity, emission levels), controlled emission levels, type of fuel(s) fired, proximity to sensitive receptors (e.g., schools, day cares, hospitals), siting at a new location or an existing site (e.g., commercial building, industrial facility), health risk exposure of cancer and non-cancer combustion by-products, and a demonstration that projected emission levels are met via source testing.
    • Each air district has its own set of regulations. BACT requirements is the most notable difference for air agency approval of a CHP project, particularly for NOx emissions. The NOx level is based on some controlled level of emissions and therefore may require add-on control technology. Jurisdiction defined by county limit or a group of counties comprising an air district.
    • There are explicit air permit exemption thresholds and thresholds stipulating the need for an air permit. For CHP projects, fossil fuel-fired technologies such as reciprocating engines and turbines must obtain an air permit. All districts require the same type of information, however, differences from agency to agency include:
    • Application forms and fees
    • Title V permit program implementation
    • Details of support information that must be provided
    • Emission factors to estimate air toxics
    • BACT requirements and pollutant-specific cost-effectiveness benchmarks
  • Application forms and fees differ in terms of level of detail and cost for review. For all CHP projects, emissions must be estimated, exhaust gas parameters must be defined (for air toxics evaluation), and a demonstration of compliance with rule requirements must be made. US EPA is developing an Emissions Calculator to provide an estimation of the expected emissions from a CHP facility for various operating scenarios.
  • The Midwest CHP Application Center's Volume B - Permitting Issues, nearly half of all facilities in the Midwest had to obtain a Clean Air Act Title V permit and that they had to use an outside consultant for permitting purposes. If a facility has an existing Title V operating permit, the CHP project must be included in this permit. Therefore, a modification of the operating permit is necessary. For many agencies, separate Title V application forms and fees apply. Additionally, there are separate review and processing times. Both local and federal regulatory requirements must be identified. Depending on the emission levels, a public comment period may be necessary. For permit exempt CHP sources, a minor modification may be obtained, thus avoiding a more rigorous review and public comment.
  • Criteria pollutant emission factors may differ from agency to agency. For most CHP technologies, factors provided by the vendor and/or source test results of similar technologies are relied upon as the most representative, while default emission factors are used in absence of vendor information. If this is the case, it would be necessary for a developer to determine whether he/she is in agreement with the air agency's default factor.
  • Air and water permitting, especially for facilities classified as a major emissions source or a facility in need of a National Pollutant Discharge Elimination System (NPDES) water discharge permit, may constitute the critical elements of the timeline during the development of a CHP project.

2. Local natural gas distribution company approval

  • Interconnection study

  • Natural gas pipeline connection/supply

    3. Other potential approvals

    • Environmental/health department. Approvals issued for projects in conformance with federal and state hazardous materials and waste management requirements. Jurisdiction defined by city or county limit.
    • Public works
    • Regional water quality control board
    • Fire department. Approvals issued for projects in conformance with fire code requirements. May also be organization responsible for portions of environmental health-related requirements. Jurisdiction typically defined by city or county limit.
    • Water/wastewater district. Water supply and discharge. Water permits, while not required for many CHP prime movers, are usually required for heat recovery and energy utilization equipment. Approvals issued for allowable discharge to sewer system; evaluates waste streams that may enter various bodies of water (e.g., lakes, streams, bays, estuaries, coastal waters, etc.). Ensures compliance with stormwater requirements. Project conformance with federal Clean Water Act and local water and wastewater quality

    4. Local jurisdiction post-construction and operation approvals

    • Planning department and building department confirmation and inspection of installed CHP source
    • Air district confirmation that CHP emissions meet emissions requirements

    New Source Review (NSR)

    The New Source Review (NSR) is a preconstruction review and permitting program that considers emissions such as nitrogen dioxide, carbon monoxide, particulate matter, ozone, and other emissions as legislated by Congress in Title I of the Clean Air Act (Act) to preserve or restore air quality.

    The 1977 Amendments to the Act required implementation of a Prevention of Significant Deterioration (PSD) program. Requirements were then promulgated into those States, as State Implementation Plans (SIPs), where there was no approvable plan in place. The purpose of the PSD program is to insure that the permitting of proposed new industrial facilities and the associated economic growth will occur in a manner consistent with the preservation of clean air resources.

    Luis Troche, Team Lead of the U.S. Environmental Protection Agency's CHP Partnership, addressed the basics of New Source Review (NSR) and recent reforms at a 2003 CHP Partnership meeting. Troche asserts that almost every CHP project needs some form of NSR permit.

    • Major Source NSR Permit
    • Minor Source NSR Permit
    • PSD

    To minimize permitting pitfalls, Troche recommends the following steps: Steps to Minimize

    Step 1. Define Source

    • Is CHP its own source or part of another source?
    • Is CHP a new source or a modification to an existing source?

    Step 2. Calculate Emissions

    For a new source, estimate potential to emit (PTE) based on design operational capability but can account for operational limits, fuels, emissions controls

    For modifications to existing source, determine net emissions increase (if any); and source-wide creditable contemporaneous increases - source-wide creditable contemporaneous decreases + modification increases

    Step 3. Determine NSR Applicability

    A CHP project will trigger BACT or LAER if it is a new major source or a major modification of an existing major source.

    Step 4. Explore Options to BACT/LAER Analysis

    • Exemptions in rule (e.g. some fuel switching is exempt)
    • Reduce emissions below threshold level
      • Install pollution controls
      • Take operating limits
    • Emission netting
    • Trade cost vs. emissions

    Step 5. Meet with Permitting Officials Step 5. Meet with Permitting Officials

    • Meet early in the process
    • Present your proposal
      • Ensure that source definition, emissions factors, calculations are approved by the authority (Permitting authorities have interpretative latitude for NSR)
      • Ensure both agree if BACT/Lowest Achievable Emissions Rate (LAER) is triggered
    • Ask about other applicable requirements (water regulations, NSPS, HAPs)
    • Negotiate permit terms and conditions
      • Fuels, controls, hours, monitoring & reporting

    Step 6. Permits

    • For both Major and Minor Sources
      • Submit permit application
      • Obtain permit to construct
      • Obtain permit to operate

    NSR Reforms

    NSR Reform is meant to provide flexibility to respond to rapidly changing markets. It was published December 31, 2002 (67 FR 80186); reforms took effect March 3, 2003 in some areas but the old rule still applies in most of the U.S. until January 2006.

    All reforms affect the applicability of NSR to modified sources; a final rule and a proposed rule affecting different elements of NSR. Reform is not applicable to new sources nor is it retroactive.

    There are four elements of NSR Reform:

    1. New Applicability Test. New Applicability Test

    • Projected Actual (maximum projected annual emissions in next 5 years)

    Baseline Actual (look back 10 years and pick highest 24-month emissions)

    = Emissions Increase

    2. Plantwide Applicability Limitation (PAL)

    • Optional Approach for Determining NSR Applicability
    • Sets a plantwide emissions cap (tons/year, 12-month rolling average)
    • NSR not triggered if emissions < PAL
    • Requires monitoring and semi-annual reporting of emissions
    • A PAL is pollutant specific and has 10-year term

    3. Clean Unit Exemption Clean Unit Exemption

    • Purpose: To avoid re-permitting units with state-of-the art controls
    • Clean units are exempt from NSR unless a change:
    • Exceeds permitted emission limitations
    • Fundamentally changes the process
    • Clean unit status lasts 10 years
    • Applies in nonattainment areas only if allowable emissions were offset

    4. Pollution Control Project (PCP) Exclusion

    • Exempts a PCP from major NSR, even if a significant emission increase occurs
    • The rule lists 20 technologies that presumptively qualify
    • Sorbent injection
    • Fuel switching
    • Selective catalytic reduction
    • Modification must pass air quality tests and permitting authority approval

    The Reforms might help CHP in the following circumstances:

    • Netting out using 10-year lookback (e.g., if CHP replaces an existing boiler)
    • Upgrading equipment to incorporate CHP technology
    • Refurbishing an existing CHP unit
    • Implementing CHP at a facility with a PAL

    For new CHP sources, the reforms do not change current requirements because NSR emission increase = PTE.

  • Drafted by D&R International  |  Supported by ORNL  |  Feedback and questions


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