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Biotech / Medical : Catalytica Energy Systems, Inc. (CESI)

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To: Erik T who wrote (1446)1/24/2000 3:46:00 AM
From: Erik T  Read Replies (1) of 1514
 
buscom.com

Turbines without the NOx

Flameless combustion can virtually eliminate emissions.

Industrial gas turbines are used for elec-
tric power generation, compression
of natural gas for pipeline transmission, and for
various industrial process applications. There are
over 10,000 industrial gas turbines operating in the
United States today.

Natural gas is the fuel of choice for turbines that
have high annual hours of operation (over 4,000
hours/year) because of its relatively low emissions
and low cost compared to alternative fuels.
However, when gas turbines combust natural gas
at the high temperatures (2,700­F and above),
oxides of nitrogen (NOx) are created. Carbon
monoxide (CO) and unburned hydrocarbons (UHC)
are also created in the combustion process.

These pollutants have been singled out as
causing damage to health and the environment
and NOx, in particular, contributes to the
formation of tropospheric ozone, which is a
respiratory irritant. The EPA has established
guidelines for operating turbines to reduce NOx
emissions. In addition, there is regulatory
pressure in much of the industrialized world to
reduce emissions from operating turbines.

From the perspective of the electric power
generation industry, one of the more critical
issues facing the industry in coming years will
be the ability to satisfy economically the growing
worldwide demand for power while complying
with environmental protection requirements.
Inasmuch as the above-described gas turbines
are expected to supply the majority of increasing
electric demand in many locales--because
natural gas burns more cleanly than other fossil fuels, and gas turbines have shorter construction lead times and lower
aggregate installation cost per kilowatt than alternative power generation methods, and usually the
best operating efficiency--it will be extremely critical to bring on-line a demonstrated, technically proven
means of reducing NOx emissions. Through its Catalytica Combustion Systems, Inc. subsidiary,
Catalytica, Inc. has developed catalytic combustion systems that are designed to significantly reduce
emissions of pollutants from turbines. And, as discussed in this article, these innovative systems have
moved from the R&D stage to the commercialization phase.

Market Overview

The gas turbine market encompasses a range of turbine sizes and applications that are typically
divided into two segments: utility power generation and industrial applications. The installed base of
gas turbines in the United States is approximately 50,000 megawatts, which is estimated to be less
than one-half of the worldwide installed base. One megawatt is sufficient energy to provide power to
approximately 1,000 households.

Utility Power Generation: The utility power generation segment is comprised principally of large
turbines ranging from 50 to 250 megawatts. The principal end users of these turbines are major
electric utilities and independent power producers. According to the Power Data Group, the worldwide
demand for new turbine capacity, including replacement of existing capacity, is projected to grow at an
average annual rate of 24,000 megawatts through 2003. General Electric and its affiliates are
estimated to have over a 50% share of the worldwide gas turbine market.

Industrial Applications: The industrial applications segment is comprised of small and medium size
turbines generally ranging from 1 to 25 megawatts. The principal end users of these turbines are
nonutility industrial power generators and mechanical drive turbines such as those used for
processing and transmission of natural gas in pipelines. According to Power Data, the world market for
industrial power generation and mechanical drive gas turbines is projected to grow at an average rate
of 6,000 megawatts per year. The United States market is believed to represent approximately 25% of
the world market. Allison Engine Company, Inc., a subsidiary of Rolls Royce, and Solar Turbines, Inc., a
subsidiary of Caterpillar, together have a majority of the worldwide market. Other suppliers include
European Gas Turbines and Kawasaki.

Regulatory Impetus

In the United States, the Clean Air Act provides the regulatory guidelines for the emissions of NOx,
carbon monoxide and unburned hydrocarbons. The U.S. EPA developed emission guidelines for gas
turbines. However, the emission requirements for specific sites are defined at the state and local level.

Under the Clean Air Act, the EPA establishes ambient air quality standards. Areas which meet these
standards are considered "attainment areas," while areas not meeting these standards are
considered to be "non-attainment." In areas that are considered to be non-attainment, the regulations
require the emissions of any new source to be "offset," i.e., if a new gas turbine is going to exceed a
specified emission threshold, the user must offset the entire emissions of the project so that the net
increase of emissions for the area is zero. In many cases there is a multiplier applied to the new
emissions, so that the new project combined with the "offset" must actually provide a net decrease in
emissions.

One of the ways to meet the offset requirements is to make contemporaneous reductions of
emissions at the same facility. As part of bringing a new project on line, emission reductions at the
facility are made by introducing controls on existing equipment at the location or by taking existing
equipment out of service. If it is not possible to make sufficient contemporaneous reductions at the
facility, then the user must obtain Emission Reduction Credits (ERCs) from one of their own locations
or from someone else's location to offset the emissions from the project. There is a developing market
for ERCs which provides economic value to sources with credits available from their emission
reductions and establishes the cost for those who must acquire such credits.

In addition to environmental requirements in the United States, there are increasing regulatory
requirements relating to emissions in many other countries, such as Japan and the European
Community. The World Bank and ExIm Bank impose emission limitations on new gas turbine
applications that they finance.

Current Control Approaches

Gas turbines currently utilize diffusion flame combustors that operate at about 1,800­C (3,272øF).
Without emissions controls or cleanup processes, combustion at these temperatures results in NOx
emissions of between 75 and 200 parts per million (ppm). These levels generally are not permissible
for new turbines in most areas of the United States. For example, in several metropolitan areas of the
United States, new gas turbines have been required to achieve NOx emission levels of 5 ppm or lower
to obtain permits for installation. Specifications for the next generation turbines being developed under
the United States government sponsored Advanced Turbine System program require the achievement
of less than 8 ppm of NOx without any post-emissions cleanup system.

One current approach for reducing NOx is to reduce the combustor temperature by using wet controls,
which involves injecting water or steam into the turbine combustor. NOx emission levels can be
reduced to about 42 ppm with water and about 25 ppm with steam injection. However, the use of water
and steam requires that purified water be available at the site location. Capital and operating costs can
significantly increase if sufficiently pure water is not readily available and extensive water cleanup is
required. Additionally, corrosion induced by water impurities can cause serious turbine damage over a
relatively short time period.

A second approach currently used to reduce gas turbine emissions by reducing temperature utilizes a
control technology that is generally referred to as lean pre-mix or dry-low- NOx (DLN). DLN is a
combustion process in which natural gas and air are premixed prior to entering the combustor,
resulting in a low fuel to air ratio. Turbine manufacturers utilizing this approach have achieved emission
levels of approximately 25 ppm, and are undertaking to achieve emission levels in the 10 to 15 ppm
range in the next product generation. Compared to wet controls, DLN capital costs are moderate and
operating costs are low to moderate. Operating costs are expected to increase as emissions are
reduced below 25 ppm.

Maintaining an operating temperature in the combustors at 1,500øC (2,732øF) or below virtually
eliminates production of NOx. Wet controls and DLN technologies are not able to operate at this
temperature level, and therefore these methods require post-combustion process cleanup to achieve
lower emission levels.

The most common post-combustion cleanup process is selective catalytic reduction (SCR). SCR
reduces NOx emissions by approximately 80%. For example, a turbine with NOx emissions at 25 ppm
can be reduced by 80%, to about 5 ppm, with the addition of an SCR unit. Capital and operating costs
of this approach add significantly to the overall cost of producing power. In addition, the gas turbine
operator must store and handle large quantities of ammonia--a toxic, hazardous substance.

XONON Technology

NOx production in a gas turbine combustor occurs predominantly within the flame zone, where
localized high temperatures sustain the NOx-forming reactions. The overall average gas temperature
required to drive the turbine is well below the flame temperature, but the flame region is required to
achieve stable combustion. Because catalytic combustion offers the possibility of achieving full
conversion of a fuel/air mixture without the presence of a flame and its associated NOx formation
reactions, it offers the potential for delivering ultralow NOx levels without the need for SCR or other
exhaust after-treatment.

This potential of catalytic combustion has been recognized for 20 years, but the environment in a gas
turbine combustor presents significant challenges for a catalyst. The gas temperature required at the
combustor exit ranges from 1,175­ to 1,500­C, depending upon the particular turbine design. Such
temperatures are well above the operating limits of most catalytic materials. Even ceramics that can
survive the combustor temperatures are susceptible to thermal shock failure during the transients that
accompany turbine operation. These durability issues have been a significant barrier to development of
a viable catalytic combustion technology for gas turbines.

Over the past few years a catalytic combustion technology has emerged that successfully addresses
the unique challenges of the gas turbine application. This technology uses catalysts that are designed
to limit the extent of fuel combustion that occurs within the catalyst structure itself. By limiting the
reactions in this way, such systems also limit the maximum catalyst temperature and thus broaden the
choice of suitable catalyst components and extend catalyst life.

The XONON (pronounced zo-non) Flameless Combustion system has a catalyst that limits the
temperature in the combustor below the temperature where NOx is created. This controlled reaction in
the XONON Combustor results in the gas turbine operating with ultralow emissions: NOx in the 3 ppm
range with CO and UHC less than 10 ppm. The major benefits of the technology are cost-effective
elimination of air pollution emissions from the gas turbine, and elimination of vibration or noise
associated with lean-premix gas turbines. Additionally, XONON technology reduces offset
requirements for new installations; can generate emission reduction credits; reduces emissions levels
such that Title V permits may not be required; does not require Selective Catalytic Reduction; allows
faster project permitting; and eliminates water or steam use for NOx control.

Catalytic combustion offers the possibility of attaining the firing temperatures of current and
next-generation gas turbines (up to ~2,600­F), while keeping emissions of oxides of nitrogen (NOx) at 3
ppm by volume. Such catalytic combustion technology has been under development at Catalytica for
several years, and the first full-scale test of the technology took place at GE under Tokyo Electric Power
Company sponsorship in 1992.

Catalytic Reactor

Briefly, the technology involves a staged system in which a portion of the fuel is consumed within the
catalyst, but the final combustion that generates the highest temperatures takes place in a volume
downstream from the catalyst. Initial fuel combustion is accomplished stepwise in two or more catalyst
stages, each designed for its own particular purpose and set of reaction conditions. Typically, about
half of the fuel is reacted within the catalyst stages, and the remainder is burned via homogeneous
combustion reactions after exiting the outlet stage catalyst. By isolating the highest temperatures
downstream from the catalyst, this strategy circumvents many of the issues of high temperature
catalyst stability that have deterred other approaches.

In contrast to competitive combustion technologies, Catalytica Combustion Systems' technology,
marketed under the name XONON, is designed to avoid the high temperatures created in conventional
combustors. The XONON combustor operates below 2700­F at full power generation, which results in
virtually no NOx emissions and significant reductions in emissions of carbon monoxide and unburned
hydrocarbons. XONON uses a proprietary flameless process in which fuel and air react on the surface
of a catalyst in the turbine combustor to produce energy in the form of hot gases, which drive the
turbine.

Catalytica Combustion Systems believes that the XONON system provides the lowest level of
emissions achieved with any control technology at gas turbine operating conditions. Catalytica
Combustion Systems has tested the durability of the XONON catalytic combustion system for over
7,000 hours at atmospheric pressure and for over 1,000 hours at high pressure with no change in
system performance for NOx, carbon monoxide or unburned hydrocarbons emissions.

Emissions levels obtained in the Company's tests of the XONON system that simulate full turbine
operating conditions have been below 3 ppm for NOx and 10 ppm for carbon monoxide and unburned
hydrocarbons. Results in a series of tests conducted by General Electric at its commercial-scale test
facility have supported the emissions results obtained by the Company's test results.

The XONON system is expected to have capital and operating costs that are similar to DLN while
offering significant emissions performance and cost advantages relative to water and steam control
systems. Additionally, the XONON system is expected to provide significant cost advantages over SCR
systems.

The Company's XONON system is designed to fit inside each combustor on a turbine. Catalytica
Combustion Systems expects to generate revenues from the sale of XONON systems installed in each
combustor of new turbines, the retrofit of combustors in existing turbines, and the ongoing sale of
catalytic replacement units.

Environmental Impact

If a 1 MW uncontrolled gas turbine produces NOx at 100 ppm, it will produce about 17.6 tons of NOx
per year, based on operation for 8,000 hours a year. Therefore, a 25 MW turbine would produce about
440 tons of NOx a year. If the XONON Flameless Combustor were installed on this turbine, it would
eliminate 98% or 431 tons of NOx emissions each year.

If the average turbine operates 4,000 hours per year and produces 100 ppm of NOx, the application of
XONON to just 20% of the population of turbines in the United States would lower NOx air pollution
emissions by an estimated 463,000 tons each year.

Technical Results

At the just concluded (June 2-5) International Gas Turbine & Aeroengine Congress and Exhibition,
detailed results of the most recent and most successful full-scale test in this program were reported by
Catalytica and the company's technical partners. In this full-scale test, a catalytic combustor system
(referred to as the XONON technology) was designed for the GE Model MS9001E gas turbine fired by
natural gas. The 508 mm (20 in.) diameter catalytic reactor was operated at conditions representative
of the start-up and load cycle of that machine. It was verified that the observed NOx levels were
produced not in the catalyst, but in the diffusion flame of the preburner used to start the system and
maintain the necessary catalyst inlet temperature.

Even so, NOx levels of 3 ppm were achieved at the simulated base load operating point. Carbon
monoxide (CO) and unburned hydrocarbon emissions were likewise below 10 ppm at that condition.
Single digit emissions levels also were recorded at conditions representative of the combustor
operating at 78% load, the first such demonstration of the turndown capability of this system.
Throughout the test, dynamic pressure measurements showed the catalytic combustor to be quieter
than even the diffusion flame combustors currently in commercial service.

Successful results have also been achieved in a Kawasaki M1A-13A gas turbine under field operation
conditions. XONON's performance was achieved over the operating range from 50% to 100% load, in
varying ambient conditions, and included multiple starts, load steps and stops. Emissions goals were
achieved for each targeted pollutant over this operating range: oxides of nitrogen (NOx) were less than
3 parts per million; carbon monoxide (CO) and unburned hydrocarbons (UHC) were less than 5 parts
per million. These engine performance evaluations were conducted at AGC's Tulsa, Oklahoma
manufacturing facility and demonstrate the combined effectiveness of the XONON catalytic technology
and Woodward's fuel management technology in achieving ultra-low nitrogen oxide emissions.

Catalytica Combustion Systems is also currently in development with both Solar Turbines and Allison
Engine Company to incorporate the XONON system in the next generation of gas turbines as part of the
U.S. Department of Energy's Advanced Turbine System (ATS) program. The ATS program objectives
are increased efficiency, reduced NOx and decreased power generation costs.

Armed with successful test results, Catalytica is moving ahead on the road to commercializing this
promising new pollution prevention technology which may benefit a huge segment of the power
generation business. At the June Gas Turbine Congress, Catalytica and Woodward Governor
Company, through their joint venture, Genxon Power Systems, announced that a Memorandum of
Understanding was signed with General Electric for the worldwide commercialization of XONON
Combustion Systems for GE-designed heavy duty gas turbines. Under the MOU, GE and Genxon will
adapt and apply the XONON system to the requirements of GE's installed turbines. GE will market the
XONON system to its worldwide installed base and provide installation and retrofit services.

Catalytica's Strategy

To commercialize the XONON system, Catalytica Combustion Systems is developing products for both
the utility power generation and industrial applications markets through collaborative relationships with
leading manufacturers in both of these market segments. Catalytica believes the earliest
commercialization opportunities are in small and medium sized turbines because the sales and
commercialization process are faster than for the larger natural gas turbines used in the utility power
generation market.
I read that to mean that distributed power applications, while not announced yet, will be commercialized sooner than Enron's Pastoria project. I think revenues from Xonon could be realized in 2000. Catalytica is also focused on out-of-warranty turbines that are not currently
supported by existing turbine manufacturers. These efforts are being pursued by GENXON Power
Systems, the company's joint venture with Woodward Governor.

Industrial Applications Market: In the industrial applications area, GENXON Power Systems has been
working with AGC to install and test the XONON system in AGC's unit that uses a 1.5 megawatt
Kawasaki turbine unit. AGC manufactures and markets small co-generation systems to deliver power
and steam to industrial users.

California to retrofit their Pratt & Whitney FT 4 gas turbine with the XONON system. In order to comply
with their regional regulatory requirements, Glendale had evaluated various NOx control alternatives
before selecting XONON.

Utility Market: Catalytica is pursuing the market opportunity in large turbines used by electric utilities
and independent power producers through a program with turbine manufacturers.

Genxon Joint Venture

In October 1996, Combustion Systems and Woodward Governor Company formed a 50/50 joint
venture to serve the gas turbine retrofit market for installed, out-of-warranty engines. The new company,
GENXON Power Systems, LLC, will initially provide gas turbine fleet asset planning and utilization
services for both power generation and mechanical drive markets. These planning services will result
in the delivery of an integrated product portfolio which includes the XONON Combustion System for
ultralow NOx emissions, Woodward's control systems, and turbine overhaul and upgrades, as well as
contract maintenance and service.

By Joseph Cussen, VP, Business Development and J. Charles Solt, Director, Regulatory Affairs,
GENXON Power Systems.
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