Shore power disruptor?
Small Calif. firm wants to commercialize cheaper, clean-air alternative to electrifying berthed vessels.
In an effort to reduce air pollution, West Coast ports and shipping lines have spent hundreds of millions of dollars to install electric substations on docks and retrofit vessels with equipment that can receive power from shore. The new infrastructure is a substitute for running shipboard diesel engines to supply energy for heating, cooling, refrigeration, lighting, electronics and other systems while docked at the pier.
Diesel emissions from vessels and other industrial activity adjacent to population centers have become a major health issue. Political pressure has forced many port authorities, intent on avoiding potential political or legal obstacles that could hinder future growth, to mitigate their environmental impact. In addition to electrifying the docks, some ports have encouraged vessel operators to switch to cleaner fuels and slow down on approach, converted trucking providers to clean-diesel engines and experimented with alternative-fuel vehicles.
Ports in California don’t have a choice. Reducing harmful emissions at berth is a state mandate.
But a promising new system being tested at the Port of Long Beach could prove to be a much cheaper alternative and raises questions about whether the rush to invest in shore power was premature. The technology, developed by Rancho Dominguez, Calif.-based Advanced Cleanup Technology Inc. (ACTI), essentially captures engine emissions at the smoke stack through a direct connection to the exhaust outlets, and funnels the soot and gases to an after-treatment device.
(A similar system is being tested at the Port of Los Angeles. See “AMECS faces challenge from rival developer.")
Ship-to-shore power, also referred to as cold-ironing because the ship’s engines grow cold when shut down as a power source, is the primary way the maritime industry has chosen to comply with the new rules. Shore power can cut source emissions by 95 percent.
(It should be noted, however, that electrification doesn’t eliminate air pollution—it merely displaces from the port to utility plants that are often in less populated areas. Power plants are regulated and have various emission controls depending on their age, but they can also be powered by coal or other fossil fuels.)
Under California statute, container and refrigerated cargo vessels, as well as cruise ships, are required to reduce at-berth emissions this year by turning off auxiliary engines and connecting to another power source, or using alternative technology that reduces emissions by an equivalent amount. The rule is being phased in. Half the vessels in those categories, and half of each company’s fleet, must hook up to electric power. The vessel threshold rises to 70 percent in 2017 and 80 percent in 2020. The California Air Resources Board (CARB) is allowing a transition period as ports finish installing the necessary infrastructure and vessel operators become familiar with the new technology on their ships.
The Port of Long Beach invested $200 million to install shore power stations at its terminals. Next door at the Port of Los Angeles, about $180 million has been invested over the last decade to equip 25 container and cruise berths with electric power. Port Hueneme is spending $13 million, the bulk of it from its own resources, to electrify one of its wharves. Last November, the Port of Oakland completed the construction of its shore power infrastructure at a cost of $55 million, with some tenants investing another $10 million, spokeswoman Marilyn Sandifur said. And the Port of Seattle has two cruise berths outfitted with electric power.
The Oakland port authority, according to its website, charges $267 per hour plus tax for shore power usage, on top of a $4,430 fee for commissioning the first time a vessel plugs into the grid. At that rate, a container vessel spending three days at berth could spend more than $19,000 for electricity.
Meanwhile, the cost to retrofit a container vessel is $500,000 to $2 million, according to multiple industry sources. Significant alterations, which take six to eight months, are required to run cabling from the electrical panel in the engine room up to the main deck.
Hapag-Lloyd in 2012 said it was modifying 15 vessels. Its system is comprised of a 40-foot container located at the stern of the ship that contains electrical components and an extendable cable drum. In the past three years, many new containerships have been designed with the necessary electrical connections.
About one-third of APL’s container fleet is outfitted with shore power connections, David Wong, a spokesman for parent company NOL in Singapore, said. He declined to reveal how much the carrier has invested in the systems.
ACTI’s Advanced Maritime Emission Control System (AMECS) is the only alternative technology to shore power that has an approved test plan from CARB, but the fixed, on-dock prototype had to be modified to optimally function in a container terminal. Testing has recently shifted to a mobile, barge-mounted system that appears to overcome key logistical challenges of the original version. The wharf-based scrubber—nicknamed “sock on a stack” because of the big bonnet that fits over the entire exhaust stack—potentially can interfere with cranes and longshoremen loading and unloading containers. It also requires ships to come to a particular berth for service.
Ruben Garcia, ACTI’s president and founder, told American Shipper the concept was always to have both barge and shore-based service.
The barge enables ACTI to bring the emission-control system to the customer anywhere in the port. The new design also separately connects to each exhaust pipe within the stack.
Garcia said he has been working on the AMECS concept for 10 years. Early on he used his own funds and a $3 million grant from the U.S. Environmental Protection Agency. He was unable to attract venture capital because people weren’t sure how the emissions regulations would change, whether they would be enforced or if someone came up with a different technology.
The South Coast Air Quality Management District, with the help of a $2 million grant from the Port of Long Beach, is administering the next phase of the demonstration program to assess AMECS’s effectiveness and durability during a real duty cycle. Garcia said he fronted his own money for the barge development because it took a year for the Long Beach Board of Harbor Commissioners to approve the final contract in February. ACTI had to work with regulators to develop a test protocol because “no one has ever captured emissions from a non-stationary source,” the environmental entrepreneur said. It took two years, 18 test plan revisions and dozens of emissions tests to get CARB’s blessing to proceed, according to the company’s website.
The barge runs on a Tier 4 diesel generator, the least polluting engine available, and the goal is for it to eventually have zero emissions. The original plan was to pipe the barge’s own exhaust back into the system. Garcia and associates say they want to lead by example when it comes to emissions reduction. By September, ACTI will swap out the diesel engines for new propane ones while continuing to explore other fuel types.
Earlier this year, ACTI was able to prove it could successfully connect to the vessel exhaust stack and safely operate the barge-based system. Another 200 hours of testing is underway. The environmental technology company has already hooked up to smaller vessels operated by Hapag-Lloyd and ZIM and is scheduled this summer to service 8,800-TEU and larger vessels from OOCL, a pure car carrier at the Toyota terminal and a passenger vessel, Garcia said.
CARB will analyze the data and determine whether to certify the technology as meeting its efficiency standards for controlling particulate matter and nitrous oxide. If the unit achieves 90 percent or greater efficiency—through a combination of emissions capture and treatment—it will be declared equivalent to plugging a ship into shore power.
The goal is wrap up testing in a couple of months and have the verification in place by the end of the year, Rick Cameron, Long Beach’s managing director of environmental affairs and planning, said.
Additional testing may be required in the future if ACTI wants to expand to more engine types, he added.
“Based on the dock-mounted demonstration, the technology does seem to be ready for commercialization. Tests on 32 different vessels showed the system reduced particulate matter, sulfur dioxide, volatile organic compounds and nitrogen oxides by more than 98 percent,” South Coast Air spokesman Sam Atwood said via e-mail.
ZIM, the Israeli shipping line, declined through a representative to comment on its participation in the pilot program.
Garcia originally developed a wet scrubber that uses water and an electrical charge to attract the particulate matter and other compounds, but the resulting waste was high in heavy metals and considered hazardous. That required trucking it to a hazmat site and paying disposal fees. It also meant the vessel company, under law, was perpetually responsible for the cost of moving the material in the event the government ever declared the site unsafe and had to relocate it.
Instead, Garcia and his team came up with a dry system that incinerates the particulate matter. A crane on the barge hooks up high-heat ducting directly to each pipe venting exhaust from the auxiliary engines, rather than draping the bonnet over the entire smoke stack funnel. A fan at the end of the system creates negative pressure so the emissions won’t blow back into the engine room. A diesel filter removes the particulate matter and then the exhaust gas goes through a catalytic converter to remove nitrogen oxide. Sulfur dioxide is removed in another stage and the small amount of remaining condensation is vented to the atmosphere.
The filter incinerates the particulate matter and at the end of six months produces a coffee can full of ash, which ACTI gives to concrete manufacturer to use as a bonding agent, Garcia said.
Port of Long Beach officials view AMECS as a potential solution for breakbulk, roll-on/roll-off and tanker vessels not covered under the CARB shore-power regulation and a way to provide compliance flexibility for charter operators, Cameron said. Most vessels in those categories are chartered from leasing companies that are unlikely to spend capital to install electric equipment when their customers don’t operate regularly scheduled services that repeatedly call at the same California ports.
And most container fleets charter a significant number of their vessels, too. AMECS would allow them to move third-party and company-owned assets interchangeably to other routes, as businesses' needs dictate, without leasing companies having to spend money on retrofits.
“That’s going to help us be competitive because customers want options” for deploying their fleet, Cameron said.
Cameron envisioned a future where operators of non-container cargo vessels would be offered incentives to use AMECS and help Long Beach meet its clean air targets.
Incentive programs are a common tool for maintaining the port’s competitiveness and can be more effective than mandates that have the potential of driving international carriers and cargo owners to other ports, Cameron suggested.
On July 1, the port began waiving dockage fees for vessels that plug into shore power at berth and comply with the voluntary vessel speed-reduction program within 40 nautical miles of the port. It also launched a $5-per-TEU incentive program for incremental volume that uses on-dock intermodal rail to reduce costs for ocean carriers, and truck congestion in container yards and on city streets.
Cost Comparisons. Cameron cautioned it’s too early to know how cost effective AMECS will be, but Garcia said his technology can save ocean carriers a lot of money. And when carriers save money their customers in the retail and manufacturing sector tend to be better insulated from cost recovery mechanisms.
The South Coast Air’s Atwood would not disclose how AMECS compared to cold ironing based on the agency’s benefit-cost methodology because the review is not completed.
“The problem with cold ironing is that people have made huge investments to plug into power, but the price of power continues to go up. And so, what happens, our technology cost goes down because we find less expensive ways to use it,” Garcia said.
Electric utility rates are scheduled to annually increase 8 to 12 percent, which means energy costs are likely to double within seven to nine years, Clay Sandidge, a partner at Long Beach-based Muni-Fed Energy Inc., said at the American Association of Port Authorities spring conference in Washington. Ports on the West Coast typically pay 12 to 16 cents per kilowatt hour today versus 6 to 8 cents per kilowatt hour for ports on the East Coast, he said.
Muni-Fed, an energy consulting and project management firm, is helping Garcia market AMECS.
“We think we’re one-third the cost of shore power at today’s rates in California,” Sandidge said in an interview. His comparison factors in the full cost of shore power, including capital investments by ports and carriers, as well as additional labor for unionized longshoremen to connect and disconnect vessels from the on-dock substations.
To control costs and maintain the port’s competitiveness, the Port of Long Beach recently entered into an agreement with Southern California Edison that offers terminals preferential rates similar to those the Port of Los Angeles is getting from that city’s own utility. The deal is expected to cut electric rates an estimated 15 percent, saving port users more than $350 million over 24 year. Annual savings could add up to hundreds of thousands of dollars for a single container terminal.
Marine terminals have separate power lines and meters for the container yard (cranes, lighting, etc.) and the ship-side power. Separate billing enables the terminal to bill back its customers for the power they used, an official at a Long Beach facility said on condition of anonymity because he had not been cleared to speak with the press.
The city of Long Beach previously convinced the California Public Utilities Commission to scale-back certain vessel-related peak demand charges, saving maritime operators $85 million per year.
Electric consumption within the port district is expected to balloon 500 percent from 50 megawatts in 2010 to 250 megawatts in 2030, according to technical analyses done for the Long Beach port authority
With cold ironing still in its infancy, gauging the true cost of electric service is difficult. Carriers and terminals haven’t had enough billing cycles since January to fully understand the average cost of plug-in power per port call and many figures cited don’t factor in capital and other costs associated with shore power. And there are many factors affecting electric use, from the ship’s age, the systems used and the amount of refrigerated units on board.
Vessels are paying between $5,800 to $13,000 per call for electric power, depending on the length of their stay and other factors, Renee Moilanen, a manager in Long Beach’s Environmental Planning Division, said in an e-mail.
The electricity bill for plugging in a single 8,000-to-11,000 TEU vessel can average $7,000 to $10,000, according to Frank Capo, senior vice president and chief commercial officer for Total Terminals International, which operates the 380-acre Pier T facility.
It will probably take a few more months before terminal operators start seeing the impact of the new rate structure. Every terminal has its own contract rate, based in part on its service voltage and usage, which will be applied within the new structure. Rates are also structured to decrease as demand increases, so the more ships plugging into shore power could bring down the per-call cost a bit, Moilenan said.
“We’re still trying to figure out the best way to bill our customers and the best way to analyze the data we’re providing them,” the terminal official said, adding that negotiations are continuing about what are reasonable pass-through charges.
Plugging a cruise ship into the grid can also cause tremendous spikes in demand and potentially contribute further to brown outs during peak periods, Garcia said.
A containership draws about 1.5 megawatts of power, but big cruise ships can draw between 10 to 14 megawatts because of all the onboard systems that must remain at full capacity to support thousands of passengers and crew. Refrigerated container ships also require a bigger load to keep the cooling units running.
Few seem certain about what happens to the electric grid if a couple dozen vessels at the ports of Los Angeles and Long Beach are hooked up to shore power at the same time.
A 2,500-passenger cruise ship that draws about 10 megawatts of energy also has a gas flow of about 35,000 to 50,000 standard cubic feet per minute, which is about two- to 3.5-times the exhaust flow of a 10,000-TEU cargo vessel, Sandidge said.
The dock-mounted AMECS is a better option for cruise and liquid bulk vessels because it is bigger and can handle the extra exhaust flow, and those types of vessels tend to use the same berth each visit compared to containership berths that are more interchangeable, Garcia said. And the unit can be made less of an obstacle by setting it at the back of the terminal and pulling in the exhaust through ducting run under the pier, he said.
Liner carriers have little interest in converting smaller Panamax-size vessels, which once were the workhorse of the transpacific trade, for cold ironing because the lifecycle economics don’t make sense, an industry executive familiar with the issue said on condition of anonymity because he is not authorized to speak publicly on the matter. A vessel that only has 10 years of life remaining would only have a short period to benefit from shore power, especially if California is the only place where it is required. Vessel owners would rather spread their capital on new ships with a 20- to 30-year lifespan to better amortize their investment. AMECS could potentially extend the life of older vessels serving the California market.
There are no known commercial cargo terminals elsewhere in the world with ship-to-shore power infrastructure, according to Bryan Wood-Thomas, vice president for environmental policy at the World Shipping Council.
“Where you don’t have vessels calling that have fairly high power demand and call fairly frequently – I’d say at least six times a year – [cold ironing] tends to be very cost ineffective” because much more is spent per ton of emissions removed relative to the fixed costs, said Joseph Hower, a principle for Environ International Corp.
The global environmental compliance and risk advisory firm has done studies on shore power for the ports of San Diego, San Francisco and Los Angeles, and is closely involved with ACTI.
East and Gulf coast ports have shied away from electrifying wharves because they aren’t convinced the high implementation cost will prove economical, Elena Craft, a health scientist at the Environmental Defense Fund who is working to improve the environmental performance of ports, said. The reluctance stems from concern that ships calling outside the West Coast are not equipped to use shore power, that liquefied natural gas may become a clean-fuel choice for ocean carriers and a port may just transfer pollution to a different source if the electricity comes from a coal-fed power plant, she said.
“But you can’t discount the health benefits from the existing shore power elements that have been in place,” she added.
Even if ocean carriers stick with cold ironing as the primary way to comply with the California regulations, they still could benefit from AMECS, Garcia said.
Cold ironing doesn’t address the emissions from the boiler, which creates steam for pump systems on tankers and to keep bunker fuel warm so it doesn’t coagulate. AMECS could also capture emissions when ships have to anchor in the harbor and wait for a berth. And some ocean carriers that cold iron could opt for the emission control system to bridge the three-hour gap allowed by CARB to ready the vessel for electrical power.
“AMECS can come alongside the ship. It takes us less than 10 minutes to attach to the stack,” Garcia said.
Some container lines that opted to invest in ship-to-shore power to comply with the CARB rules are not happy about the prospect of AMECS being certified because competitors that chose the equivalent emission-reduction method “could potentially save a good bit of money,” the industry insider said.
“If the AMECS system is approved you have the possibility of hitting your 50 percent reduction with a much smaller capital investment,” he said.
And, the source added, he strongly suspects the operating cost per visit will prove to be much cheaper than cold ironing.
However, ocean carrier cost comparisons of the two alternative emission control systems must also account for the fact that ships on shore power don’t have to burn thousands of gallons of marine distillate fuel.
“The jury is still out” on whether electrification is the best way to improve air quality for ships at rest, Lee Kindberg, Maersk Line’s director of environment in North America, said in April during an EPA summit on air pollution at ports. Shore power also could prove problematic for vessels that stay for shorter periods because of the time it takes to plug and unplug a vessel, and the smaller reduction in emissions as a percentage of the stay.
Maersk has installed shore-power equipment on 16 larger vessels serving California ports because for the same investment one can get greater emission reductions, she said in an interview.
When Maersk builds new mega-size vessels, such as the Triple E class, it sets aside space in the design to install the reels and cables in the future if the ship begins to call a port with shore power.
“One of the big challenges with shore power is how you schedule vessel changes and vessel redeployment, and that’s where there’s real potential for an alternative technology,” Kindberg said. “So every time you consider a schedule change you have to model that change with everything else to make sure you meet that 50 percent compliance requirement” on a total fleet basis.
“And you really need to target 60 percent. You can’t shave it that closely,” particularly when dealing with a new technology, she added.
Some liner carriers, anticipating CARB verification is imminent, have begun to line up service contracts.
Garcia said he has ordered four more barge systems—two to service ZIM vessels in Long Beach and Oakland and two for other tentative customers—and is closing in on a contract with an undisclosed port authority to supply several more systems.
“The port is going to use our technology to attract vessels and businesses that won’t cold iron. So the port is saying, ‘we’ll invest in this technology and supply it.’ Under the port model, we negotiate directly with the port for four systems and it decides who will use them,” Garcia said.
ACTI is currently offering three-year contracts with service provided on a flat hourly fee basis. It plans to charge $800 to $1,000 an hour depending on the size of the scrubber.
Garcia said his next line of business will be a third-generation AMECS scrubber that can be sold to ship yards for installation on new vessels during construction.
“There’s all kind of variations of scrubbers out there. But some put the particulate matter back in the water and some aren’t as efficient. And most treat only one pollutant. I haven’t seen any scrubbers that are mounted in the vessels that scrub more than one pollutant,” Garcia said.
“With AMECS we can scrub NOx, SOx, particulate matter and volatile organic compounds at same time and still be extremely cost effective," he said.
Some filtration systems, he claimed, only capture 40 to 50 percent of the harmful emissions, compared to AMECS’s ability to eliminate 99 percent of the gases and 96 percent of the heavy metals.
What else is on tap for Garcia’s environmental services company, which also offers a system for cleaning oil residue from tank cars and hazardous waste spills?
“I’m always looking for regulations coming down the pike that will affect our customer base in goods movement in petrochemicals and see if we can come up with a better mousetrap,” ACTI’s founder said.
AMECS probably won’t make cold ironing obsolete, Cameron predicted.
“I have to believe though that those who invested in cold-ironing infrastructure are going to want to maximize their investment,” he said. “I really think where this system will not be so much for the larger carriers that invested in shore power, but will be more for small and medium carriers that maybe don’t have the overall revenue to invest in retrofitting their existing fleet. That really is the target audience for this type of technology. The larger companies may look at it if they need to rotate a vessel in under charter during a peak season, or whatever.
This article was published in the September 2014 issue of American Shipper.