Final Report Number: 1004662
Published: October 2001
EPRI Project Manager B. Syrett

Corrosion increases the costs of generating, transmitting and distributing electricity. For instance, adequate corrosion control may require more expensive materials and designs, inspections of corroding components and corrosion rate monitoring, extensive maintenance and repairs, and replacement power to compensate for corrosion-related losses of power generation. The estimated cost of corrosion in the electric power industry in 1998 was $17 billion, representing about 7.9% of the cost of electricity to consumers in the United States. About 22% of the corrosion costs were considered avoidable.

Background

A report on the cost of corrosion in the USA was prepared by Battelle Columbus Laboratories and the National Bureau of Standards (NBS) and presented to Congress in 1978. In this report, the cost of corrosion to the United States was estimated at 4.2 %of the gross national product (GNP), and the cost of corrosion in the electric power industry alone was about 0.24 % of the GNP - equivalent to more than $21 billion in 1998). About 15% of the latter cost was considered avoidable by applying optimum corrosion control technology. In this report, there was no breakdown by component or cost category and no specific recommendations were made on corrosion control or corrosion management strategies.

In 1999, a two-year study was mandated by Congress in the Transportation Equity Act for the 21st Century (TEA-21 Act) to revisit the old Battelle/NBS study and extend it by making recommendations on corrosion management strategies. This study was administered by the Federal Highway Administration (FHWA) and was performed by a team led by CC Technologies in collaboration with NACE International, the world’s largest corrosion organization. Objectives of this study were to estimate the total economic cost of metallic corrosion in the United States and to provide cost-effective, rational strategies to minimize corrosion’s impact. Although the study covered a large number of economic sectors, including the electric power industry, the emphasis was placed on the transportation infrastructure, conveyance, and storage.

Objectives

To update the estimates of the cost of corrosion in the electric power industry provided by the old Battelle/NBS report; to provide more detailed information than was anticipated from the concurrent FHWA study by breaking down the cost of corrosion by component and cost category; and, to make specific recommendations on optimum corrosion management strategies.

Approach

To keep data consistent, the project team used the same methodology for the EPRI study as was used for the FHWA study. The team determined total national costs for generating transmitting, and distributing electric power from reports issued by the Department of Energy and its energy Information Administration. Team members assumed the fraction of these costs attributable to corrosion was the same for the entire industry as those determined in a detailed evaluation of one large utility company, Duke Power. They estimated corrosion costs associated with pressurized power plants, the transmission system, and the distribution system. A different utility provided general technical literature allowed the team to estimate the corrosion related costs of maintenance work in various classes of equipment and to corroborate utility-developed estimates.

Results

The project estimated the total cost of corrosion to the domestic electric power industry in 1998 to be about $17.3 billion dollars. This represents about 7.9% of $218 billion, the cost of electricity to the United States in 1998; it also represents 0.20% of $8,782 billion, the 1998 gross domestic product (GDP, essentially equal to the dollar value of the GNP). About 22% of corrosion costs ($3.8 billion) was considered avoidable using practical, cost effective measures. The project identified numerous, specific causes of high corrosion costs, which the project team believed warranted systematic evaluation so that approaches to reduce these costs can be developed. Topics warranting such attention include radioactive corrosion products growth and boiler tube corrosion in fossil plants, and chemistry control for aqueous systems in all types of plants.

EPRI Perspective

The economic model used in this study was significantly different from the one used in the old Battelle/NBS study, so the apparent drop in the cost of corrosion from 0.24% of the GNP in 1978 to 0.20% of the GDP in 1998 is probably not significant. More important, this study confirms that corrosion costs the electric power industry a huge sum every year. Section 9 of the report recommends general strategies for corrosion management, which, if followed, could significantly decrease these corrosion costs. The FHWA cost-of-corrosion study reported only the direct cost of corrosion to the electric utility industry ($6.9 billion), a value that does not include a corrosion-related fraction of the costs of sales, administration, taxes, and profit. Comparison of this direct cost with the total (direct plus indirect) cost determined in the EPRI study shows that the cost to the consumer ($17.3 billion) is 2.5 times the direct cost.

This report was prepared by:
J. Gorman, M. Arey, G. Koch

This report describes research sponsored by EPRI.