The economics of cold ironing

In this age of globalisation, ports – and the goods flowing through them – have become a mainstay of the U.S. economy. Although containerisation is a highly successful component of the evolving international trade, it has created its own backlash; the burgeoning volume of containerised cargo has generated an increased level of concern about the environmental effects of ever-expanding port operations.

The ports of Los Angeles and Long Beach have led the movement to require cleaner performance from cargo operations. “Cold ironing” – providing ships with  shoreside power so vessels can turn off their engines while hotelling in port – is one of the key elements of the clean air action plan (CAAP) recently adopted by the two ports. As explained in a CAAP fact sheet, the plan envisions that “all major container cargo and cruise ship terminals at the ports would be equipped with shoreside electricity within five to ten years so that vessels can shut down their diesel-powered engines while at berth.”

The requirement for cold ironing is expected to spread beyond Southern California to other environmentally sensitive areas. In the past, the capital costs of cold ironing have often made it seem unattractive, but the overall life-cycle costs (compared to the cost of using shipboard fuels) have not been rigorously evaluated. The
following analysis examines the financial and environmental issues surrounding cold ironing.

Cold ironing infrastructure

In order to allow for cold ironing, marine terminals must be equipped with extra electrical capacity, conduits, and the “plug” infrastructure that will accept power cables from a vessel. A large container ship typically requires approximately 1,600 kilowatts (kW) of power while at berth, but the power requirements can differ substantially, depending on the size of the vessel and the number of refrigerated containers on board.

Although cold ironing for container ships in Los Angeles initially entailed the use of a barge to deliver the power, the future standard relies on permanent shoreside power. Designing and constructing a terminal that is equipped for cold ironing will cost more than a conventional terminal that does not have the capability to deliver shoreside power. The cost of constructing the shoreside infrastructure, and the cost of retrofitting the vessels calling at the berth, must both be included.

These extra costs will obviously differ considerably by location; this analysis uses US$1.5 million per berth for the shoreside infrastructure, based on recent  documented costs for a cruise ship installation in Seattle. Assuming a 30-year design life and applying a six per cent interest rate, this translates to a shoreside
construction cost equivalent to US$110,000 per year per berth.

The vessels calling at the berth will also need to be equipped with the required electrical infrastructure to take advantage of shore power while hotelling. Based on recent published estimates, this analysis assumes five vessels are required to provide a weekly trans-Pacific service, at a cost of US$400,000 per vessel, or US$2
million for the fleet of five.

With a 20-year vessel design life and six per cent interest, this equates to an annual cost of US$170,000 for vessel modifications to a fleet of five vessels. Adding this to the shoreside infrastructure cost yields a total annual construction cost per berth of US$280,000.

Mark Sisson, PE, Lead Analyst & Krystle McBride, Analyst, AECOM, Los Angeles, CA, USA
Edition: Edition 40

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