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How do Natural Gas Generators Save Money on Fuel?

Natural gas is an abundant resource that is piped throughout our communities. Houses and businesses all over California (and United States) rely on the steady and reliable service of natural gas to fuel stoves, dryers, boilers, heating units and more. Last year there was a total of 31.01 trillion standing cubic feet (SCF) of natural gas consumed in the United States. (1)

Likewise, diesel fuel is also an abundant resource. It’s used to fuel most of our transportation trucking and trains. Last year there were 47.2 billion gallons consumed in the United States. (2)

Those are both big numbers - so how do these numbers compare?

If we convert natural gas standing cubic feet to diesel gallon equivalent – by using the BTU equivalent values of natural gas as compared to diesel fuel, we can compare apples to apples. 31 trillion SCF = 223.02 billion diesel gallon equivalent (dge).

Said another way, natural gas is consumed nearly 5x that of diesel in the United States.

Overall usage volumes are interesting and they play their part in the supply/demand of pricing. But there are also many other factors – such as cost of refining/production – that more directly contribute to commodity prices.

Cheaper in Commodity Pricing:

In March of 2020 in Southern California,

  • the commodity rate of a red-dye diesel gallon was $2.38

  • the commodity rate of 1000 SCF of gas was $1.25

Once again, we convert the natural gas to diesel gallon equivalent (using BTU content) to compare apples to apples and we get natural gas at $0.17 per gallon cost.

Cheaper in Fuel Delivery for Your Generator:

Most diesel generators have fuel tanks that can hold approximately 1 day of fuel if the generator is running at full load. This requires the diesel fueling truck to come everyday to keep your generator fueled and producing power. Most of the cost of the delivered diesel fuel is found in the expense of the delivery itself. The diesel fuel is marked up from the commodity rate to cover those delivery expenses.

Natural gas can also be delivered direct to your generator/site. Natural gas is compressed and stored in cylinders onsite – right next to your generator. The gas cylinders are connected to the generator providing a constant fuel for the generator. The capacity of the natural gas storage cylinders is often much larger than that of diesel fuel storage. As a result, the gas storage might only require a refueling trip once a week – as opposed to everyday like in diesel. This means less refueling trips and thus less delivery costs built into the natural gas price.

It’s true that there are more moving parts to fueling and refueling with natural gas, but even so the price of natural gas delivered to your generator site is less than the diesel gallon equivalent. And this means you’ll save money using natural gas.

Natural Gas Onsite Storage - to fuel generators

Example of Savings using Natural Gas Generator

Let’s assume you need a 500 KW generator and you’re planning on running it at 75% load 24 hours a day.

This size/load on a diesel engine is projected to use 26.4 gallons of diesel fuel per hour.

This size/load on a natural gas engine is projected to use 5.1MCF of natural gas (or 37 diesel gallon equivalent) per hour.

If diesel is priced at $3.00 per gallon delivered and natural gas is priced at $12 per MCF delivered ($1.67 diesel gallon equivalent), then you will save $432 per day using the natural gas generator.

Cost Compare Natural Gas vs Diesel Generator Fuel

There are additional financial savings with natural gas generators. The above focuses solely on the savings in fuel. If pipeline natural gas is available to your site, these savings would be substantially greater.

(1) https://www.eia.gov/tools/faqs/faq.php?id=50&t=8

(2) https://www.eia.gov/energyexplained/diesel-fuel/

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