What to Expect with On-Site Power System Costs

by Contributor KelscNM on ‎04-23-2014 03:40 PM - last edited on ‎05-08-2014 09:18 AM by Administrator

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Many times I’ve been asked to provide the price of a Cat generator for people in the project planning process. They are typically looking for a back-of-the-napkin calculation to see if the power system investment, whether it’s an emergency system or cogeneration system, makes financial sense. I understand why people seek an estimated range—it’s a fast way to determine whether a project will fall within an anticipated budget or deliver a specific payback hurdle. If it’s reasonable, then they’re open to taking the next step. If it’s too much, then they look for another option elsewhere.


Providing an accurate price is complicated because we have to consider the application, power need, fuel costs, infrastructure, service requirements, scope of equipment supply, transportation, logistics and so on. All of these factors impact the power solution, and they also affect the cost. Every installation is unique in some respect, and it’s impossible to provide an accurate price without working through the details.


However, people are pressed for time and resources, so suppliers are forced to provide estimates on the spot. Therefore, I try to deliver budgetary costs that reflect most of the expenses needed to acquire, install and commission an onsite power system. It is important to note that the below situations include a scope of supply and labor costs sourced in the U.S. that could be considered “turnkey” and should therefore represent something closer to an all-in analysis. Project scope and costs can still vary dramatically from site to site and country to country. Specifically, installed costs can be significantly lower in lesser regulated countries due to differences in standards, emission requirements and labor costs.


Below are some “typical” onsite power system prices listed by cost per electrical kW in U.S. dollars. These numbers are based on industrial-grade power systems in the range of 1,000 kW of electrical capacity. My assumptions also include:


  • Mechanical costs ̶ engine generator, outdoor enclosure, fuel tanks or gas train, exhaust/silencer, radiator, air filters and mechanical contractor installation
  • Electrical costs ̶ switchgear or transfer switch, communications, cable and conduit, batteries, breakers and electrical contractor installation
  • Commissioning ̶ onsite liquid fuel fills, coolant, oil, technician service, project management and basic operator training
  • Freight shipment of everything to a U.S. location


Note: Smaller generator sets using higher speed or automotive derivative engines, and larger generators that reach different economies of scale can cost less per kW.


Diesel Emergency Power System = $590 per ekW

Natural Gas Emergency Power System = $720 per kW


A 1,000kW combined heat and power (CHP) system with the same assumptions as above plus heat recovery for hot water production can be estimated:

Natural Gas CHP System = $852 per ekW


An installed and commissioned 1,000 kW, industrial-grade uninterruptible power supply (UPS) system can be estimated:

Battery UPS System = $470 per ekW

Flywheel UPS System = $540 per ekW


Operating costs for a 1,000 kW rental power system are as follows:

Diesel Rental Power Cost (100h with fuel at $4/gallon) = $0.52 per kWh

Natural Gas Rental Power Monthly Rate (100h with fuel at $5/MMBtu) = $0.67 per kWh

Diesel Rental Power Cost (600h with fuel at $4/gallon) = $0.36 per kWh

Natural Gas Rental Power Monthly Rate (600h with fuel $5/MMBtu) = $0.23 per kWh


Now let that sink in for a minute, and ask yourself, “Why the heck would anybody spend that kind of money for an onsite power system?” It depends on what matters most for each business owner. Sometimes government regulation dictates priorities for power systems. Other times the cost of a potential power outage far outweighs the capital and maintenance costs. In the case of a CHP system, the benefit is defined in terms of total operating cost savings and a fast financial payback. For a renewable biogas energy project, we define benefits in terms of profit and reduced social costs such as reduced carbon and odor emissions.


For a future blog, we will explore the owning and operating costs for these systems and demonstrate the value of specific applications over time. We might also discuss how different types of projects are best financed. In the meantime, I expect a lot of comments, questions and clarification. I welcome it all in hopes of arriving at a common understanding.


  • What other factors would you add in determining your power project estimate?
  • How would you quantify the additional cost/kW of regulatory and permitting costs? 
  • How does the capital cost of an onsite power project relate to the cost of not doing the project?

by Visitor ngobeh
on ‎05-10-2014 05:46 AM

My comment is bit different from what you might be expecting me to say. After my graduation from university of Sierra Leone I had so much desire to work with Cat now know as Mantrac in Sierra Leone. On two attempts i applied went for interview I was not successseful to work there as Mechanical and Maintenance Engineer. Today I am electromechnaical Engineer with too much pratical and theoretical knowledge in power generation and utilisation. However i will can do my litle contribution in the form comment on your postings



by New member Peter734
on ‎05-12-2014 08:06 AM

This is interesting and useful information.


In addition, I would like to see a posting on load banks, comparing load bank integrated with the generating equipment with free standing loadbank in single and multiple generator installations. Advantage/disadvantage and cost per ekW as you did for the generating equipment.

by Contributor KelscNM
on ‎05-13-2014 12:34 PM

Thanks Plantpro for your insight.  I presume your cost includes all ancillary equipment, building, contracting, permits, etc?


Thanks ngobeh.  I'll look forward to hearing more from you.


Peter734, there are a number of load bank manufacturers (Crestchik and Avtron are well know brands in the US) that offer different degrees of quality and features (resistive vs. reactive, voltage, and controls capability) that impact price.  Caterpillar dealers provide sales, service, and rentals of load bank products.  My best advice is to contact your local Caterpillar dealer for an estimate based on your needs.  http://www.cat.com/en_US/support/dealer-locator.html

by New member George
on ‎05-13-2014 03:42 PM

"Rules of thumb" are litle better than WAGs (wild ass guesses), and are often substituted for in depth analysis. There are just too many variables, to be any where useful. 

What needs to be done is to have an in depth discussion, to fnd out what the customer really is trying to acoplish.
Smiley TongueSmiley SurprisedWith many years of experience, I know, that some times the time spent, developing a solution, may yield, a sale, or be a waste of time.

by Contributor KelscNM
on ‎05-15-2014 11:40 AM

George.  I agree with you that specifics and in-depth discussion are necessary to meet the goals of any specific project.  Unfortunately, that doesn't always satisfy those on the sidelines wondering 'what if?'.  What are the variables that you address on your projects?

by Sal Castro
on ‎12-16-2014 11:27 AM


I am running some 3608 Gas Engine Generators and am trying to look up on the website what the EPA Engine Family AND Tier number they would be considered?? 

by Contributor KelscNM
on ‎01-05-2015 08:15 AM



EPA regulates emissions for gaseous fuel engines under the New Source Performance Standard for stationary generator sets based on fuel type and power range.  You should provide your serial number to your local Cat Dealer and they can provide you with nominal emissions data for that engine.



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