on 04-23-201403:40 PM - last edited on 05-08-201409:18 AM by cboysen
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?