Is it cheaper to run a generator on gas or natural gas?

Is it cheaper to run a generator on gas or natural gas? In many cases, natural gas costs less to operate than gasoline, especially for extended or frequent use.

However, the actual savings depend on local fuel prices, generator efficiency, load demand, and installation costs. This guide compares the key cost factors to help you choose the right fuel for your power needs.

Is natural gas cheaper than gasoline for a generator?

Natural gas often has a lower fuel cost per kilowatt-hour, particularly when a generator runs regularly. Gasoline may be cheaper overall for occasional use because equipment and installation can cost less.

The comparison depends on local prices and the generator’s actual fuel consumption. Natural gas contains less energy per unit of volume, so comparing a gallon price directly with a gas utility rate is misleading.

For businesses, fuel cost is only part of the decision. Connection charges, expected operating hours, maintenance, and the financial consequences of an outage can change which option delivers better value.

How do you compare generator fuel costs?

Calculate the cost of producing one kilowatt-hour of electricity at the load you expect to use. Request consumption data from manufacturers for both fuels at that load.

For gasoline, multiply gallons consumed per hour by the price per gallon. Divide the result by the electrical output in kilowatts to find fuel cost per kilowatt-hour.

For natural gas, multiply the hourly consumption in your supplier’s billing unit by its delivered price. Then divide by output in kilowatts, using consistent units throughout.

For example, suppose a generator produces 20 kW while consuming 2 gallons of gasoline per hour. At $3.50 per gallon, its fuel cost is $0.35 per kWh.

If a comparable natural gas unit consumes 300 cubic feet per hour at $15 per thousand cubic feet, its fuel cost is $0.225 per kWh. These figures are illustrative, not equipment specifications.

At 20 kW for 1,000 hours, the example’s natural gas unit saves $2,500 in fuel. Actual savings require verified consumption figures and local delivered fuel prices.

Include applicable gas delivery charges and taxes in the unit price. Treat fixed monthly fees separately, especially if they continue when the generator is idle.

What changes the cost of running each generator?

Electrical load: Fuel consumption does not always fall in proportion to output. A lightly loaded generator may use more fuel per kWh than one operating nearer its efficient load range.

Operating hours: A small difference in fuel cost matters more over thousands of hours. For short backup runs, purchase and installation costs may dominate the calculation.

Fuel prices: Gasoline prices can change quickly, while natural gas bills may include variable supply rates and utility charges. Use realistic prices for your location and expected operating period.

Generator efficiency: Two units with the same rated output can consume different amounts of fuel. Compare manufacturer data at matching loads and account for any required derating.

Fuel availability: Gasoline needs storage and replenishment. A natural gas generator needs an adequate gas supply, and pipeline availability during an emergency depends on local infrastructure.

When can gasoline cost less overall?

A gasoline generator can make financial sense for portable equipment or a small backup system used only a few hours each year. Its lower initial cost may outweigh higher fuel spending.

Gasoline also avoids the cost of connecting to a gas line. However, owners should budget for safe fuel storage, replacement of stored fuel, and refueling during longer outages.

For extended operation, calculate how much fuel must be delivered and stored. Refueling logistics and downtime can matter as much as the price displayed at the pump.

When is a natural gas generator the better investment?

Natural gas becomes more attractive when a site runs a generator frequently, needs longer backup periods, or already has a suitable gas connection. Continuous supply can also reduce refueling work.

Before purchasing, ask the utility whether the existing line can provide the required pressure and flow while other equipment is operating. Upgrades or permitting can add significant cost and lead time.

For larger commercial applications, AMICO’s 500kW natural gas generator set uses natural gas to generate electricity and is listed at 600 V and 50 Hz.

Model AMC500GFJ6-2PN is specified as two 250 kW units. Confirm fuel consumption, gas requirements, configuration, and suitability for your site with the manufacturer before calculating operating costs.

How long will fuel savings take to recover extra installation costs?

Subtract annual natural gas fuel and maintenance costs from the equivalent gasoline costs. Divide the additional natural gas equipment and installation cost by that annual saving to estimate simple payback.

For example, if natural gas costs $10,000 more upfront and saves $2,500 annually, simple payback is four years. The calculation excludes financing, fuel price changes, and replacement costs.

If annual savings are small or negative, the extra investment may not pay back on fuel alone. Include fixed gas charges and any changes in maintenance when assessing the result.

Which fuel should you choose?

Choose based on your expected load, annual operating hours, delivered fuel prices, and installed cost. Natural gas often wins for frequent operation; gasoline can suit occasional, portable use.

Obtain comparable quotes and consumption data before deciding. The cheapest fuel per unit is less useful than the total cost of reliable power over the generator’s expected life.