Natural Gas Standby Generator

I was recently looking at natural gas standby generators on the Costco website. Given the current electricity rates during peak Time of Use hours, I then started wondering what the cost per kWh was for a natural gas standby generator. Especially considering how low the natural gas prices have been.

So let’s do some math. Fun!

According to, natural gas is currently 25.04¢/m³ in my area. That includes all of the “add ons” that are over and above the posted natural gas rate. It excludes taxes though. As we saw before, your real electricity rate is not the same as what is “advertised” by Hydro One. We need to add in a number of extra charges to get the real rate. With the recent switch to the summer Time of Use pricing, the advertised rates increased.

Based on the current Hydro One Residential Delivery Rates, the real Time of Use prices are (based on Urban High density) 12.01¢/kWh for off-peak, 15.24¢/kWh for mid-peak and 17.18¢/kWh for peak usage. Again, these are the rates without taxes added (and minus some monthly charges that don’t translate well into a per kWh price).

So, let’s take the Generac 17 kW Standby Generator that is available on the Costco website, and figure out the cost per kWh. According to the website, it is capable of producing 16kW using natural gas and consumes 6.9m³/h at full load. So, that translates to 2.32kWh/m³ at full load. Given the current natural gas rate in my area, that means the standby generator costs 10.80¢/kWh.  WHAT?

Well, hang on, let’s not get too carried away with this. Natural gas prices are currently at all time lows.  Let’s see how much it would cost with the ~50¢/m³ that we were paying a couple years ago.  At that price, the generator costs 21.55¢/kWh to run.

Let’s not forget about the cost of the generator – $3699.99 plus around $1000 of installation/other costs (based on some rough numbers I found while Googling). To cover that, you’d have to run the “standby” generator at full load during Time of Use on-peak time for about 67142 hours all while hoping that the natural gas price doesn’t go up. Oh, and don’t forget that peak time is only for about 6 hours a day and only 5 days a week.

Oh well, that satisfied my curiosity.

Well, almost.  I poked around a bit and found a couple industrial natural gas generator sets. Unfortunately most of the large scale (2500kW – 3000kW) units I found didn’t have fuel consumption values. The $500k for a used (with no warranty) 3000kW generator set was interesting. (Yikes!)

I did manage to find the Kohler Power 400RZX which is 400kW natural gas generator. It’s capable of around 3.3kW/m³ at full load or a cost of 7.5¢/kWh. Of course, no price is listed so I’m going to assume its payoff time would be greater than the 67000+ hours of the Generac unit.

3 thoughts on “Natural Gas Standby Generator

  1. Tom

    If instead of buying a 16kW generator, you get a 2kW generator, that’s built really well, you can also use the excess heat (about 70% of the energy consumed is heat). So you get included hot water and house heating, plus power up to the first 2kW used in your home for 11c. With electric rates rising likely faster than gas, you have in your math the beginnings of a new industry in Canada. Another way of looking at it: Take the heat load of an Ontario house – since you are burning the nat gas anyway, you may as well generate electricity.

    Honda makes a micro gen unit ONLY available in the USA, though.

    1. Jeff Ivany Post author

      Tom, thanks for the comment.

      That Honda mCHP system is very interesting. Unfortunately in my quick search, I didn’t find anything about cost of the system. Since it appears to be a complete replacement for an existing water heater & furnace combo, I’m assuming it’s not cheap. ;)

      I don’t think it would qualify for the microFIT program in Ontario so at best you’d get straight net metering on the small amount of power put back on the grid (only 4000-5000kWh/year?). I wonder if you’d be able to connect a PV system to it and take advantage of the built in solid state inverter and grid interconnect.

  2. Mike

    Thanks for the info about payback… I think it’s a purchase for safety(my health) and comfort.
    If I justified the cost on payback only, it would take longer than I have left on this earth to justify and experience the payback. I think I’ll enjoy cool air, warm heat and all of the other comforts power gives me.


Leave a Reply