How Much Does a Natural Gas Generator Cost to Run?

The cost to run a natural gas generator depends on generator size, load, fuel consumption, local natural gas prices, engine efficiency, and annual operating hours.

For industrial generators, there is no single accurate “cost per hour.” A 500 kW generator operating at 50% load has a very different fuel cost from a 2,000 kW generator running continuously near full load.

The most useful approach is to calculate:

Hourly Fuel Cost → Cost per kWh → Annual Fuel Cost → Total Operating Cost

DIYPOWER provides industrial natural gas generator solutions for standby, prime, continuous, and distributed-power applications. This guide explains how to estimate generator running costs and identify the factors that have the greatest impact on long-term operating expenses.

Natural Gas Generator Running Cost: Quick Answer

The basic calculation is:

Hourly Fuel Cost = Natural Gas Consumption per Hour × Local Natural Gas Price

For example, if a generator consumes 8,000 ft⊃3;/h and natural gas costs $5.00 per 1,000 ft⊃3;:

8 × $5.00 = $40/hour

If the generator is producing 1,000 kW:

Fuel Cost per kWh = $40 ÷ 1,000 = $0.04/kWh

This is only an example.

Actual cost should always be calculated using:

• Manufacturer fuel-consumption data

• Actual generator load

• Local delivered natural gas price

• Expected annual operating hours

Natural gas prices can vary substantially by location and over time. The U.S. Energy Information Administration Natural Gas Price Data provides current U.S. price information by market sector.

How to Calculate Natural Gas Generator Running Cost

You need three main pieces of information:

1. Generator gas consumption

Usually expressed as:

• m³/h

• ft⊃3;/h

• SCFH

• MMBtu/h

2. Local natural gas price

This may be quoted per:

• m³

• therm

• CCF

• MCF

• MMBtu

3. Expected operating hours

Then calculate:

Hourly Fuel Cost = Gas Consumption × Gas Price

Annual Fuel Cost = Hourly Fuel Cost × Operating Hours

Fuel Cost per kWh = Hourly Fuel Cost ÷ Electrical Output

For detailed fuel-consumption calculations, see How Much Gas Does a Generator Use?.

Example: Industrial Natural Gas Generator Running Cost

Assume an industrial generator:

• Output: 1,000 kW

• Natural gas consumption: 8,000 ft⊃3;/h

• Gas price: $5.00/MCF

• Operating time: 4,000 hours/year

Hourly Fuel Cost

8,000 ft⊃3;/h equals:

8 MCF/h

Therefore:

8 × $5.00 = $40/hour

Fuel Cost per kWh

At 1,000 kW output:

$40 ÷ 1,000 = $0.04/kWh

Annual Fuel Cost

At 4,000 operating hours:

$40 × 4,000 = $160,000/year

This simplified example shows why annual runtime matters.

A small difference in fuel consumption or efficiency can create a substantial cost difference when an industrial generator operates thousands of hours each year.

Important: These figures are illustrative only. Use the actual fuel-consumption specification of the selected engine and the delivered natural gas price at your facility for project calculations.

What Determines Natural Gas Generator Running Cost?

1. Generator Size

Larger generators consume more natural gas per hour because they produce more electrical power.

However, larger industrial engines may also achieve better electrical efficiency than smaller units.

This means a larger generator may consume more fuel per hour while using less fuel per generated kWh.

For this reason, industrial buyers should compare:

Gas Consumption per Hour + Electrical Output + Cost per kWh

rather than hourly consumption alone.

2. Generator Load

Generator load has a major effect on fuel consumption.

At lower loads, the generator consumes less total fuel per hour, but fuel consumption per generated kWh may increase because engine efficiency generally decreases at part load.

EPA technical data for natural-gas reciprocating engines shows that the efficiency of a representative lean-burn engine at 50% load can be approximately 8–10% lower than at full load.

This is why generator sizing should be based on the actual facility load profile rather than simply selecting the largest available unit.

For more information about efficiency and load, read How Efficient Is a Natural Gas Generator?.

3. Natural Gas Price

Fuel price is one of the most important—and most variable—parts of generator operating cost.

Natural gas prices vary according to:

• Country

• Region

• Utility

• Contract structure

• Season

• Market conditions

• Consumption level

• Transportation and distribution charges

For example, U.S. Energy Information Administration data shows substantial differences in industrial natural gas prices between states and over time.

Therefore, avoid calculating a project using a generic national price found online.

Use the actual delivered price available to the facility.

Current U.S. data can be checked through the U.S. EIA Natural Gas Industrial Price Database.

4. Engine Efficiency

Generator efficiency determines how much of the fuel's energy becomes useful electricity.

A simplified calculation is:

Electrical Efficiency = Electrical Output ÷ Fuel Energy Input × 100%

Higher electrical efficiency generally means less fuel is required to generate the same amount of electricity.

EPA technical data shows that natural-gas reciprocating-engine efficiency varies considerably with engine size and technology.

Large high-performance lean-burn engines can achieve substantially higher electrical efficiency than small gas engines.

Therefore, two generators with the same rated kW may have different:

• Fuel consumption

• Heat rate

• Running cost

• Cost per kWh

Compare the actual engine performance data rather than assuming generators of the same output have identical operating costs.

5. Annual Operating Hours

Operating hours determine whether small differences in efficiency become financially significant.

Consider two applications:

Standby Generator

100 operating hours/year

Continuous or Prime-Power Generator

6,000 operating hours/year

A difference of only $10/hour in fuel cost would represent:

100 hours = $1,000/year

versus:

6,000 hours = $60,000/year

This is why fuel efficiency and cost per kWh become especially important for high-hour industrial applications.

Fuel Cost vs Total Generator Operating Cost

Fuel cost is only one part of the total cost of running an industrial natural gas generator.

A more complete calculation is:

Total Operating Cost = Fuel + Maintenance + Lubricants + Parts + Labor + Auxiliary Energy + Overhaul Costs

Depending on the installation, other expenses may include:

• Engine oil

• Oil filters

• Air filters

• Spark plugs

• Coolant

• Gas-system maintenance

• Battery replacement

• Sensors

• Alternator maintenance

• Control-system maintenance

• Service labor

For long-term industrial projects, buyers should therefore evaluate total lifecycle cost, not fuel price alone.

Natural Gas Generator Maintenance Costs

Maintenance requirements depend on:

• Engine manufacturer

• Generator size

• Annual operating hours

• Load profile

• Fuel quality

• Environmental conditions

• Duty rating

Typical maintenance items include:

Do not use a universal maintenance interval for every natural gas generator.

Follow the engine manufacturer's service schedule for the specific generator.

For high-hour applications, also consider scheduled engine overhauls when calculating long-term operating cost.

Gas Infrastructure Can Affect Total Cost

The generator itself is only one part of a natural gas power project.

The site may also require:

• Gas piping

• Pressure regulators

• Gas filtration

• Metering

• Isolation valves

• Gas detection

• Ventilation

• Utility connection upgrades

Large industrial generators require substantial gas flow.

Before purchasing equipment, verify:

Available Gas Pressure

Maximum Gas Flow

Pipeline Capacity

Pressure Drop

Gas Heating Value

Other Facility Gas Loads

A generator with attractive fuel efficiency may still require significant infrastructure investment if the existing gas service cannot support its maximum demand.

Natural Gas Generator Cost per kWh

For industrial projects, cost per kWh is usually more useful than cost per hour.

Use:

Fuel Cost per kWh = Hourly Fuel Cost ÷ Electrical Output

For example:

Generator A costs $40/hour to operate while producing 1,000 kW:

$40 ÷ 1,000 = $0.04/kWh

Generator B costs $60/hour while producing 2,000 kW:

$60 ÷ 2,000 = $0.03/kWh

Generator B has a higher hourly fuel cost but a lower fuel cost per unit of electricity.

This illustrates why hourly cost alone can be misleading when comparing generators of different sizes.

Natural Gas vs Propane Generator Running Cost

Natural gas and propane have different:

• Fuel prices

• Energy content

• Storage requirements

• Delivery systems

• Infrastructure costs

Pipeline natural gas eliminates the need for large onsite LPG storage, while propane provides onsite fuel inventory for locations without natural gas infrastructure.

Neither fuel is universally cheaper.

Compare:

Fuel Cost per kWh

Annual Fuel Cost

Infrastructure Cost

Maintenance

Required Runtime

For a detailed comparison, read Natural Gas vs Propane Generator: What's the Difference?.

Natural Gas vs Diesel Generator Operating Cost

Diesel and natural gas generators should also be compared using total operating cost rather than fuel price alone.

Important factors include:

Natural gas is not automatically cheaper than diesel in every market.

The correct comparison is:

Total Annual Cost ÷ Annual Electricity Generated

This produces an approximate total operating cost per kWh.

Can CHP Reduce Overall Energy Cost?

For facilities requiring both electricity and heat, Combined Heat and Power (CHP) can change the economics of natural gas generation.

A conventional generator rejects heat through:

• Exhaust

• Cooling system

• Engine jacket water

A CHP system recovers part of this thermal energy for:

• Process heating

• Hot water

• Steam

• Drying

• Facility heating

According to the U.S. EPA's CHP Efficiency Guidance, CHP systems typically achieve total system efficiencies of approximately 60–80%, depending on technology and system design.

This does not mean the generator suddenly uses less fuel to produce each electrical kWh.

Instead, more of the fuel's total energy becomes useful output because both electricity and heat are utilized.

For industrial facilities with consistent thermal demand, this can improve overall project economics.

How to Reduce Natural Gas Generator Operating Costs

Size the Generator Correctly

Avoid unnecessary oversizing.

Define:

• Base load

• Average load

• Peak load

• Motor starting

• Load steps

• Future expansion

A properly sized generator can operate closer to its intended efficiency range.

Compare Fuel Consumption at Multiple Loads

Do not compare only the full-load specification.

Review fuel consumption at:

25% → 50% → 75% → 100% load

This is particularly important when facility demand varies throughout the day.

Monitor Cost per kWh

Track:

Natural Gas Consumption + Generator kWh Output

Then calculate:

Actual Fuel Cost per kWh

This makes it easier to identify changes in generator performance.

Maintain the Engine

Poor maintenance can affect combustion and fuel utilization.

Follow manufacturer requirements for:

• Filters

• Spark plugs

• Lubrication

• Cooling

• Gas regulation

• Sensors

Consider Multiple Generators for Variable Loads

For large sites with highly variable demand, multiple generator sets can sometimes provide greater operating flexibility than one oversized unit.

Generators can be brought online or offline as demand changes.

EPA technical guidance notes that multiple engines may help avoid some part-load efficiency penalties where significant load reductions occur regularly.

Example: Operating Cost Planning for a Large Industrial Generator

For a multi-megawatt generator, even a small efficiency difference can significantly affect annual fuel cost.

DIYPOWER's 2000kW JiChai High-Voltage Natural Gas Generator represents the type of large industrial equipment where operating-cost analysis becomes particularly important.

Before selecting a generator in this power range, evaluate:

• Fuel consumption at expected load

• Heat rate

• Gas price

• Annual runtime

• Gas pressure

• Pipeline capacity

• Maintenance intervals

• Overhaul requirements

• Parallel operation

• CHP potential

For example, a difference of only:

$0.005/kWh

at:

2,000 kW × 6,000 hours/year

represents:

$60,000/year

in operating-cost difference.

For high-hour projects, generator efficiency therefore has a direct impact on lifecycle economics.

Natural Gas Generator Operating Cost Checklist

Before estimating generator running cost, collect:

With these inputs, you can calculate a much more realistic total operating cost.

DIYPOWER Natural Gas Generator Solutions

DIYPOWER provides natural gas generator solutions for industrial standby, prime, continuous, and distributed-power applications.

For operating-cost evaluation, important project information includes:

• Required kW/kVA

• Voltage and frequency

• Load profile

• Annual operating hours

• Gas pressure

• Gas composition

• Local fuel price

• Site conditions

• Parallel-operation requirements

• CHP requirements

Explore DIYPOWER Natural Gas Generators for individual generator solutions.

For larger multi-generator projects, see DIYPOWER Natural Gas Power Stations.

Related guides:

How Much Gas Does a Generator Use?

How Efficient Is a Natural Gas Generator?

How Does a Natural Gas Generator Work?

Natural Gas vs Propane Generator

Frequently Asked Questions

How much does a natural gas generator cost to run per hour?

There is no universal hourly cost.

Use:

Hourly Cost = Gas Consumption per Hour × Local Natural Gas Price

A large industrial generator will consume more gas per hour than a small generator, but generator efficiency and load also affect the final cost.

How do I calculate natural gas generator cost per kWh?

Use:

Fuel Cost per kWh = Hourly Fuel Cost ÷ Electrical Output

This is usually more useful than cost per hour when comparing generators of different sizes.

How much does it cost to run a 1,000 kW natural gas generator?

The cost depends on the specific engine's gas consumption, operating load, and local gas price.

For accurate calculations, obtain the manufacturer's fuel-consumption data at the expected load and multiply it by your facility's delivered gas price.

Does a natural gas generator cost less at 50% load?

Total hourly fuel consumption normally decreases as load decreases.

However, fuel cost per generated kWh may increase because natural-gas reciprocating engines can become less efficient at part load.

Is natural gas cheaper than diesel for generators?

Not always.

The result depends on local fuel prices, engine efficiency, annual operating hours, infrastructure, maintenance, and load profile.

Compare total cost per generated kWh rather than fuel price alone.

What is the biggest operating cost of a natural gas generator?

For high-hour generator applications, fuel can be a major operating expense.

Maintenance, lubricants, replacement parts, engine overhauls, and auxiliary systems should also be included in lifecycle calculations.

Does an oversized generator cost more to operate?

It can.

An oversized generator that operates at low load for long periods may have poorer fuel efficiency per kWh than a correctly sized generator.

How can I reduce natural gas generator fuel costs?

Start with correct generator sizing, compare fuel consumption across the expected load range, maintain the engine properly, monitor actual gas consumption per kWh, and consider multiple-generator configurations where loads vary significantly.

Does CHP reduce natural gas generator operating cost?

CHP can improve overall project economics when the facility has useful thermal demand.

It recovers heat that would otherwise be rejected and uses it for processes such as hot water, steam, drying, or space heating.

What information does a generator supplier need to estimate operating cost?

Provide:

• Required kW/kVA

• Average and peak load

• Expected annual runtime

• Natural gas pressure

• Local natural gas price

• Voltage and frequency

• Site altitude and temperature

• Duty rating

• CHP requirements

Conclusion

The cost to run a natural gas generator cannot be determined from generator size alone.

A reliable estimate requires:

Fuel Consumption × Local Gas Price × Operating Hours

For industrial projects, also calculate:

Fuel Cost per Hour

Fuel Cost per kWh

Annual Fuel Cost

Maintenance Cost

Total Lifecycle Cost

Generator load and efficiency are particularly important for high-hour applications because even a small difference in cost per kWh can create a substantial annual cost difference.

DIYPOWER provides industrial natural gas generator and power-station solutions for standby, prime, continuous, and distributed-generation applications. Matching generator capacity to the actual load profile, fuel infrastructure, annual runtime, and site conditions is essential for controlling long-term operating costs.