How to make generator fuel type selection in four steps

When selecting a generator, one of the first and most important decisions is which fuel type to choose

By Lilly Vang and Joshua Hunter May 20, 2024
A 500-gallon diesel fuel tank located in a building at a wastewater lift station. Courtesy: CDM Smith

Generator insights

  • When considering backup, standby or emergency power for a building, generators are typically specified.
  • The type of fuel to power a generator is often determined by codes and standards, storage and delivery and application, among other things.
  • This article presents the advantages and disadvantages of several common generator fuel types for different applications and sizes and provides a list of three considerations to help with the decision.

This article has been peer-reviewed.When a generator is required, whether for emergency or nonemergency situations, it is important to choose the optimal fuel type based on the capacity and application. Each fuel type offers its own advantages and disadvantages. These can include fuel costs, fuel availability, reliability, environmental impact, generator performance, initial generator cost, generator size, generator availability, fuel storage and delivery methods and code/standard requirements.

Standards, industry guides and codes relating to generator and generator fuel include, but are not limited to the following:

Some common generator fuel types include diesel, natural gas, propane and gasoline. Each of these fuel types can be the best fuel type for any given project application. To choose the best generator for any project application, it is important to first understand a little about each fuel type, the disadvantages, the advantages and generator availability.

Diesel generators

Diesel fuel is a distillate fuel oil refined from crude oil and biomass materials. It is a commonly used fuel for many vehicles, including buses, trains, military vehicles and freight and delivery trucks. It is also a common fuel for generating electricity using diesel-engine generators.

There are many types of diesel fuel, such as diesel #1, diesel #2 and biodiesel. The most widely preferred is diesel #2. It is the preferred option because of the presence of paraffin wax, which has a lubricating effect, lowering the volatility and increasing the viscosity of the fuel. This effect protects the design engine and other components from extended wear, tear and abuse. Diesel #2 is also a readily available and cheaper fuel option with higher energy content than diesel #1.

The one downside to diesel #2 is that the wax will cause a gelling effect during cold winters, which could cause the generator to start poorly — or not at all. During these times, it may be better to use diesel #1.

On the other hand, biodiesel, while perfectly capable of running a diesel generator, is more sensitive to both cold and hot temperatures, has a shorter shelf life and is generally less readily available. Hot weather can cause biodiesel fuel to mold, while cold weather can harden the fuel, making it difficult to dispense.

Installing diesel generators offers an efficient and reliable backup power system for the following reasons:

  • Diesel fuel is less flammable than other fuel types.

  • Fuel tanks can be easily located and stored on-site, ensuring external disasters or sabotage will not affect a facility.

  • Diesel generators have the best transient response time compared to other generator fuel types.

The downsides of diesel generators include high emissions, high fuel costs and high noise levels during operation. For emergency generators, the emissions may be less of a concern, but nonemergency operation of larger generators require a Tier 4 unit (or greater in some locations) to meet U.S. Environmental Protection Agency (EPA) regulations. These units are more expensive and complex due to emission treating accessories, creating a higher chance for equipment malfunctions and maintenance.

For noise levels, there are mufflers that can help reduce noise and the generators can be placed in a sound-attenuated walk-in enclosure or building. Figure 1 shows a 500-gallon diesel fuel tank located in a building at a wastewater lift station. However, not much can be done about the high fuel cost of diesel besides using the generators as infrequently as possible, only for maintenance, testing and emergency situations.

Figure 1: A 500-gallon diesel fuel tank located in a building at a wastewater lift station. Courtesy: CDM Smith

Figure 1: A 500-gallon diesel fuel tank located in a building at a wastewater lift station. Courtesy: CDM Smith

Diesel generators are available in nearly any size needed and are the typical choice for industrial applications that require a reliable emergency backup power system and on-site fuel. Figure 2 shows a 1,000-kilowatt (kW) diesel generator with a subbase fuel tank sized big enough to provide power to a water treatment facility for 72 hours. Diesel fuel tanks can be provided in a variety of sizes, providing power for five, seven or even 20 days and can be mounted external to the generator unit.

Figure 2: A 1,000 kW diesel generator is shown in a weather-protective enclosure with a 72-hour subbase diesel fuel tank at a wastewater treatment facility. Courtesy: CDM Smith

Figure 2: A 1,000 kW diesel generator is shown in a weather-protective enclosure with a 72-hour subbase diesel fuel tank at a wastewater treatment facility. Courtesy: CDM Smith

However, diesel fuel will eventually degrade, which will start to happen in as little as 28 days and result in the fuel being unusable in 6 to 18 months. Therefore, the larger the fuel tank, the more the generator will need to be run for testing. Another option to mitigate degradation of diesel fuel is to include fuel polishing as a regular maintenance procedure. While fuel polishing adds an additional cost, it is far cheaper than continually replacing the diesel fuel, which typically has a high dollar to gallon cost.

These units are best when installed permanently on-site or mounted on a portable trailer. Diesel fuel type generators are typically not as good of a choice for smaller scale portable applications, such as households and camp sites because of the generator weight and initial cost.

Applications requiring nonemergency use and facilities that are concerned about high emissions will likely not want this fuel type due to the high fuel costs and high emissions produced.

However, diesel generators are manufactured to account for the high emissions if nonemergency use is preferred or required. For these units to operate during nonemergency situations the generator will have to comply with EPA Tier 4 requirements and other local/state emission standards.

Tier 4 requirements

The EPA requires that diesel generators used only during emergencies or for maintenance purposes must not exceed 50 hours per year in nonemergency situations, 100 hours per year for maintenance and testing. They cannot be used for nonemergency demand response or to generate income for a facility to supply power to an electric grid. A Tier 4 EPA rating is required for all new diesel generators operating as nonemergency generators.

Engine manufacturers offer Tier 4-certified generators as complete sets, including the alternator, engine and emissions systems, as required by federal regulations. The regulations require that the entire engine and emissions system, including the specific power rating, be certified as a package. Because of the more limited demand for Tier 4 generators and the lack of flexibility due to certification requirements, generator manufacturers offer a more limited range of generator ratings (sizes) than for Tier 2 or 3 (emergency) generators.

Because of the enhanced emissions requirements of Tier 4 generators, additional techniques and corresponding equipment is included with the generators to mitigate the emissions of the engine.

In general, there are four types of systems added to engines to comply with Tier 4 requirements:

  • Selective catalytic reduction systems, which use diesel exhaust fluid (DEF) to reduce nitrous oxide (NOx)

  • Diesel oxidation catalysts, which use a catalyst to reduce carbon monoxide emissions.

  • Diesel particulate filters, which work to capture particulates in the exhaust stream.

  • Exhaust gas recirculation systems, which recirculate engine exhaust to reduce NOx emissions.

If any of these systems becomes compromised or malfunctions, the generator will shut down and the generator vendor must be contacted to reenergize the generator. There is a one-time per year exception to this rule, which will allow the owner to continue operating the generator, but all other instances will require vendor communication. For highly critical applications this can be detrimental, resulting in a loss of power because a small component, such as the DEF system malfunctioning, and may require more backup generators to create additional redundancy in the system.

Natural gas generators

Natural gas is an odorless, gaseous mixture, predominantly made up of methane. Natural gas is commonly used for heating, cooking, power generation and other industrial uses. This fuel type is so prevalent that it accounts for about 30% of the energy used in the United States, about 40% of which is used for electric power production.

Natural gas generators provide a more environmentally friendly and operationally cost-effective alternative to diesel generators because:

  • Natural gas is typically a cheaper fuel source than diesel.

  • Emissions from a natural gas generator are less than those from a diesel generator.

The advantages of natural gas fuel being cheaper and producing fewer emissions will have a smaller benefit if the generators are operated only during emergency situations. If the generator is used continuously or more often for nonemergency applications, such as demand response, the cheaper fuel source and reduced emissions would provide more benefits. This will depend on regional pricing; however, most areas in the United States have a source of cheaper natural gas supply compared to diesel fuel costs.

Although natural gas is cleaner, many jurisdictions have been extending decarbonization efforts to natural gas burning equipment. For now, emergency power generation has been exempted from many of these restrictions; however, there is concern in the industry that natural gas generators will eventually not be exempt from these decarbonization efforts.

The downsides of natural gas generators include higher initial costs for the generator, slower transient response time compared to diesel, an increased engine footprint and reliance on continued service from a local natural gas utility, which may have inadequate service capabilities and susceptibility to external disasters or sabotage affecting the natural gas pipeline.

The generator’s higher initial cost becomes prevalent when the unit is larger than about 150 kW. This is when the diesel driven engines become more cost effective to produce than natural gas generators. For example, a vendor quote for a 2,500 kW natural gas generator came out to be roughly 45% more expensive than a 2,500 kW Tier 2 diesel generator.

However, the natural gas generator was only about 5% more expensive than the Tier 4 diesel variant. Due to the large cost increase for bigger generators, it may negate operational cost savings for a generator only operating during emergency outage situations.

The slower response time also only becomes an issue for larger generator units, as a 2,500-kW natural gas generator with a 10-second startup time can be procured from a major manufacturer. Generator units larger than 2,500 kW will typically have startup times of 60 seconds or longer. This can be a disadvantage for high priority loads or varying loads as the generator cannot begin to power the facility until it has finished achieving ready to load status, whether it happens within 10 seconds or 60 seconds. The generator set will also take longer to change speed to account for changes in load. This disadvantage will be less problematic for supplying continuous loads, which do not vary frequently.

The biggest reliability concern with using natural gas is the reliance on the natural gas utility, essentially not mitigating the same risks associated with reliance on the electrical utility supply. A standby system reliant on off-site infrastructure is less attractive for a facility that needs a reliable and resilient backup power system.

Moreover, obtaining permission from the relevant authority may be required to use the natural gas pipeline for backup power generators. The natural gas utility may not even have the capability of supplying natural gas at a high enough pressure to operate a larger generator. This can require gas booster pumps, which would need its own backup power generator during utility outage events. These limitations can make this fuel source not practical for certain facilities.

As for available sizes, natural gas generators are manufactured in nearly every size needed. The units are not quite as reliable as diesel, but close and they will need a natural gas source, which will need to be piped in by a utility. This all but eliminates the ability to have a portable natural gas generator unit.

Where natural gas generators truly shine is nonemergency, continuous-use industrial applications. This takes advantage of the much cheaper and cleaner fuel source. Several natural gas models will even be designed specifically for this type of operation. Natural gas units are an ideal choice for combined heat and power (CHP) systems and many power plants use large scale natural gas generators. Even for emergency situations, natural gas generators can provide good utility redundancy if power from an electrical utility is lost.

Propane generators

Propane, also known as liquefied petroleum gas, is a byproduct of natural gas processing and crude oil refining. It is a clean-burning fuel stored in pressurized tanks. When stored, the fuel is a liquid. When released from the fuel tank, it turns into a gas used to create a flame or for combustion. Common uses of propane fuel include home and water heating, drying clothes, cooking food, farm and industrial equipment and propane electric generators.

Propane as a generator fuel is more environmentally friendly and stable because:

  • Propane has fewer emissions than diesel.

  • Propane fuel may be stored on-site nearly indefinitely without the need for a polishing system or fuel cycling.

The downsides of propane generators include propane fuel being more expensive than both natural gas and diesel per kilowatt-hour produced, higher initial costs for the generator compared to diesel, low energy density (requiring more propane stored on-site in large propane tanks), higher maintenance costs, shorter life expectancy, less reliability and increased hazards due to the flammability of the fuel source.

The propane tank size alone can make this fuel type impractical if the facility has inadequate space. For instance, a propane generator can require more than three times as much fuel as a diesel generator in gallons for the same energy production. Figure 3 shows a 1,000-gallon propane fuel tank located at a gas station.

Figure 3: This 1,000-gallon propane fuel tank is located at a gas station. Courtesy: CDM Smith

Figure 3: This 1,000-gallon propane fuel tank is located at a gas station. Courtesy: CDM Smith

Another potential downside to propane generators is the general lack of sizes they are made in. Most propane generators are relegated to smaller units less than 150 kW or derated natural gas generator units and will often be dual fuel rated for natural gas and propane.

Based on the downsides and advantages, propane power generators are best for smaller applications wanting to store fuel on-site, but not use diesel fuel. Because many propane generators are dual rated to function with natural gas, propane tanks can be located on-site as an additional backup should the natural gas supply be compromised. This can provide a clean, cheap generator with the added resiliency of on-site fuel storage, like a diesel generator. Other times propane might be used as the fuel source before the installation of natural gas piping, allowing use of the generator earlier.

Gasoline generators

Gasoline, also known as petrol, is a fuel made from crude oil and other petroleum liquids. This fuel type is mainly used for vehicle engines, especially smaller everyday vehicles such as cars, SUVs, pickup trucks and vans. Gasoline generators are also common for smaller scale power requirements, such as residential homes, camp sites and construction work sites.

Gasoline generators are known for being:

  • Lightweight, quiet and easily portable units.

  • Easy to purchase and store fuel.

The downsides of gasoline generators include lower fuel efficiency than diesel requiring more frequent refills, a more flammable fuel requiring old fuel to be drained for safe storage and more failure prone components requiring more maintenance and replacement of parts.

Additionally, there is limited availability of larger sizes. Most gasoline generators come in size 20 kW or smaller, which are suited for small-scale operations.

Emission wise, gasoline generators are slightly better than diesel generators, but worse than most other generator fuel types.

Considerations for generator fuel type

As discussed previously, generators can be used as an emergency backup power source, as a primary power source or for nonemergency applications. Choosing the right fuel type depends mainly on the needs of the facility, physical and design limitations of the area and the life cycle cost of the generator and its fuel type. The following sections detail four generalized considerations to determine the fuel type that best matches the end user’s needs.

Step 1: Understand the demand

The first step is to understand the load profile of the electrical demand and determine the capacity of the generator needed for the facility. The term “facility” is used loosely throughout this article to represent the end user and can be a business, industrial sites, etc. Power usage for a facility typically follows three main types of profiles: residential, commercial and industrial.

Residential facilities typically have the lowest demand, then commercial and finally, industrial. The total amount of power usage is also reflected in the size of the facility. A commercial facility is often much bigger than a residential facility and typically has more loads. An industrial facility may at times be smaller in footprint than a commercial facility, but may have larger motor loads, which have higher demands than the lights and receptacles commonly seen in a commercial facility. Harmonics and inrush caused by motor loads can and will increase the size of the generator required for the facility even though the average demand does not appear as high.

A common misconception is the loading of the generator. Not all generators are recommended to be 100% loaded. Emergency standby rated generators, depending on the generator manufacturer’s recommendation, work best around 70% loaded. For example, a 100 kW generator is ideal for a facility that has an average 70 kW demand with peak demand of around 75 to 80 kW. Other generators, such as prime rated and continuous generators may perform best when loaded up to 100%. Knowing the optimal loading characteristics will ensure the generator unit lasts as long as possible and has the greatest fuel efficiency.

The capacity of the generator, whether that is 100 or 1,000 kW, greatly affects the selection of fuel types available. For example, if the capacity is high, fuel types such as propane and gasoline are typically not efficient or practical.

Step 2: Determine the operation of the generator

After understanding the type of demand, the operation of the generator needs to be determined. Generators can be operated when needed due to potential hazards for critical life safety and/or critical operation resiliency, during peak electrical utility rate times or continuously for power generation, such as a microgrid, CHP system or power plant.

Determination of the generator operation should consider the needs and operation of the facility. If the facility is legally required and classed as emergency or critical life safety by municipal, state, federal or by any governmental authority having jurisdiction, the facility will need a generator that can start within 10 seconds. The emergency system is intended to supply light and power to designated areas in the event of normal power failure to support safety to human life. Out of the fuel types discussed, only diesel and some natural gas generators can start within 10 seconds of power outages.

Most facilities are not required to have emergency backup systems but can be legally required to have standby systems. They are intended to supply power to selected loads that could create hazards or hamper rescue or fire-fighting operations in the event of normal power failure.

Generators can also be operated as the primary power source or operated during peak electrical utility rate times for peak shaving or demand response. Generators must meet EPA emission regulations and/or federal, state and local regulations for these nonemergency types of operations.

Any critical facility can participate in demand response if the EPA emission regulations and code requirements for emergency systems are met. In other words, diesel generators need to be Tier 4 generators to meet EPA emission regulations for nonemergency operations. The other fuel types, depending on the size, have emissions that meet EPA emission regulations.

Step 3: Review additional limitations in the area

Step 3 considers the limitations caused by the facility location. The next few portions cover a few but not all the critical topics of consideration for selecting the type of fuel source.

Federal, state and local codes and ordinances: Federal, state and local codes and ordinances vary based on the location of the facility. Some locations are more stringent than others. Per NEC Articles 700-702 and 708, emergency, standby or prime mover generators, in general, cannot be solely dependent on a public utility gas system for their fuel supply. They are required to either have another dual fuel supply or a supply that can be stored on-site.

NFPA 110, Annex A also provides additional requirements and considerations for the fuel type depending on whether the generator is a prime mover, standby or emergency type. For example, Annex A, Chapter 5.1.1(1) of NFPA 110 details that diesel fuel used for prime movers should not contain biodiesel if the fuel is stored longer than six months.

Certain state and local codes and ordinances also limit the noise created by the generator, particularly for residential areas. Therefore, soundproofing may need to be considered. Diesel generators tend to be the loudest and require more sound proofing to meet codes and ordinances.

Fuel availability: Depending on the location of the facility, the availability of the fuel also affects the selection of the generator type. For example, obtaining natural gas fuel in a very rural area may be next to impossible or not very cost effective because a new gas pipeline would need to be installed.

Physical limitations: The available real estate for the generator and its associated equipment (fuel tanks, emission correcting accessories, etc.) also plays a key role in the selection of the fuel type. Gasoline, propane and smaller natural gas generators tend to be smaller and lighter for residential, casual applications such as camping or small-scale backup power on a construction site. On the other hand, gasoline, propane and diesel generators require additional space for fuel storage.

Manufacturer availability: Manufacturer availability also plays a key role in the selection of generator fuel type. Having a local manufacturer’s factory nearby or even a local generator representative to contact for maintenance or operation concerns can help ensure the generator has an optimal life cycle.

Step 4: Perform a life cycle cost analysis: The last step is to consider the life cycle cost of the fuel types that are feasible for the facility. This step allows the end user to accurately select or justify the usage of the selected fuel type. A life cycle cost analysis is typically reviewed over a period, which may be for as long as the manufacturer’s recommended generator life expectancy/maximum operation hours.

The total life cycle cost can be broken down into three major types: initial expenses, future expenses and residual value.

  • The initial expense is the cost of provision and installation.

  • Future expense is the cost of operation and maintainability, which is a recurring cost. Examples include fuel cost, operating hours, maintenance cost, etc.

  • The residual cost is essentially the value of the generator at the end of the study period. This cost can be negative or positive depending on whether the owner can resell it or needs to pay a contractor to replace generator.

The life cycle cost for each feasible fuel types can then be compared to determine which fuel type is most cost-effective solution over the generator’s lifetime.


Author Bio: Lilly Vang, PE, is an electrical engineer at CDM Smith, focusing on the design of electrical power systems. Joshua Hunter, PE, is an electrical engineer at CDM Smith, experienced in the design and analysis of electrical power systems.