<$0.05 Power on Natural Gas

[wndsnb]

Anyone using a natural gas generator to power your mining farm?

A few years back I got a backup generator that runs on natural gas installed at my home. It's spec. sheet listed the fuel usage, so I did the calculations to see how much it cost to run per kWh and found it came out to about $0.10 per kWh, which is about half of what I pay the utility for electricity. It's a standby generator, so it could not be run continuously, and it's loud enough that my neighbors would kill me if ran it 24/7 anyway, but it got me curious so I did some research on larger prime power generators and natural gas prices around the USA.

Natural Gas Prices by State - https://www.chooseenergy.com/data-center/natural-gas-rates-by-state/

Industrial rates for gas in some states are really low. The lowest right now is Oklahoma, at $2.14/1000 ft^3.

Using $2.14/1000 ft^3, and specs from Generac's website for their large generators that are rated for prime power, I came up with these #s. I estimated the maintenance charges based on ranges this company gave for service contract rates. I did not take into account the cost of purchasing the generator, only the operating cost and gas cost. On the larger side of things, if you could purchase a 2nd hand SG750 for $200,000 (wild guess based on what I'm seeing on ebay...) and spread that cost over a 5 year run time at 75% load, it would come out to $0.00812/kWh.


Generac SG150 14.2L, including $800/per month for maintenance

75% load 112.5kW, $0.0426/kWh
50% load, 75kW, $0.0511/kWh


Generac SG250, including $1000/month for maintenance

75% load, 187.5kW, $0.0349/kWh
50% load, 125kW, $0.0416/kWh


Generac SG450, including $1200/month for maintenance

75% load, 337.5kW, $0.0315/kWh
50% load, 225kW, $0.0351/kWh


Generac SG750, including $1500/month for maintenance

75% load, 562.5kW, $0.0258/kWh
50% load, 375kW, $0.0289/kWh

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[DaveF]

Some other things to consider in the cost:

How are you going to keep the lights on during generator maintenance? Utility power, 2nd generator, etc?
How much is the install going to cost you? (never mind the cost of the generator)
The big one, how much extra cost (if any) is the local utility going to hit you for if you are using more gas then the rest of the city combined?
Yes, it's a bit of an exaggeration, but a upstate data center had that issue. When they were running their generators the businesses next to them lost enough gas pressure that their water heaters would not turn on.
Oops. The utility actually had to run more pipes and a don't know what the real term is but lets call it "pumping stations" to boost the pressure a bit. He had to pay for that.

When gas utilities do builds they assume "X" amount of gas. If you are using 10X you may or may not pay 10X the price. It could be more.

So, yes it's nice to say that Oklahoma is at $2.14/1000 ft^3.
But if the local utility can't get you the amount you need at that price it's not going to work.

Hate to be a downer on this, but while I agree gas is great, it has a lot of drawbacks. The biggest one, that I have seen is again and again, the cheap selling price is great for you at home for your stove.
Want to heat a 3 story 60K SF office building. Oh, that's @ THIS price not THAT price

-Dave

[wndsnb]

I agree, there are a lot of other factors. You're not going to be able to slap a 20,000lbs generator in your back yard and get 3 cent power.

The site would need to be in an industrial area with the infrastructure to support industrial level use. In order to get the low prices, you need to use a large amount. Residential rates are significantly higher.

Here's an example for published rates in upstate NY.

Service
Supply

On average, it looks like total cost would be between $3 and $4 per 1000/ft^3.

But absolutely, for a given address the utility could tell you to get the level of service you need they'd have to run new pipe from a larger supply line, and that would be very expensive. But it's the same game you play to get megawatts of electrical hookup.

For industrial applications, I don't think the usage is all that high or unusual.

31.5% of electricity generated in the USA came from natural gas in 2018 (Source). So in general terms, I don't think infrastructure is an issue. The price in Oklahoma is probably so low because they have an abundance of supply capacity available.

An estimate from Generac in this white paper puts installation cost at $150 per kW for the generator, and an additional $10-$20 per kW for the gas hookup from the utility. If you figure the high end for the gas hookup, that would be $127,500 for the installation. So together with my wild estimate for 2nd hand cost of the generator, it would be $327,500, which comes out to $0.013/kWh over a 5 year life.

I think the biggest issue would be that natural gas prices can be pretty volatile. You'd have to be pretty sure they'd stay low or continue dropping to make that kind of investment. Get a Green New Deal candidate in the White Hose and it'd be all over....

I just thought it was interesting that the cost seemed to be in the ball park of competitive.

[NotFuzzyWarm]

Agreed ^^
Interesting thing about the Generacs is that if you read the pdf's on the generators, even for example the 14.7L 130kw one, while it does talk about Prime power usage, there is a note on that saying that NONE of the generators are EPA rated as Prime power usage in the US and its territories. Weird.

Regarding the few times that maint would require a shutdown for say a valve job, then go for a modular 2+n setup. Generac does mention very often that solution (using 2 smaller generators online sharing the load & 1 standby) is actually cheaper than using a single larger genset.

[mgoz]

I don't know about residential, but I had an investor that wanted me to help build a farm right next to a natural gas power plant they were building a couple of years ago. They were talking about < $0.01 kWh due to oversupply of shale gas plays. They lost interest once BTC price crashed in 2018. The natural gas industry has pretty much bulldozed through Pennsylvania over the last decade and they've only started to build the infrastructure to actually bring the gas to market. There is so much oversupply that they are turning import terminals into LNG export terminals and halting production to control prices.

[buwaytress]

I actually asked this back home!

Sharing the calculations we did.

Petrol is among the cheapest in my country (my state is the major producer) but I knew already that even at subsidised rates, diesel generators would not be profitable or even realistic, given heating problems especially (tropical) but natural gas (LNG) is really cheap (and supply is just much more than demand anyway because we don't have gas lines, yeah I know).

At about $8 per mmBTU (it is 20% if you somehow could apply for subsidised residential) that's about $0.008 per 1k BTU

If we estimate 1kW generator at full load takes about 13k BTU per hour = $0.104. Double your estimate but still cheaper than direct electricity, and would not raise any red flags on power grids... And using old generators, I'm pretty sure there are more efficient ones and probably also at higher loads.

[Steamtyme]

I did remember it coming up in the past, with NotFuzzyWarm generally doling out a good deal of useful information. Here's a couple of the topics from the past few years.

Free natural gas, is it worth it to use a Natural gas generator? Wonder if this ever got off the ground?
My Plan I don't think this ever went anywhere as they stopped signing in.

Either way it seems like a good investment for the right situation. The previous examples in 2017 and 2018 had a longer run time with a bit of certainty - Block reward. Now it's a little more precarious and the backup plan for revenue has to be a more solid concept as it may become Plan A sooner. I'm not sure what that would be but maybe building near a plant that you know could benefit from in house power generation. If the mining end falls short, it could be sold off as a cost saving measure possibly.