Costs and Risks Involved in Generator Purchase

By Austin Bredow, Joe DuTemple and Larry Dykstra  
OTHER PARTS OF THIS ARTICLEPt. 1: Back-Up Generator Meets Demand for Continuous Availability of PowerPt. 2: This PagePt. 3: Others Ways for Improving Power Reliability Include ATS, UPSPt. 4: Power Reliability Showcase Products

While there are compelling reasons to install a generator in numerous applications, there are additional costs and risks associated with the generator design that must be considered prior to installation. They include issues related to infrastructure, maintenance, and liability, as well as planning for the installation itself.

Generator-associated capital expenses will include structural, mechanical, electrical, monitoring, and construction costs. A generator, with its supporting MEP (mechanical, electrical, plumbing) systems, can take up as much as 2,000 to 3,000 square feet that could otherwise be used as rentable space. Depending on the building's layout, the immediate surroundings, and location, it is often preferable to install the generator outdoors to reduce some of these costs.

Generator-associated operational expenses include regular testing, preventive maintenance, and fuel replacement. Generators should be exercised on a monthly or weekly basis to ensure proper operation. If the generator uses diesel fuel, it will require additional maintenance, as the fuel must be both treated and replenished regularly.

The life expectancy of a generator, if well maintained, can be 20 years or more. The owner should establish a maintenance contract or regular service agreement with the generator manufacturer or a third-party vendor to maximize its useful life.

In the event a landlord provides and maintains a generator on behalf of a tenant, it should be understood that the landlord is assuming some level of liability, since he or she is taking on responsibility for delivering and maintaining backup power to the tenant's expectations. A service contract between the landlord and the tenant will be key to defining the risks and liabilities associated with the agreement. Some questions that may need to be answered upfront include: What recourse does the tenant have if the generator does not start? Can the tenant legally target the building for a system failure?

Similarly, before engaging in the agreement, the tenant will want to know the age of the generator, the electrical capacity, and its current condition. In some cases, the building owner/operator may want to consider installing multiple generators to provide additional capacity and reliability.

Installation Considerations

Planning for a generator's space and infrastructure requirements will be paramount to ensuring a successful installation. For example, sometimes a generator's space provisions are accounted for in the design, but the available MEP systems are insufficient. As an example, this may necessitate modifying the core and shell mechanical systems to allow for enough make-up air to be brought into the generator room for heat removal and proper combustion.

Fuel storage and the logistics surrounding refueling must be considered. Will the fuel be pumped from an offsite location? Can it be brought in via multiple 55-gallon drums? Does the local authority having jurisdiction limit the size of the fuel tank? Is it more feasible to install a natural gas type generator?

Additionally, certain regulatory bodies (e.g., the U.S. Environmental Protection Agency or the local authority having jurisdiction) and insurance underwriters have their own requirements that must be adhered to that can impact the generator's exhaust requirements, necessitate local sound attenuation, or require protections against fuel leakage — just to name a few.

Access to reliable electrical service is becoming increasingly important to a growing number of businesses and tenants. Improving the power reliability of any building or tenant space can be a key market differentiator for a building owner. A thorough analysis should be performed to understand the local code requirements as well as the demand for this level of backup by existing and potential tenants. The cost of ownership of the generator must also be considered to determine the required capital improvement costs and ongoing operational costs to maintain this high level of service.

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  posted on 4/17/2015   Article Use Policy

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