Microgrid Backbone Generation Assets, Part 1: Gen-Sets

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Editor’s Note: Here’s another great guest post from the crew over at Riverview Consulting. I’ve been wanting to get more coverage of microgrids on CleanTechnica, since microgrids are fascinating and increasingly useful (even GM is getting into the microgrid action), so I’m glad the excellent folks over at Riverview Consulting are tackling this and offering up their articles as reposts.

By JJ Augenbraun and the Riverview Consulting Team

Note: This is Part One of a three-part series that will address several options for backbone generation in a microgrid. This post will focus on generator sets, a traditional form of auxiliary power. The second and third parts of the series will focus on up-and-coming alternatives: microturbines and fuel cells.


Last week a major blackout cut a wide swath across Cambridge, MA, where I live. As I left the bright lights of Boston and biked across the Longfellow Bridge on the way home from work, the transition to the darkness of Cambridge was quite stark. Other than the lights of the cars stuck in bumper-to-bumper traffic caused by the disabled traffic lights, the streets were pitch black. Seeing Massachusetts Avenue in total darkness was eerie, and I was not looking forward to the possibility of a cold evening in my electrically heated apartment.

However, as I turned into my building’s driveway, I saw the welcoming glow of lights from the building’s windows and heard the deep rumble of two large diesel generator sets unobtrusively situated in the corner of the parking lot. Considering that I do not live in a luxury apartment building, I was a bit surprised by this unexpected amenity, and I am still trying to figure out why the management company spent money on providing full standby power for the ~120 units in the building. Grid power was restored after only a few hours, so the generators were somewhat unnecessary in this case, but it is nice to know the building has them.

A picture of a typical diesel gen-set. The engine and generator are housed inside a protective enclosure.


These types of generators, technically known as generator sets or gen-sets, are not only for emergency standby power. They can also be used as a form of backbone power generation for a microgrid. (In fact, so-called “wind-diesel” systems are common in many remote communities throughout the world from Mongolia to Alaska – see for instance this paper from NREL: http://www.nrel.gov/docs/fy02osti/31755.pdf)

We start with a brief overview of what a generator set is and how it works before delving more deeply into how a gen-set can be integrated with a microgrid. I will then provide a brief analysis of the main types of 100+ kW gen-sets (diesel, natural gas, and propane). This post, along with the two that will follow in this series, is intended to provide readers a starting point for understanding the tradeoffs among different backbone generation assets for a microgrid.

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What is a Generator Set?

A gen-set at its most basic level consists of a prime mover connected to a generator. The prime mover (engine) converts the energy stored in fuel (fossil fuels like diesel, natural gas, propane, gasoline, coal or biomass like wood pellets or straw) into mechanical energy that turns the generator crank to produce electricity. As the load on the generator increases, more fuel is fed to the prime mover to match the supply of electricity with the demand for electricity. The concept behind a gen-set dates back to the early 1800s when Michael Faraday discovered the principle of electromagnetic generators that is now known as Faraday’s Law.

The diagram below provides an excellent overview of the main components of a typical gen-set:

A diagram of the main components of a gen-set. Source: http://www.dieselserviceandsupply.com/How_Generators_Work.aspx

The vast majority of gen-sets installed around the world are “backup” generators used to supply power to a single building in the event of a grid failure. Most of these gen-sets are “dumb” in the sense that they do not interact with the grid and only run when the grid goes down, or when they are given their annual checkup. These standby gen-sets run for just a few hours per year, sitting idly by for the other 8,000+ hours per year. This represents an enormous asset (capital expenditure plus fuel inventory) sitting idle on institutional balance sheets – and unused even as “reserves” for the grid. As energy markets mature, these backup generators may evolve into valuable generation assets that can be monetized by their owners.

By incorporating a gen-set into a microgrid, the gen-set can interact with the grid and is no longer “dumb.” This “smart” generation asset can now dynamically interact with the grid, ensuring higher electricity reliability for loads on the microgrid and also providing a source of revenue throughout the year by enabling participation in a variety of demand response programs.

Integrating a Gen-Set with a Microgrid

Every microgrid must be built on some form of backbone (or “baseload” or “dispatchable”) generation capacity to ensure power is available when needed. Renewables like wind and solar are great, but they are not fully dispatchable. Batteries are dispatchable, but they are also very expensive at this time – it’s much cheaper to store energy in a gas tank or a pipeline.

Therefore, most microgrids incorporate one of three forms of dispatchable generation: gen-set, microturbine, or fuel cells. As long as these units have access to fuel and are properly maintained, they can operate for many years (although as Hurricane Sandy reminded us, getting gasoline or diesel can sometimes be a challenge even in New York!).

Given the wide range of gen-set sizes (10 kW up to 1,000+ kW) and the relatively low upfront cost ($300-$600/kW installed), gen-sets are a popular choice for the backbone of a microgrid. One or more gen-sets can be incorporated into a microgrid as required to meet the expected load. These gen-sets can then be supplemented with renewable energy generation assets, and the (expensive) battery portion of the system can be reduced substantially. When renewable energy is available, the microgrid control software intelligently decreases the load on the gen-sets to allow for electricity from the more efficient forms of generation to flow.

Diesel vs. Natural Gas vs. Propane

Gen-sets in the ~100 kW size are most commonly fueled by one of three fuels: diesel, natural gas, or propane. However, for any gen-set larger than approximately 200 kW, the only real fuel choices are diesel and natural gas. Propane simply does not have the energy density (like diesel) or the extensive network of pipeline distribution (like natural gas) to make it an attractive choice for gen-sets much larger than ~150 kW. The frequency of fuel deliveries and the size of the fuel storage tank for gen-sets larger than ~150 kW would make such a gen-set a poor choice. However, for small standby gen-sets for individual homes, a propane gen-set is an excellent choice.

In deciding between a natural gas and a diesel gen-set there are several key factors that should be considered. First and foremost, is the availability of fuel. In some cases, natural gas is simply not an option because the site may not have access to a natural gas line. However, when natural gas is available, it will often provide a more secure and reliable source of fuel in the event of a regional natural disaster that may significantly disrupt road transportation and consequently the delivery of diesel. As we saw in Hurricane Sandy, the natural gas network suffered minimal disruption while diesel and gasoline supplies were significantly limited in certain portions of the Northeast. To provide extra reliability, a dual fuel gen-set could be used with natural gas as the primary fuel and diesel as a secondary fuel (with a limited amount of diesel stored on site in the event that natural gas delivery is disrupted).

A second factor to consider is the capital expenditure of the gen-set. Although each installation will vary in cost, a reasonable estimate for both natural gas and diesel gen-sets is in the $300 – $600/kW installed range for a gen-set of 100+ kW (based on data from this Department of Defense microgrid study). The difference in price for comparable natural gas and diesel gen-sets for a given site will likely be insignificant.

Third, operational expenditures (primarily fuel cost) should be considered. Based on a survey of the specifications for natural gas and diesel gen-sets, I created the following chart comparing the average cost of fuel per kWh:

A comparison of the fuel cost to generate a kWh of energy from diesel and natural gas based on a variety of fuel prices.

As the chart illustrates, the fuel cost per kWh for a natural gas gen-set is almost on par with the price of retail power! (Of course, this is not a full LCOE analysis, but that is beyond the scope of this blog post). Interestingly enough, the efficiency, defined as energy out divided by energy in, of an average diesel gen-set (33.5% efficient) is significantly higher than the efficiency of an average natural gas gen-set (25.0% efficient).

One should note that shale gas has caused the spot price for natural gas in the US to fall dramatically in the past two years (currently about $3.50/mCF). Regardless, enormous price movements on both sides would be required before the fuel cost of generating a kWh of energy from a natural gas gen-set would ever be equivalent to one from a diesel gen-set.


In many areas of the US, based on excellent fuel availability and low operating costs, a natural gas gen-set is the technology of choice to serve as a backbone generation asset for a microgrid. A natural gas gen-set also provides the added benefit of producing less greenhouse gas (GHG) emissions. In the next blog post, I will explore microturbines in the context of backbone generation for a microgrid and how they compare to using a natural gas gen-set.

Maybe the town of Cambridge, MA will put one in, and it will be easier for me to bike home next time there is a blackout!

If you have any questions about the topics discussed in this blog post or how Riverview can help your organization explore microgrid options, please send us an email: info@riverviewconsultinginc.com

-JJ Augenbraun and the Riverview Consulting Team

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Zachary Shahan

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