How to Calculate Diesel Generator Running Costs

Diesel generators are widely used for backup power in homes, businesses, and industrial operations due to their reliability and fuel efficiency. However, while they provide dependable electricity, it’s essential to understand the running costs associated with their use. 

Knowing how to calculate these costs helps you manage fuel expenses, plan budgets, and make smarter energy decisions. 

How to Calculate Diesel Generator Running Costs - Step-by-Step Guide

Below are the step-by-step details to get you started on how to calculate diesel generator running costs.

Step 1: Determine the Generator’s Fuel Consumption Rate

The biggest contributor to diesel generator running costs is fuel consumption. Each generator consumes fuel at a different rate depending on its size, load, and efficiency.

Fuel consumption is usually measured in liters per hour (L/hr) and can be found in the generator’s user manual or specifications sheet.

Here’s a rough estimate of average fuel consumption based on load:

• 25% load: 0.8 liters/hour per kVA

• 50% load: 1.4 liters/hour per kVA

• 75% load: 2.0 liters/hour per kVA

• 100% load: 2.7 liters/hour per kVA

For example, if you have a 50 kVA generator running at 75% load, the fuel consumption would be:

50 × 2.0 = 100 liters/hour.

Step 2: Calculate the Fuel Cost Per Hour

Once you know how much fuel your generator consumes, you can calculate the fuel cost per hour using the current diesel price.

Formula:

Fuel Cost per Hour = Fuel Consumption (L/hr) × Diesel Price per Liter

If diesel costs $1.20 per liter and your generator uses 100 liters per hour, then:

100 × $1.20 = $120 per hour

This is the most significant cost factor in generator operation.

Step 3: Include Lubrication and Oil Costs

Diesel engines require regular oil changes to function smoothly. Over time, oil lubricates moving parts and collects contaminants that can damage the engine.

Oil costs depend on how often you change it and how much oil the engine uses. A general rule is to change the oil every 100–150 hours of operation.

For example:

• Engine oil cost per change: $60

• Oil filter: $15 

If you change oil every 100 hours, your oil cost per hour would be:
($60 + $15) ÷ 100 = $0.75/hour

This may seem small, but it adds up over time.

Step 4: Add Maintenance and Servicing Costs

Regular maintenance ensures your generator stays efficient and reliable. Maintenance costs vary depending on usage and service type — from routine inspections to full overhauls.

• Routine service (every 250 hours): $100–$200

• Major service (annually or every 2,000 hours): $500–$1,000

If you average these costs over operating hours, you can estimate:
Maintenance cost per hour = Total annual service cost ÷ Total annual operating hours

Example:

If you spend $1,000 yearly on maintenance and run the generator for 1,000 hours, your cost per hour is:

$1,000 ÷ 1,000 = $1/hour

Step 5: Factor in Depreciation and Replacement Costs

Like any machinery, diesel generators lose value over time due to wear and tear. The average lifespan of a well-maintained diesel generator is 10,000–30,000 hours, depending on quality and usage.

If your generator costs $20,000 and lasts 20,000 hours, the depreciation cost per hour would be:

$20,000 ÷ 20,000 = $1/hour

This cost helps you account for the eventual replacement of the generator.

Step 6: Add All Costs Together

Now that you have fuel, oil, maintenance, and depreciation costs, you can find your total running cost per hour:

Total Running Cost = Fuel Cost + Oil Cost + Maintenance Cost + Depreciation Cost

Using the examples above:

• Fuel Cost = $120/hour

• Oil Cost = $0.75/hour

• Maintenance Cost = $1/hour

• Depreciation Cost = $1/hour

Total = $122.75/hour

This means your diesel generator costs approximately $122.75 per hour to operate at 75% load.

Step 7: Optimize for Efficiency and Savings

While you can’t eliminate running costs, you can reduce them with smart maintenance and usage practices:

• Run at optimal load (60–80%) to maximize fuel efficiency.

• Perform regular maintenance to prevent expensive repairs.

• Keep filters clean to improve engine performance.

• Use high-quality diesel to avoid clogging and fuel waste.

• Install an automatic load management system to regulate output.

Even small improvements can significantly lower your overall running costs.

Conclusion

Calculating diesel generator running costs helps you understand the true expense of operating your power backup system. By accounting for fuel, oil, maintenance, and depreciation, you can accurately estimate your hourly, daily, or annual operating costs.

Keeping track of these numbers not only helps in budgeting but also identifies opportunities for cost savings through efficient operation and timely servicing. In the long run, this proactive approach ensures your diesel generator delivers reliable power — without draining your wallet.