If you’ve ever stood on a job site at 2 a.m. when the grid dies, or helped a small business owner keep their refrigerated inventory from spoiling during a storm, you know how critical a reliable generator set is. For 12 years, I’ve built and sold generator sets—first as a technician, now as a supplier—and over that time, one question comes up more than any other: “Should I run my genset on an alternative fuel instead of diesel?” Generator Set
I get it. Diesel has been the workhorse of backup power for decades. It’s easy to find, it packs a lot of energy into a small tank, and people trust it. But over the last few years, alternative fuels—natural gas, propane, biodiesel, hydrogen—have stopped being a niche gimmick and started feeling like a real option. Every week, a new customer stops by our lot or calls to ask about switching. Some want to cut costs, some want to lower their carbon footprint, and some just got tired of waiting for diesel deliveries during a pandemic or a hurricane. But no one has the full picture, and honestly, neither did I until I installed and serviced every type of genset fuel system you can imagine.
Today, I want to break down the pros and cons of alternative fuels for generator sets, straight from the perspective of a guy who works with these machines every day. No fancy jargon, no sales pitches (well, a soft one at the end), just what I’ve seen, what my customers have lived through, and what the data actually says.
The Big Pros of Alternative Fuels for Gensets
Let’s start with the good stuff. The benefits are real, but they don’t apply to every scenario—here’s where they shine.
Lower Long-Term Operating Costs (When It Makes Sense)
I don’t mean the sticker price of fuel at the pump (though that matters too). I mean total cost over time, and that’s where alternative fuels pull ahead a lot of the time. Take propane, for example. A lot of people don’t realize that if you already have a gas line running to your home or business, adding a propane genset is almost plug-and-play. Our customer who runs a 24-hour grocery store in suburban Cleveland had a diesel genset that cost him $450 a month in fuel during peak winter. He switched to a propane genset tied to his existing tank, and his monthly fuel bill dropped by $180. That’s a big chunk of change for a small business.
Biodiesel is another one. It’s made from vegetable oil and animal fat, so it’s domestic for the most part—no more worrying about supply chain issues when a shipping lane gets blocked. I had a landscaping company customer who used to spend $1,200 a week on diesel for their portable gensets on job sites. They switched to B20 biodiesel (20% biodiesel, 80% petroleum diesel) and saved about $210 a week. The price per gallon is slightly higher than regular diesel right now, but when you factor in federal tax credits for using alternative fuels, that gap shrinks fast. And here’s a big one: biodiesel is less likely to gel in cold weather than diesel, so our Minnesota customers tell us they don’t have to fight cold starts as much in January.
Natural gas is the king here for large-scale backup. A hospital in Detroit we equipped uses a 500kW natural gas genset, and their fuel bill is 30% lower than it was with their old diesel unit. Because natural gas pipelines are widespread, they never have to worry about running out of fuel during a power outage—something that happened twice when they were on diesel in 2019 and 2020. That peace of mind alone is worth the extra cost for a lot of critical facilities.
Better for the Environment (If You Pick the Right Alternative)
Let’s be honest: climate change is no longer a distant threat. My 16-year-old son’s high school has mandatory recycling, and the construction industry my cousin works in is getting pressured by clients to cut emissions. Alternative fuels deliver here, but not all of them are created equal.
Biodiesel cuts greenhouse gas emissions by 50 to 80% compared to petroleum diesel, according to the EPA. That’s a number I’ve seen in our own data—customers who switch to biodiesel report a noticeable drop in black smoke coming out of their exhaust, which is great for their neighbors, their workers, and the environment. Propane and natural gas gensets also burn cleaner than diesel. The same Cleveland grocery store I mentioned earlier cut their nitrogen oxide (NOx) emissions by 25% and particulate matter by 30% when they switched to propane. The air quality around their store is better, and they qualified for a local green business tax credit, which saved them another $1,200 a year.
Hydrogen is the wild card here. It emits zero tailpipe emissions when burned in a genset—only water vapor. We’ve installed a couple of small hydrogen gensets at rural data centers, and while they’re still in the testing phase, the feedback so far is that their carbon footprint is almost negligible. The catch is that hydrogen fuel is still expensive and hard to source in most parts of the U.S., so it’s not a practical choice for most customers right now.
Increased Reliability and Convenience
Diesel has a weakness everyone who’s ever lived through a storm knows about: supply shortages. When a hurricane hits Florida or a winter storm hits Texas, diesel pumps run dry within hours. I’ve had customers in Tampa who waited three days for a diesel delivery during Hurricane Ian in 2022—by that time, their backup power had already failed. Alternative fuels don’t have that same problem if they’re tied to a pre-existing infrastructure. If you have a natural gas line or a propane tank on-site, you don’t have to chase deliveries during an outage. Our customers with on-site propane tanks never wait for fuel—they just keep the tank filled during normal times, so when the grid goes down, their genset is ready to go.
Another reliability win is for standby applications. Diesel gensets need regular maintenance to keep their fuel from gelling or going bad if they sit unused for long periods. A lot of small business owners only test their gensets once a month, and if they’re on diesel, they have to drain the fuel and replace it every year to keep it from clogging the engine. Alternative fuels like propane and natural gas don’t degrade nearly as fast. We did a test last year where we left two gensets running on different fuels for six months without use. The diesel unit had fuel that was 30% less energy-dense, and it took three tries to start when we tested it. The propane unit started on the first crank, just like it was brand new. That’s a huge deal for anyone who relies on backup power that needs to work immediately—no time to troubleshoot a clogged fuel line.
Lower Maintenance Costs (Most of the Time)
I used to service diesel gensets 10 years ago, and I can tell you: the fuel lines, injectors, and filters on diesel units get clogged all the time. Alternative fuels burn more cleanly, so they leave less residue in the engine. A restaurant customer in Chicago that switched to biodiesel last year spent half as much on engine maintenance as they did with diesel. Their service intervals went from every 200 hours to every 400 hours, which means less downtime and less money spent on parts and labor.
Propane and natural gas gensets have even fewer moving parts in the fuel system. We’ve had a few customers who have run their propane gensets for 10 years with only minor tune-ups, compared to a diesel unit that needs an injector replacement every three years. That’s another big plus for long-term ownership.
The Not-So-Great Cons of Alternative Fuels for Gensets
Now, let’s get real—alternative fuels aren’t perfect. If I only told you the good stuff, I’d be doing you a disservice. I’ve seen way too many customers buy into the hype and end up with a genset that doesn’t work for their needs.
Higher Upfront Costs
This is the biggest one. A basic 20kW diesel genset for a small home or business costs around $6,000, installed. The same size genset running on propane is $8,000 to $9,000, and a natural gas unit is even more—around $10,000 for a comparable model. For larger units, the gap is even wider. A 500kW diesel genset is about $50,000 installed, while a natural gas unit is $70,000. Why? Because the fuel systems for alternative fuels are more complex—they have to handle different pressure levels, different combustion rates, and different storage requirements.
I recently had a customer who runs a small warehouse in Indianapolis come to me. They wanted to switch from diesel to natural gas because of lower fuel costs, but the upfront cost to run a natural gas line to their property was $15,000 on top of the genset. Even with the lower fuel bills, it would take them 10 years to recoup that cost. They ended up sticking with diesel for now, and they’re waiting for the local gas company to expand lines to their area. Upfront cost isn’t a dealbreaker if you have the capital, but it’s a major barrier for small businesses and homeowners on a budget.
Limited Availability and Infrastructure
I touched on this earlier, but it’s worth repeating. While natural gas lines are common in most urban and suburban areas, rural areas often don’t have access to natural gas pipelines. Propane is more widely available in rural areas, but you have to store it in large tanks on your property, which takes up space and requires regular refills. Biodiesel is available at most gas stations now, but not every station has it, and in remote areas, you might have to drive 50 miles to find a pump with B20 or higher.
Hydrogen is the worst for availability right now. There are only a handful of hydrogen fueling stations in the entire country, so unless you’re located near one, a hydrogen genset is basically a paperweight right now. We had a customer in Wyoming who bought a hydrogen genset as a “future-proof” solution, but they still can’t get hydrogen delivered to their site, three years later. It’s a cool technology, but it’s not ready for mainstream use yet.
Lower Energy Density (Which Means Less Power Per Gallon)
Diesel is one of the most energy-dense fuels we have—one gallon of diesel has about 138,000 BTUs of energy. Compare that to propane, which has about 91,500 BTUs per gallon, and natural gas, which is only about 1,020 BTUs per cubic foot (so a gallon of natural gas equivalent has around 100,000 BTUs, tops). What does that mean in real terms? You need a bigger tank to get the same amount of power, or you’ll run out of fuel faster.
For example, a 20kW diesel genset will run for about 10 hours on a 50-gallon tank. A 20kW propane genset will only run for about 7 hours on the same size tank. If you need power for a long outage, that means you’ll have to refuel your propane genset more often, which is a hassle. For a large commercial genset, that can mean needing a much bigger fuel tank, which takes up space and adds to the upfront cost. I had a grocery store in Detroit that switched to a propane genset, and they had to double the size of their outdoor tank to keep enough fuel on hand for 24-hour outages. That added $3,000 to their installation cost.
Cold Weather Performance Issues
I mentioned earlier that biodiesel doesn’t gel as easily as diesel, but that’s not true for all alternative fuels. Propane and natural gas can have issues in very cold temperatures. When the temperature drops below 20 degrees Fahrenheit, propane can start to vaporize poorly, which means the genset might not start or might run rough. We had a customer in northern Minnesota who bought a propane genset for their cabin, and on the first night it got below 10 degrees, the genset wouldn’t start. We had to add a heating element to the propane line, which cost them $500 extra and required more maintenance.
Natural gas gensets have similar issues in extreme cold. The gas can condense in the lines if they’re not properly insulated, which can cause pressure drops and engine stalling. That’s a big problem for anyone in northern climates who relies on backup power during the winter.
Emission Regulations and Certifications
Believe it or not, alternative fuels come with their own set of regulatory hoops. Most areas have strict emission standards for generator sets, and even though alternative fuels burn cleaner than diesel, you still have to make sure your unit is certified for your area. For example, some states in California require gensets to meet very low NOx emissions standards, and while natural gas gensets meet those standards, not all propane gensets do. If you buy a propane genset that’s not certified for California, you can’t legally use it there, no matter how cheap it is.
We had a customer in Los Angeles who bought a cheap uncertified propane genset online, and when we tried to install it, we found out it didn’t meet the city’s emission rules. We had to take it back and upgrade to a certified model, which cost him an extra $2,000 and a week of waiting for delivery. That’s a costly mistake a lot of people make when they shop around without checking local rules.
So, Who Should Use Alternative Fuels for Their Generator Set?
Let’s cut to the chase. Alternative fuels aren’t right for everyone, but they’re a great choice for certain groups:
- Critical facilities: Hospitals, data centers, and 24-hour grocery stores that need reliable backup power and can afford the upfront cost. The lower long-term fuel costs and no-delivery-during-outage benefit makes them worth it.
- Businesses in areas with strict emission rules: Restaurants, hotels, and offices that want to lower their carbon footprint and qualify for green tax credits.
- Customers with pre-existing infrastructure: If you already have a natural gas line or a large on-site propane tank, the upfront cost of switching is much lower, so the savings add up fast.
And who should stick with diesel?
- Homeowners and small businesses on a tight budget: The upfront cost of alternative fuels is usually too high to justify, unless you’re planning to keep the genset for 10+ years.
- Customers in rural areas with no natural gas or propane infrastructure: Unless you’re willing to invest in a large propane tank and regular refills, diesel is still the most reliable option.
- Anyone in very cold climates without proper heating for fuel lines: The cold weather issues with propane and natural gas can make them more trouble than they’re worth in places that regularly drop below 0 degrees.
A Final Note From a Generator Set Supplier
After 12 years in this business, I’ve learned that there’s no “one-size-fits-all” when it comes to generator sets. Diesel will always have a place—tough, reliable, and ready to go when you need it most. But alternative fuels have come a long way, and for the right customer, they offer real benefits: lower long-term costs, lower emissions, and more reliable power during outages.
If you’re trying to decide whether to switch to an alternative fuel for your generator set, don’t just listen to the sales pitch. Talk to someone who’s actually lived with the setup. We’ve installed hundreds of gensets over the years, and we know what works (and what doesn’t) in every scenario. We can walk you through the numbers, help you compare upfront costs to long-term savings, and make sure you pick a unit that fits your needs, your budget, and your local rules.
If you’re ready to talk through your options, we’re here to help. Whether you’re a small business owner looking for a backup for your shop, a hospital needing a new primary power source, or a homeowner trying to prepare for storm season, we’ll give you honest, no-pressure advice.
References
Commercial and Industrial Energy Storage System Environmental Protection Agency. (2023). Biodiesel Basics. EPA Office of Transportation and Air Quality.
U.S. Energy Information Administration. (2024). Alternative Fuels Data Center: Generator Set Emissions.
National Fire Protection Association. (2022). NFPA 110: Standard for Emergency and Standby Power Systems.
Propane Education & Research Council. (2023). Propane Generator Performance in Extreme Temperatures.
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