Why does it cost so much to install a generator?
Why generator installation costs are high
Buying a generator is a significant investment that often requires careful financial planning. There are ways to reduce the cost of a generator, but the final price tag is still high: usually about $12,250 to $27,150 upfront for a medium-sized house, plus $165 to $485 per year in maintenance and repair costs. What many people don’t realize is that a large chunk of the price tag comes down to the generator installation cost.
Though the exact cost of installation depends on a number of factors, including the amount of skilled labor, materials, and overhead that goes into the installation of the generator, a good rule of thumb is that it usually costs about 75% of the cost of the generator to install it. That means that if the generator itself costs $10,000, it would cost about $7,500 to install it for a total of $17,500.
There are a number of reasons why generator installation costs are so high. A lot of it has to do with the amount of expertise, labor, and materials that go into safely installing and connecting a generator to a home’s electrical system. This article explains the factors behind the high generator installation costs. For more information on how much your generator is likely to cost, try out AlltimePower’s free generator pricing calculator. Our estimates are all-inclusive, meaning they include every part of the generator installation process.
The manpower behind the generator installation cost
Installing a backup generator in your home is not as simple as unloading the engine in your yard and plugging it into the nearest outlet. Installing a backup generator in your home is more like installing a car engine in the hood of your car: it has to be done exactly right. Generators are complex works of engineering, and safely and effectively connecting it to your home’s electrical system takes a lot of work and skill.
Before the generator is installed, a foundation of concrete or compressed gravel must be built. This often involves leveling the surface of the yard because a tilt of just a few degrees can harm the engine. The platform must be above ground level to prevent the engine from sucking in leaves, dirt, or water, which would cause interior damage. During this stage, the installation crew may also need to dig a trench for wiring or gas lines, which would also add to the generator installation cost.
Installing the foundation would take two men at least an hour to complete, longer if leveling or trenching needs to be done. Afterward, the generator unit must be driven to your home and carefully transported to the raised platform. It must be set in place and secured so that it will not be moved by strong winds or other forces. This stage would also take two men at least an hour to complete.
Gas lines and electrical wiring
Depending on what kind of fuel the generator runs on, you may need to hire a certified gas professional to connect the gas lines to those of the house. This is usually required for generators that run on natural gas. Connecting and securing gas lines is complicated and can take up to 6 hours. The gas professional must also run some tests of the gas service to the home while running the generator to ensure the pressure is correct.
Once the gas lines are secured, a certified electrician must connect the generator’s wiring to that of the house. The wiring must be properly sized and, for the electrician’s safety as well as yours, it must be protected by a secured conduit. Wiring the home involves a number of substeps, including installing a subpanel, moving circuits, mounting a transfer switch, and installing the control wiring and sub-feeder. It may take 6 to 8 hours to complete.
If the electrician has to make electrical upgrades to your house before wiring the generator, it may take more than 8 hours to complete. For example, if the home has a fuse box instead of a circuit breaker, the electrician may have to upgrade the home to a circuit breaker in order for the generator to run properly. Before buying a generator, it’s a good idea to consult with an electrician to see if any electrical upgrades would need to be done and how much they would add to the generator installation cost.
Testing the generator
Once the generator is installed and the wiring is complete, there’s still one more step that needs to take place: testing. Generators may be able to run right out of the box, but just like any engine, they need to be calibrated and adjusted in order to work properly and safely. Testing the generator involves checking and adjusting the voltage, testing the circuit breaker, and checking to see how the generator performs at full capacity, among other things.
Though it may sound like a simple task, testing must be completed by a certified generator professional. That means it can’t be done by just any electrician. If your electrician performs the testing, he must have been trained and certified on the unit because different generator units require different specialized knowledge. The professional will likely spend about 2 hours on this stage of the installation process.
In total, installing a backup generator requires about 18-20 hours of work by certified electricians and 6 hours of work by a certified gas professional. That’s a significant amount of specialized labor. Though the hourly wage varies based on location, the average pay for a skilled and specialized electrician is about $35 an hour in the United States. That would amount to at least $840 to $910 for labor alone. If additional hours are needed to level the ground or upgrade the home’s electrical system, this number could be higher.
The materials necessary for generator installation
Of course, more goes into installing a generator than skilled labor. You must also take into account the equipment and materials that add to the generator installation cost. The pipe, wire, conduit, stone, concrete, compressed gravel, wood, fittings, conduit, and other materials will add hundreds of dollars to the total cost. All of these materials are needed to put the generator in the ground and attach the pipelines and electrical wiring to those of the house.
In addition to the raw materials, you will likely need to pay for some technical equipment. For example, the electrician will need to install circuit breakers to protect your home’s electrical circuits from damage that can be caused by a short circuit or an overload. He will also need to install a subpanel, which will help distribute power from the generator to the home. Finally, if you live in an area where temperatures routinely fall below freezing, you may need to have a carbonator heater installed. This device keeps cold weather conditions from disruption generator operations.
The cost of this additional equipment varies, but you can expect it to add up to $1000 to the total generator installation cost. Unfortunately, the cost doesn’t stop there. You’ll also need to anticipate an upcharge for the overhead. For example, transporting the generator from the factory to your home involves fuel costs as well as the use of a truck. Other possible overhead costs include permits, licenses, training, insurance, and office expenses. These can cost anywhere from a couple hundred to over a thousand dollars. On top of all of that, the company expects to make a profit from each generator installation, so you can attribute any additional cost to the company’s profit margin.
Financial planning for the generator installation cost
As you can tell, buying a generator involves more than the cost of the generator itself. You’re also paying for hours of skilled labor, materials, and overhead that go into the generator installation cost. Because installing a generator is such a high investment, you may need to do some financial planning before making the purchase. Just as you would save up before buying a car or another expensive piece of equipment, you should set aside some money every month in anticipation of buying the generator.
Alternatively, you can find a financing option that fits your financial goals. Try to find a plan with a lower interest rate, even if that means paying off the generator more quickly. Some companies, such as Generac, offer a no-interest monthly plan if you pay off the generator within 18 months after you purchase it. If you’re unsure about what your financing options are, contact a dealer’s representative. Never complete a purchase without fully understanding the financing plan.
Lastly, you will want to make sure you find a generator dealer that meets your budget. Different dealers offer different rates for similar generators, so you may want to shop around to find the best option. If you want to find out how much buying a generator will cost you, including the generator installation costs, you might find AlltimePower’s free generator pricing calculator helpful. Our estimates include every part of the generator installation process. Once we give you an estimate, you’ll have the option to allow generator dealers in your area to compete to give you the lowest cost for a new generator.
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