Condor Capital's Generator Buying Guide

Nov 20, 2012, 10:45 ET from Condor Capital

MARTINSVILLE, N.J., Nov. 20, 2012 /PRNewswire/ -- As the northeast continues to recover from Superstorm Sandy, the power outages that many experienced for days, or in some cases weeks, have almost everyone thinking about purchasing a generator for their home.  Before doing so, there are a few important things to keep in mind to ensure that the generator is the best one for you.  How long do you plan to stay in the home?  Do you want the generator to power only the essentials like the refrigerator and lights?  Or do you also want to power a central air conditioner?  In addition to answering these questions, there are some basic facts about generators that you should know.

All generators consist of a motor than burns fuel to create power and a generator head that turns power into electricity.  When deciding on a generator, the first decision one needs to make is which of the two types of generators to purchase: a portable or stationary unit.  Portable generators are usually smaller and less expensive than stationary generators but generate less power, usually somewhere between 3 – 8.5 kW.  Most portable generators have a built-in fuel tank and run on gasoline, which can't be stored well for long periods of time and have standard power outlets for use with ordinary extension cords.  A 3 – 4 kW portable generator will power a refrigerator, sump pump, TV, and several lights, while costing $400$800.  A 5 – 8.5 kW portable generator will also power a heating system, computer, second pump, and several more lights, and generally costs $500$1,000.  Usually, portable units don't generate enough electricity to power a home's central air conditioner.  If you're unsure of your kW needs, you should consult an electrician.

Stationary generators typically run on natural gas, propane, or diesel fuel and, while natural gas is preferred since it connects to the utility line and draws fuel when necessary, not all areas will have access to a natural gas line.  If a house doesn't have access to a natural gas line, propane is preferable to diesel fuel.  Stationary generators come in two basic designs: residential and commercial.  Residential units typically generate 10 – 20 kW, while commercial units generally start at 20 kW and although they can generate up to 500 kW, most small businesses require no more than 15 – 100 kW.  Besides the amount of power generation capacity, the main difference between residential and commercial stationary units is the cooling mechanism.  Like most portable units, stationary residential generators tend to be air-cooled, whereas most commercial generators are liquid-cooled.  While air-cooled generators cost less than their liquid-cooled counterparts, they produce more noise, are less efficient, and do not last nearly as long as liquid-cooled generators.  10 – 20 kW residential units will cost $4,000$8,000, while commercial units start at about $12,000 for a 20 kW unit and rise from there.

An additional cost to keep in mind for stationary units is the price to install the unit, which can run from $5,000 to $10,000, depending on how sophisticated the installation needs to be.  You will certainly need a professional electrician to install the transfer switch, which is a device that prevents your generator from feeding power back to the grid and reconnects the electric power from its primary source to a standby source.  Automatic transfer switches are more convenient than manual switches, but will cost more.  You will also need a plumber to connect the gas or propane line to the generator.  Luckily, there is a sizable secondary market for stationary commercial generators, so you can realize considerable savings by purchasing a used unit. 

It is important to know that, thanks to installation costs, the decision to purchase a smaller stationary unit may not necessarily save you money.  If you end up purchasing a unit that is too small to power your entire house, you either have to put in a subpanel – or a transfer switch with a subpanel – to isolate the powered from the non-powered breakers.  Alternatively, this can also be done using relays.  For more complex installations of undersized units, it may be cheaper to just buy the larger generator to reduce installation costs.  In any case, always put a transfer switch in with the main breaker or install an extra main breaker before the transfer switch for safety.

Another thing to remember is that there will be maintenance costs associated with the generator each year.  Oil and spark plug changes, as well as other regular maintenance, will help ensure the longevity of your generator.  For most air-cooled units, expect maintenance to run about $500 per year while liquid-cooled units will cost about $1,000 per year.  Larger liquid-cooled models can be considerably more expensive to maintain.       

So which generator is right for you?  If you're going to be living in your home for less than 7 – 10 years, it probably doesn't make financial sense to install a stationary commercial generator.  Instead, a residential unit may be the way to go, although it should be noted that used stationary residential generators don't make great investments since the air-cooled engines don't last as long and the installation costs are high.  For a larger home (4,000+ sq. ft.) with 200 amp service, figure on needing a 30 kW commercial generator to power the entire home, including central air conditioning units.  Ultimately, the generator you choose will be a function of your needs and what you can afford to spend upfront and on maintenance each year.   

When choosing a generator, look for ones with a two-year parts and labor warranty and keep in mind that some warranties only cover certain parts of the generator.  If you decide on a portable generator, always remember to keep the generator outside of the home to protect against carbon monoxide poisoning.   

Finally, some recommended models from Consumer Reports include the Troy-Bilt XP 7000 30477 and Generac GP5500 5939 among portable models.  For stationary generators, the Kohler 8.5 RES-QS7 and Generac CorePower 5837 models distinguish themselves among residential units, while Kohler and Onan models have strong reputations among commercial stationary generators.    

Condor Capital

Founded in 1988, Condor Capital is an employee-owned, SEC-registered investment advisor based in Martinsville, N.J. employing 15 professional and support staff. Since Condor is a fee-only investment management firm, its fees are based on portfolio size, not sales commissions or number of trades. For more information on Condor Capital, please visit or call 732-356-7323.

Ken Schapiro

SOURCE Condor Capital