If you're spending more than £3,000 a month on nitrogen cylinders, you've probably had someone try to sell you an on-site generator. The case is straightforward in principle: generated nitrogen costs a fraction of cylinder supply per cubic metre once you're above the break-even consumption level. The part that gets glossed over is what the break-even actually looks like once you include all the costs properly.
Here's how to work it out for your situation.
The real cost of cylinder supply
Nitrogen cylinders are low-commitment and genuinely simple. You order, they arrive, you use the gas, empties get collected. No capital equipment, no maintenance programme, no compressed air requirement.
The cost per cubic metre is high, typically £3-8 depending on your contract terms, location and whether you're on a high-pressure or liquid supply. For low consumption, fewer than 50 cylinders per month, this is almost certainly the right model. The capital cost of any generator would take years to recover at that consumption level.
Beyond that threshold, the economics start shifting. The question is where exactly.
How PSA generators work and what they cost to run
PSA (pressure swing adsorption) generators produce nitrogen by passing compressed air through beds of carbon molecular sieve, which selectively adsorbs oxygen. The output ranges from 95% to 99.999% purity depending on settings and flow rate.
Capital cost for a medium-consumption generator system, including the compressed air treatment required upstream, typically runs £15,000-40,000 installed. Running cost is primarily electricity consumed by the compressed air compressor feeding the generator.
The produced cost per cubic metre at typical efficiency comes to roughly £0.30-0.80 depending on your electricity rate, system efficiency and the purity you're running at. That's against £4-6 per cubic metre for cylinders, a substantial difference once the capital is recovered.
The catch that often gets undercooked in the sales presentation: a PSA generator at 99% purity consumes 3-4 cubic metres of compressed air per cubic metre of nitrogen produced. At 99.9% purity, that rises to 8-10 cubic metres of compressed air per cubic metre of nitrogen. If your existing compressor doesn't have that capacity to spare, you need either a dedicated generator compressor or additional capacity, which changes the capital cost considerably.
The break-even calculation done properly
Rough guide: if you're consuming more than 150-200 cylinders per month at more than £4 per cubic metre, on-site generation typically pays back in 18-36 months. Below 100 cylinders per month, the capital cost per cubic metre of generated nitrogen usually exceeds or matches cylinder supply when you account for maintenance, desiccant replacement and compressed air.
The number that matters is total annual cylinder spend. If that's above £25,000-30,000 per year, it's worth modelling properly. Below £15,000 per year, cylinder supply is almost certainly more cost-effective.
Purity: the variable that changes everything
Most general industrial nitrogen applications, laser cutting assist gas, inerting, purging, modified atmosphere packaging, work perfectly well at 99-99.5% purity. Food packaging and some chemical applications require 99.9% or higher.
The generator cost and compressed air consumption at 99.9% versus 99% are meaningfully different. If you're close to the break-even point at 99.9% but clearly justified at 99%, find out what your process actually requires before committing to the higher-purity specification. Get the technical requirements from the equipment manufacturer, not from the assumption that maximum purity is safest.
Membrane generators: the alternative worth knowing about
For lower purities (95-99%) and smaller volumes, membrane generators are an alternative to PSA. They have no moving parts beyond the compressed air supply, are more compact, and are simpler to maintain. The yield per unit of compressed air is lower than PSA, so running cost per cubic metre is higher, but lower capital cost and simplicity can make them the right answer for specific point-of-use applications, a dedicated instrument supply, a specific process point, rather than site-wide generation.
For purities above 99%, PSA is the better technology and the cost advantage over membranes becomes clear.