Is it true that the Return on Investment (ROI) for a PSA Nitrogen Generator can be less than one year? Let’s explore the answer.
In the third installment of this series, we will understand whether the Return on Investment (ROI) of a PSA Nitrogen Generator can be achieved in less than a year when compared to using liquid nitrogen or nitrogen cylinders. This is an important question for businesses looking to optimize operational costs, and it often comes down to a simple calculation: Does investing in a PSA nitrogen plant provide savings that justify the capital investment?
Table of Contents
ROI Calculation: Understanding the Inputs
To accurately calculate the ROI for a PSA nitrogen generator, we need to analyze several key inputs. These inputs will allow us to compare the operational costs of using nitrogen cylinders or liquid nitrogen with the savings brought by a PSA nitrogen generator.
Quantity of liquid Nitrogen required per day or number of Nitrogen cylinders used per day: This can be measured as either the number of nitrogen cylinders used per day or the amount of liquid nitrogen required.
Cost of liquid Nitrogen per unit or cost of one Nitrogen cylinder: This refers to the cost per unit of liquid nitrogen or the price of a single nitrogen cylinder.
Application of Nitrogen Gas (Purity of Nitrogen gas required): Different industries require different nitrogen purities, which affects the cost.
Additional expenses like transportation or rental of Liquid Nitrogen or Nitrogen cylinders: Many industries overlook this, but transportation costs and rental fees contribute significantly to total nitrogen expenses..
Electricity cost per unit: The PSA generator relies heavily on electricity, so understanding your energy costs is crucial.
Capital investment of PSA nitrogen plant: This is your upfront cost and an essential component of your ROI equation.
Total maintenance expenses over10 years: Maintenance costs can add up, especially for consumables and breakdowns. These costs should be factored into the overall running costs.
Working Hours per day: The duration for which the plant runs directly impacts your operating expenses and savings.
PSA Nitrogen Plant vs. Nitrogen Cylinders: A Food Packaging Industry Example
Let’s use the example of a food packaging company that requires nitrogen gas to flush their product packages to extend shelf life. This company currently uses nitrogen cylinders but is considering switching to a PSA nitrogen plant. Here are the assumptions we’ll use:
Assume the following parameters for the food packaging industry that currently uses nitrogen cylinders:
Cost of one nitrogen cylinder: ₹400
Cost of electricity: ₹8 per unit
Number of nitrogen cylinders used per day: 40
Purity of Nitrogen Required: 99.90%
Cost of the PSA nitrogen plant: ₹20,00,000
Working hours per day: 24
PSA Nitrogen Plant vs. Nitrogen Cylinders: ROI Calculation
The ROI in this example is 0.38 years or approximately 4.5 months, which is less than 5 months. If the working hours were increased to 24 hours a day, the ROI would drop to under 3 months. Additional factors such as electricity cost or cylinder price can also influence the ROI.
PSA Nitrogen Plant Versus Liquid Nitrogen
Now let’s examine the same food packaging company, but this time they are using liquid nitrogen rather than cylinders. We’ll compare the cost savings when switching to a PSA nitrogen plant.
Cost of one Nm³ of liquid nitrogen: ₹400
Cost of electricity: ₹8 per unit
Liquid nitrogen used per day: 450 liters
Purity of Nitrogen Required: 99.90%
Cost of the PSA nitrogen plant: ₹20,00,000
Working hours per day: 12
PSA Nitrogen Plant versus Liquid Nitrogen
In this example, the ROI for switching from liquid nitrogen to a PSA nitrogen generator is 0.57 years, or approximately 7 months. This highlights why many industries are transitioning to PSA nitrogen plants instead of relying on nitrogen cylinders or liquid nitrogen.
Read More:- Understanding Nitrogen Purity in PSA Nitrogen Generators
Conclusion
As we can see from both examples, the ROI for a PSA nitrogen generator can indeed be less than one year, depending on factors like the cost of nitrogen supply, electricity rates, and plant working hours. For industries with high nitrogen consumption, the ROI can be as low as 3 to 5 months. This makes PSA nitrogen generators an attractive investment, especially for industries looking to cut operational costs and improve long-term profitability.
Given these advantages, it’s no wonder that many industries are opting for PSA nitrogen plants over traditional nitrogen supply methods.
Whether you’re planning to upgrade your Nitrogen supply system or just need advice, do remember that we’re always here to help. Please feel free to get in touch with us through either our toll-free number 1800 3010 3394 or email us at info@absstem.com.
