Is it true that the Return on Investment (ROI) for a PSA Oxygen Generator can be less than one year? Let’s explore the answer.
When choosing a PSA oxygen generator for your business, one of the most critical factors to consider is how quickly you can recoup the initial investment compared to using traditional sources like liquid oxygen or oxygen cylinders. The ROI for a PSA Oxygen Plant can indeed be less than one year, depending on various factors. Below, we will walk through the process of calculating the ROI of a PSA oxygen generator and compare it to liquid oxygen and cylinder-based systems.
Table of Contents
Key Inputs for ROI Calculation
To properly assess the ROI of a PSA oxygen generator, the following inputs are essential:
Quantity of liquid Oxygen required per day OR number of Oxygen cylinders used per day: This gives you an understanding of your current oxygen consumption.
Cost of liquid Oxygen per unit OR cost of one Oxygen cylinder: Both these costs vary, but knowing them is key to calculating operational savings.
Additional expenses like transportation or rental of Liquid Oxygen or Oxygen cylinders: Many industries overlook this, but transportation costs and rental fees contribute significantly to total oxygen expenses.
Electricity cost per unit: The PSA generator relies heavily on electricity, so understanding your energy costs is crucial.
Capital investment of PSA Oxygen plant: This is your upfront cost and an essential component of your ROI equation.
Total maintenance expenses over 10 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.
To illustrate the ROI calculation, we will use an example of a brazing industry, which uses oxygen for its operations. First, we will calculate the ROI when using oxygen cylinders, then compare it to the ROI when using liquid oxygen.
PSA Oxygen Plant Versus Oxygen Cylinders
Assume the following parameters for the brazing industry that currently uses oxygen cylinders:
Cost of one oxygen cylinder: ₹300/-
Cost of electricity: ₹8/- per unit
Number of oxygen cylinders used per day: 40
Cost of the PSA oxygen plant: ₹30,00,000/-
Working hours per day: 24
With these assumptions, we can calculate the ROI using the following detailed data:
If the working hours were reduced to 12 instead of 24, the ROI would stretch closer to 2 years. Similarly, the cost of electricity and cylinder prices play a significant role in determining the final ROI. It’s clear that even with variations in these factors, switching to a PSA oxygen generator can lead to substantial savings.
As calculated above, ROI for the PSA Oxygen Plant versus using cylinders is less than 1 year. PSA Oxygen Plant Versus Liquid Oxygen
Now, let’s calculate the ROI for the same industry using liquid oxygen instead of cylinders. The following assumptions apply:
Cost of liquid oxygen per Nm³: ₹25
Cost of electricity: ₹8 per unit
Liquid oxygen used per day: 450 liters
Cost of the PSA oxygen plant: ₹20,00,000
Working hours per day: 24
The ROI calculation for liquid oxygen is as follows:
In this case, considering the same plant of 12.5 Nm³/hr, the ROI against liquid oxygen is about 1.8 years, or roughly 22 months. This demonstrates why many industries are opting for PSA oxygen generators over liquid oxygen tanks. The cost savings over time are significant, and the switch to PSA technology provides a more stable and self-reliant oxygen supply.
Read More:- Understanding ECONOMY or IDLE Mode in PSA Oxygen or Nitrogen Generators
Conclusion
The ROI of a PSA Oxygen Generator can indeed be less than one year when compared to oxygen cylinders and approximately 1.8 years when compared to liquid oxygen. These calculations reveal the long-term financial benefits of transitioning from traditional oxygen sources to PSA plants. With rising costs for liquid oxygen and cylinders, and increasing operational demands, PSA oxygen generators not only offer cost savings but also enhance operational efficiency. When evaluating the investment, businesses should consider both the financial ROI and the operational benefits that PSA technology provides over a decade of usage.
Whether you’re planning to upgrade your Oxygen 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.
