How much does it cost to install a propane ¹ tank?

If you live in an area where natural gas is not piped but want to use gas as a method for heating your home or running appliances, a good alternative is liquid propane ¹. This is a gas alternative that is stored on your property and periodically topped off as needed by the propane supplier.

There are many ways to store propane. Some companies offer their tanks free of charge as long as you use a certain amount of gas. Others lease the tanks to you for a fee, which includes the installation, and some require you to purchase the tanks and pay for the installation. Propane tanks come in many sizes and types and can be installed both in ground and above ground. The average homeowner with a 1,500-square-foot home who uses propane for heating and all appliances will typically use a 500-gallon tank. Installed in ground, this will cost around $3,000 to rent or purchase and install.

Propane tank installation costs

Propane tank installation cost by usage and tank size

Capacity

Propane tanks come in several sizes. The more propane you use, the larger the recommended tank size. It is possible to use smaller tanks, but you will pay more in delivery fees long term. The cost of your tank varies depending on capacity as well as placement above and below ground.

Use

In most cases, the amount of propane you need or the size of the tank you have installed is dictated by a few factors, including the square footage of your home and what you will use the propane for. Keep in mind that it is very common in some areas for two smaller tanks to be used together in place of one larger tank. So, you may use two 120-gallon tanks rather than a single 250-gallon tank.

Underground vs above ground tanks

In some cases, the type of tank that you get will depend on its size. For example, if you need less than 500 gallons, then two small tanks are usually recommended and will be installed above ground beside your home.

However, if you need 500 gallons or above, then you will likely need a cylinder tank, which measures roughly 8 feet long and 4 feet high. This can also be installed above ground but has the option of being installed below ground as well. Both have advantages that you need to consider based on your region and landscaping.

Above-ground tanks are less expensive to install, costing as little as $350 to simply place in your yard. This is obviously a significant savings and does not disrupt your landscaping. However, the tanks must be a certain distance from your home and should not be near your septic system. Therefore, the location of the tank may end up being in the middle of your usable yard. This is both inconvenient as well as unsightly.

Tanks installed below ground have higher installation fees, but the tank is protected from the elements as well as deep freezes, which can be a concern for homes located in northern climates. The tank can also be placed where only a small dome will be seen so that you have more usable yard space.

The only time a propane 1 tank should not be installed below ground, however, is if you have a high water table or live in a flood zone. In this case, any flooding of the area where the tank is buried could cause it to shift, which can interfere with its usage.

Installation process

The installation process varies tremendously based on several things, including the size and type of tank, location, and whether it is above or below ground.

Smaller tanks are installed directly beside the house. They do not require a pad and can be placed with a single pipe running straight into the house. This takes about an hour to connect, and many companies do this for free or for a low charge of $25.

Larger tanks, however, have a more involved installation process. First, a concrete pad ², reinforced with mesh, is generally poured for above-ground installation. This costs around $75 and may be contracted by the propane company or homeowner. The tank is delivered and lifted onto the pad. Depending on the distance from the house, it will usually have a gas line trench dug from the tank to the home, and then the gas line is run and connected to the house. Having the trench dug costs around $45, and many homeowners choose to do this themselves. Running the gas line costs around $100, and some propane companies contract with a plumber to do this work.

For underground tanks, the yard must first be excavated to accommodate the tank, and then it will be buried with a small plastic dome left visible. This is where the tank will be filled in the future. Excavation costs start at $75 and go up, depending on the terrain, type of dirt, and how big the trench will be. The rest of the soil will be filled in around it, and you may have extra dirt that needs to be removed. The gas trench line is then dug from the tank to the house, and the pipes are connected and run.

If you are unsure of where the septic tank or utility lines are buried, have these marked ahead of time to avoid disturbing them.

Labor costs

Most labor costs are included in the price of the total installation. The propane company you contract with will handle all the associated costs, and you make a single payment. This differs only if you choose to purchase the tank and contract with the propane company to install it. In this case, installing a 500-gallon propane tank costs around $500 to $1,000 of the $3,000 total.

Buying vs leasing a propane tank

In most areas, the propane company you purchase your liquid propane from will rent or lease the tanks to you at no cost after the initial installation. Other companies may rent them to you for a low fee of around $150 to $175 a year. This is often the most cost-effective solution, especially for smaller properties that will use tanks that do not require much invasive installation.

However, some homeowners choose to purchase their own tanks, then have them installed. You can buy previously used tanks or new ones. The benefit is that you can switch propane providers as costs fluctuate. When you contract with a single company and lease their tanks, you are locked into their prices. If another company has cheaper propane, you first need to break your lease, then contract with the new company. If you own your own tank, you can switch between companies, potentially saving money.

Keep in mind that many companies charge more for installation of a tank that is not their own.

Enhancement and improvement costs

Propane tank recertification

If you have a small tank that you use for grilling or powering an RV, your tanks are considered good for use for a specified time. After that, they must be recertified. Some permanent, homeowner-owned tanks also require recertification. The propane company handles any leased tanks. Recertification requires an inspection with a fee of around $100.

Additional considerations and costs

• If a homeowner wants to purchase a used propane tank to save on rental frees or be free from obligations to a single company, the tank must be tested and certified by a propane dealer. This enables you to get the best price per gallon by allowing you to switch distributors. 

• Small propane tanks can be purchased from many areas. They cost around $30 to $40 on average.
• Underground tanks must be installed a minimum of 10 feet away from the road, building, or property line, and larger tanks may require 20 feet or more.
• To get the tank in place, the company often uses mechanical support. So, the tank position must be close enough to the road to let the equipment access the area safely.
• The installation of a new tank requires a permit and an inspection by the fire department in most areas.
• If you own the tank, you must have it inspected yearly for around $50 to $75. The leasing company covers rented tanks.
• If you have an old underground tank and want it removed, keep in mind that you will need to pay for excavation and removal, which can cost up to $500 in fees.

Remodeling Terms Cheat Sheet

¹ Propane: A hydrocarbon gas used as a common fuel source

² Concrete pad: A flat area of concrete that can be used for a variety of purposes, such as a patio or a driveway