I started brewing all-grain in 2004. After brewing with extract for a long time, I eventually spoke with a few brewers who convinced me that brewing all-grain could be a very easy jump from extract and could be very rewarding. The only items that are necessary to make the switch is a large cylindrical or square cooler, something that can be placed inside the cooler to act as a filter (a screen, bazooka, braided stainless steel tubing, a false bottom, a copper manifold, etc.), a pot that is large enough to hold 7.5 to 8 gallons of wort (for a 5-gallon batch), a scale to weigh out grains and a good thermometer so you can take the temperature of the mash and the mash & sparge water that you will heat for the mash. Below is a diagram that I was shown when I was thinking of making the jump. It lays out the steps so simply, I said to myself... I can do THAT!
If you can't read this diagram, click HERE.
Here is step one. My grains are weighed out and my mash water has been heated to about 168° or so. The warm water has been poured into my cooler and some of the grains are added and stirred into the water. The rest of the water is added and the rest of the grains and everything is stirred to ensure there are no clumps. This picture shows my Memory Lapse Pale Ale (Pale Malt, Wheat, Crystal 60°L) in the cooler with the water. Systems very, but I know that I lose about 18° when the warm water hits the room-temp grains and cooler. I heat my water to 168-170° to get to about 150-152° mash temp. Use a thermometer and ensure that the temp of the mash is where you want it. Anywhere from 148 to 154° is acceptable and you can keep cold or hot water nearby to make adjustments if you need to. The mash is left for 60 minutes and then the lid of the cooler is taken off and the drain (see pic above) is opened and the wort flows out into a plastic pitcher (preferably clear plastic so you can see the wort). Carefully pour the wort back into the cooler and try to do it gently. This process will compact the grain bed and use it as a natural filter which will be used in conjunction with the other filter (false bottom, braided tubing, etc). This process should be repeated until the wort appears clear and free of sediment (as the diagram shows).
Next, a plastic hose is attached to the spigot and the cooler is drained into the brewpot. Meanwhile, you will want to heat another 3 gallons of water to 175° to use as sparge water. When the cooler is empty and the sparge water is heated, add that back to the cooler and grains, mix and leave for another 10 minutes. Repeat the steps to recirculate the wort into the pitcher and back into the cooler until the wort runs clear. You will notice that the wort is lighter in color now than it was when you drained the cooler after the initial mash. This is normal. After that is drained, another 2+ gallons of 175° water is added to the cooler for the remainder of the wort. Leave for another 10 minutes and repeat the same steps.
Here is all of the collected wort, ready to boil with hops. This pot now represents the point in an extract batch where the water has been heated, the specialty grains have been steeped and the extract has been added. You just made your own malt extract the all-grain way! I will take a time-out here to suggest (very strongly) that you look into an outdoor burner to boil the wort with the hops. Not only will it bring the wort up to a boil in 10 minutes, but it will also save you from stinking up the house. You see those black knobs on the stove? I melted one of them trying to boil all of this wort! Not good.
Here's what your left with when you're done. You have a bunch of spent grains and a cooler in need of a good hosing. Note the braided stainless-steel tubing in the bottom of the cooler which helps the wort flow through the tubing & spigot while leaving the grains behind. Husks in the wort can bring out astringency (harsh flavor) in the finished beer, which is why we recirculated very well. This picture above represents a little extra cleanup and the mash & sparge routine certainly add some extra time. I can usually get an all-grain batch done with a 60-minute mash and a 60-minute boil in a total of about 4 hours. Your mileage may vary.
Brewing all-grain is far cheaper than brewing with extracts. I will not pretend to know the cost of extract or extract kits as of right now (2008) because I have not used them in years. Obviously, the more extract, the higher the cost. I know that many extract kits I used from 1999 to 2004 were anywhere from $25 for something like an amber or cream ale up to maybe $40 for something like an Oktober. There are many ways to brew inexpensively (buying in bulk, using yeast more than once, etc.) and it seems that even with the price of grain and hops rising, it's still pretty unreal how cheaply you can make 2 cases of great beer. Let's take an example... my Bases Loaded Blonde Ale. The recipe is on my recipe page and it contains 8 lbs of 2-row pale malt, 8 ounces each of Vienna, CaraFoam and Crystal 10°L. Midwest Supplies in Minnesota sells their Briess and Rahr pale malt and pilsner malt for $8.50 for 10 pounds (crushed) and I believe most of their specialty grains run about $1.50 per pound. So...
Pale Malt...8 lbs x 85¢ per pound is $6.80
Specialty Grains... 1.5 lbs x 1.50 per pound is $2.25
I can get the Sterling hops for just $2 at my LHBS and the small amount of Hallertau Tradition should only run about 50¢... so $2.50 for hops.
Let's say I use a yeast 4-5 times... let's call that $1.50 per use for a grand total of $13.05 for the entire batch. No, I haven't added the cost of things like Whirfloc, Gel, Irish Moss, grain bags (if any), energy to heat mash & strike water and to boil the hops, the cost of water, etc., but those costs aren't added into the $30 extract kit either. Brewing for less is a nice benefit to jumping from extract to all-grain. Cheers!