POWER PREP
Backup generation sees boom after electricity reliability rattled.
Power outages put whole swaths of Texas on ice last month, sending businesses that would otherwise provide needed goods and services out of commission.
Others that had access to power chose to shut down anyway because electricity costs were too high.
It was a boon, however, for businesses that have positioned themselves to cash in on the state’s unreliable electrical grid.
Employees at Houston Generators have been moving at a blistering pace since the freeze, said Todd Manchaca, the store’s president and general manager. Business is up about 400 percent since before the freeze, he said, and about three times higher than increases he’s seen after previous storms.
“This has had an unbelievable impact on interest in generators,” he said, calling the demand spike “hard to handle.”
Enchanted Rock, a 100-person backup generation company in Houston, powered 94 H-E-B stores in Texas during the freeze, said Allan Schurr, its chief commercial officer. The company’s generators fueled one store in Hutto for 101 consecutive hours, keeping lights on and food refrigerated.
“I do think it fundamentally changes people’s thought process about electric supply,” Schurr said. “These freak events seem to be happening more and more frequently now.”
For most businesses, cash flow stops when the lights go out.
Avengard Innovation, a recycling plant in Houston, lost $1.6 million in revenue after shutting down for eight days — not because of outages, said owner Rick Perez, but because his wholesale electricity bill would have cost $1.6 million.
“I’m looking at other options, now, for sure,” he said, naming backup generators among them.
Some companies choose to buy their own diesel generators, transporting them onsite with trailers, but companies can also outsource those services. For Enchanted Rock, it turns out, it’s a growing business.
The backup generation company has fielded hundreds of new inquiries since the freeze, Schurr said late last month.
“People are still kind of reeling from last week, so I think it will be picking up more in the future,” he said.
Enchanted Rock’s growing client list also includes Buc-ee’s, water treatment centers and assisted living facilities. When the power goes out, large, white, cube-shaped generators powered with natural gas are already onsite and step in to restore it within 10 seconds, Schurr said. For the average H-E-B store, Enchanted Rock charges around $150,000 upfront to install the generator, which lasts 15 to 20 years, and then the retailer can access its power as needed for the price of the natural gas it takes to fuel it.
“We monitor them all from our network operations center,” he said. “We’re tracking how they’re performing, oil temperature, battery charge. That gives us the intelligence to know they’re ready to go.”
Enchanted Rock’s business model grew from issues following Hurricane Ike, when many businesses experiencing outages tried and failed to use their own backup generators, which were not properly maintained, inadequately fueled or too small to power the facility.
Generator maintenance easily falls to the back burner, Schurr said. Companies forget to test them and to change out fuel if it’s been exposed or sitting too long.
“A lot of people skip that stuff,” Schurr said.
Most of infrastructure belonging to CenterPoint Energy, the regulated utility serving much of Houston, is above ground and subject to severe weather events, but Schurr said his company pulls gas from underground infrastructure and was not affected by the natural gas supply shortages that came with the freeze.
Enchanted Rock also makes money by selling power generation to the grid when the generators aren’t needed by customers, and when the price is right.