Surging demand for backup power
One Wisconsin company cashes in amid climate change events
Living on the South Carolina coast means living under the threat of dangerous weather during storm season. But the added peril of the pandemic made Ann Freeman nervous.
“What do I do if there’s an evacuation or there’s a storm, and you have all this coronavirus and problems with hotels?” Freeman said. “So I said, ‘Maybe now is the time.’ ”
That is why Freeman spent $12,400 last year to install a Generac backup generator at her home on Johns Island, a sea island near the Charleston peninsula. The wait — about three months — seemed long.
But she was lucky: The wait is twice as long now.
Demand for backup generators has soared over the past year as housebound Americans focused on preparing their homes for the worst, just as a surge of extreme weather ensured many experienced it.
Hurricane Ida left more than 1 million people in Louisiana and Mississippi without power for days in sweltering weather late last month; at least 10 deaths in New Orleans are believed to have been tied to the heat. Over the summer, officials in California warned that wildfires might once again force rolling blackouts amid record heat and the threat of wildfire. In February, a deep freeze turned deadly after widespread outages in Texas. Even lower-profile outages — last month, storms in Michigan left almost 1 million homes and businesses in the dark for up to several days — have many U.S. homeowners buying mini power plants of their own.
The vast majority are made by a single company: Generac, a 62-year-old Waukesha, Wis., manufacturer that accounts for roughly 75 percent of standby home generator sales in the United States. Its dominance of the market and the growing threat posed by increasingly erratic weather have turned it into a Wall Street darling.
Generac’s stock price is up almost 800 percent since the end of 2018, and its profits have roughly doubled since June 2020. The company recently opened a new plant in Trenton, S.C. — its third producing residential generators — while demand and pandemic-related supply chain snarls have pushed customers’ wait times to roughly seven months.
Need is driving the demand. The United States suffered 383 electricity disturbances last year, according to a tally of incidents required to be reported to the Energy Department, up from 141 in 2016. As of the end of June — the most recent data available — there had been 210 this year, a 34 percent leap from the same point in 2020.
“We’re not climate scientists, but weather events have become a lot more severe,” said Aaron Jagdfeld, chief executive of Generac, whose generators are integrated into existing fuel sources and switch on automatically once a home loses power.
Because of its typically balmy weather, California — the world’s fifth-largest economy by itself — had never been a hot spot for home generators. But 2019 was the second straight year that enormous wildfires prompted the state’s largest utility, Pacific Gas and Electric, to repeatedly cut power to millions of residents in parched communities in hopes of preventing its equipment from adding to the conflagrations. Generac’s share price doubled that year, then again in 2020 as drought conditions persisted.
The deep freeze that struck Texas in February, setting off a collapse in the state’s power grid that left millions in the cold and dark, only added to the demand.
Rhonda Collins’ home outside Austin, Texas, has electric heat, which meant almost a week of frigid nights when the power went out. She, her husband and her three excitable dachshunds — Tito, Dixie and Guinness — bunked down under multiple blankets to keep warm.
“It stayed in the teens and low 20s, which for Texas is absurd,” said Collins. “We just don’t do that. I mean, it was like the apocalypse.”
Another outage struck in June during a heat wave, and a prediction in the Farmers’ Almanac of another round of storms early next year made the decision easy: It was time to buy a generator.