Climate change demands emergency power and a business benefits

Living on the coast of South Carolina means living under the threat of dangerous weather conditions during storm season. But the added ...


Living on the coast of South Carolina means living under the threat of dangerous weather conditions during storm season. But the added peril of the pandemic has made Ann Freeman nervous.

What should I do if there is an evacuation or if there is a storm and you have all this coronavirus and issues with hotels? Mrs. Freeman said. “So I said, ‘Maybe the time is right. “”

That’s why Ms. Freeman spent $ 12,400 last year to install a Generac Backup Generator at her home on Johns Island, a maritime 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 back-up generators has skyrocketed over the past year, as homebound Americans focused on preparing their homes for the worst, just as a wave of extreme weather has caused many experience it.

Hurricane Ida left more than a million people in Louisiana and Mississippi without power for days in sweltering weather late last month; at least 10 dead in New Orleans would be related to heat. Over the summer, California officials warned that wildfires could once again cause power outages amid record heat and the threat of wildfires. In February, a deep frost turned deadly after widespread blackouts in Texas. Even the most covert blackouts – last month’s storms in Michigan left nearly a million homes and businesses in the dark for days – many American homeowners are buying their own mini-power plants.

The vast majority are made by a single company: Generac, a 62-year-old manufacturer in Waukesha, Wisconsin, which accounts for about 75% of domestic backup generator sales in the United States. Its market dominance and the growing threat posed by increasingly erratic weather have made it a Wall Street darling.

Generac’s stock price has risen nearly 800% since the end of 2018 and its profits have roughly doubled since June 2020. The company recently opened a new plant in Trenton, South Carolina – its third producer. residential generators – while demand and the pandemic supply chain grunts have pushed customer wait times to around seven months.

Need is the engine of demand. The United States suffered 383 electrical disturbances last year, according to a tally of incidents to be reported to the Department of Energy, up from 141 in 2016. As of the end of June – the most recent data available – there were had 210 this year. , a jump of 34% compared to the same point in 2020.

“We are not climatologists, but weather events have become much more serious,” said Aaron Jagdfeld, managing director of Generac, whose generators are integrated with existing fuel sources and automatically turn on once a home is out of power. He ticked off a list of weather events that have made headlines over the past year, from freezes to floods to droughts.

The air is warmer, the water is hotter, ”he said. “And the combination of these two things produces more extreme weather events..

This means his company has the attention of investors betting that the confluence of the coronavirus and weather crises are changing the priorities of American consumers.

“Instead of being nice to have, back-up power is more and more essential when you are working at home., ” said Mark Strouse, a JP Morgan analyst who covers Generac and other alternative energy stocks.

So-called home stocks – including Zoom Video, Peloton and Etsy – shone in the wake of the shocks of the Covid era and economic disruption. And vaccine maker Moderna is the top-performing stock on the S&P 500. But Generac and a few other alternative energy companies have valued at the same time.

Enphase, which makes devices that convert energy directly from solar panels into a format suitable for the home, has grown by more than 500% since the start of the pandemic. Over the past two years, investors have increased the value of Bloom Energy, which manufactures small combustion-free fuel cell generators for on-site power generation, from less than $ 1 billion to as much as $ 7 billion, although it has since fallen sharply. . Plug Power, another alternative energy stock, is up nearly 700% since late 2019.

Generac, a quietly successful player for much of the past decade, took off in 2019 as investors began to focus on growing demand for home generators in a large and largely untapped market: California.

Due to its typically mild climate, California – the world’s fifth-largest economy on its own – had never been a hotspot for home generators. But 2019 was the second year in a row that massive wildfires prompted the state’s largest utility, Pacific Gas and Electric, to repeatedly cut power to millions of people in parched communities across the country. the hope of preventing his equipment from aggravating the conflagrations. The Generac share price doubled that year and then again in 2020 as drought conditions persisted.

The deep freeze that hit Texas in February, triggering a collapse of the state’s electricity grid that left millions of people in cold and dark, has only increased demand.

Rhonda Collins’ home outside of Austin is electrically heated, which meant almost a week of freezing nights when the power went out. She, her husband, and her three excited dachshunds – Tito, Dixie and Guinness – lay down under several blankets to warm up.

“It remained in adolescents and young people of 20 years, which for Texas is absurd ”, Mrs. Collins said. “We just don’t do that. I mean, it was like the apocalypse.

Another breakdown hit 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.

The 15,000-watt Generac generator was plugged in last week, large enough to keep the house comfortable in the event of a power outage this winter. “I won’t see this again,” Ms. Collins said.

Generac sales are up about 70% from a year ago and orders far exceed production. The new plant in South Carolina – the other two that produce residential generators are in Wisconsin – is operational and the company plans to employ around 800 people there by the end of the year. Company officials have raised the possibility of adding other manufacturing operations closer to fast-growing markets like California and Texas, analysts at JP Morgan reported in a recent client note.

Generac seems to need it. The average delivery times for its generators have lengthened during the pandemic.

Although it dominates the domestic market, Generac could be vulnerable if its competitors are able to serve customers faster. Large manufacturers such as engine maker Cummins and heavy-duty equipment company Caterpillar have a relatively small share of the domestic generator set market, but have the expertise to ramp up production if they see an opportunity. Generac, aware of potential competition from other players as well as home solar panels and other solutions, has made a series of acquisitions in the battery and energy storage sector, which is emerging as a source modest but rapidly growing revenue for the company. .

But there is no doubt about the demand for its commodity right now.

After installing her generator last week, Ms Collins took a walk around the neighborhood and noticed a neighbor unpacking one in the driveway.

“We’re not the only ones,” she said.

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Newsrust - US Top News: Climate change demands emergency power and a business benefits
Climate change demands emergency power and a business benefits
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