Living on the coast of South Carolina means living under the threat of dangerous weather during the stormy season. But the added danger of the pandemic made Ann Freeman nervous.
“What can I do if there is an evacuation or there is a storm and you have all this coronavirus and problems with hotels? “Mrs. Freeman said.” So I said, ‘Maybe now is the time.’
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 he was lucky: the wait is now double.
Demand for backup generators has increased over the past year, as home-bound Americans focused on preparing their homes for the worst, just as an extreme weather wave ensured. that many would experience it.
Hurricane Ida left more than a million people without electricity in Louisiana and Mississippi for days with warm weather late last month. During the summer, California officials warned that wildfires could again force out in the midst of record heat and the threat of fires. In February, a deep freeze proved deadly after extensive falls in Texas. Even low-profile outages (last month, Michigan storms left nearly a million homes and businesses in the dark for a few days) have many American homeowners buying their own mini power plants.
The vast majority are made by a single company: Generac, a 62-year-old manufacturer from Waukesha, Washington, which accounts for approximately 75% of pending home generator sales in the United States. Its market dominance and the growing threat posed by an increasingly erratic climate have made it a loved one on Wall Street.
Generac’s share price has risen nearly 800% since late 2018 and its profits have roughly doubled since June 2020. The company recently opened a new plant in Trenton, SC (its third-generation generator). residential producer), while pandemic-related demand and supply chain savings have raised customer waiting times to about seven months.
Need is driving demand. The United States suffered 383 power outages last year, according to an incident count to be reported to the Department of Energy, compared to 141 in 2016. At the end of June (the latest data available ), this year there had been 210., a jump of 34 percent from the same point in 2020.
“We’re not climate scientists, but weather events have become much more serious,” said Aaron Jagdfeld, Generac’s chief executive, whose generators are integrated into existing fuel sources and ignite automatically when the house loses energy. He marked a list of weather events that captured headlines over the past year, from frosts to floods and droughts.
“The air is hotter, the water hotter, ”he said. “And the combination of these two things produces more extreme weather events.”
This means that his company has the attention of investors who bet that the confluence of coronavirus and climate crises is changing the priorities of American consumers.
“Instead of having a good use, the power of backup is increasingly necessary when working at home” said Mark Strouse, a JP Morgan analyst covering Generac and other alternative energy stocks.
So-called home stays (including Zoom Video, Peloton, and Etsy) have shone as a result of Covid-era shocks and economic disruptions. And the vaccine maker Moderna is the best-performing material in the S&P 500. But Generac and some alternative energy companies have increased their value at the same time.
Enphase, which converts devices that convert energy directly from solar panels into a home-friendly format, has risen more than 500 percent since the pandemic began. Over the past two years, investors have pushed the value of Bloom Energy, which makes small generators of unburned fuel cells for on-site power generation, from less than $ 1 billion to up to $ 7,000. millions of dollars, though it has since fallen sharply. . Plug Power, another alternative energy stock, has increased by almost 700% since the end of 2019.
Generac, a smooth running operation for most of the last decade, kicked off in 2019 when investors began to focus on growing demand for home generators in a large, largely untapped market: California.
Because of its typically warm climate, California, the world’s fifth largest economy alone, had never been a hot spot for home generators. But 2019 was the second year in a row that huge wildfires have caused the state’s largest utility company, Pacific Gas and Electric, to repeatedly have electricity in millions of residents in desiccated communities in hopes of ‘prevent your equipment from being added to conflagrations. The price of Generac shares doubled that year and again in 2020 as drought conditions persisted.
The freeze that hit Texas in February, which caused a collapse in the state’s power grid that left millions cold and dark, only added to demand.
Rhonda Collins ’home, outside of Austin, has electric heat, which meant nearly a week of icy nights when the power went out. She, her husband and her three exciting dachshunds (Tito, Dixie and Guinness) stayed under various blankets to warm up.
“He stayed in his teens and in his twenties, which is absurd for Texas “ said Mrs. Collins. “It simply came to our notice then. I mean, it was like the apocalypse. “
Another outage stopped in June during a heat wave and farmers ’prediction in the almanac of another round of storms early next year made the decision easier: it was time to buy a generator.
The 15,000-watt Generac generator was plugged in last week, big enough to keep the house comfortable if powered this winter. “I won’t go through it again,” Mrs. Collins said.
Generac’s sales have increased by approximately 70 percent over the past year and orders far exceed production. The new South Carolina plant (the other two producing residential generators are in Wisconsin) is up and running and the company plans to employ about 800 people there by the end of the year. Company officials have presented the prospect of adding manufacturing operations closer to fast-growing markets such as California and Texas, analysts at JP Morgan said in a recent customer note.
It looks like Generac needs them. The average delivery times for its generators have been extended during the pandemic.
Despite dominating the domestic market, Generac could be vulnerable if competitors can serve customers more quickly. Leading manufacturers such as engine maker Cummins and heavy equipment company Caterpillar have a relatively small share of the home generator market, but have experience in raising production if they see an opportunity. Generac, aware of the potential competition from other players, as well as home solar panels and other solutions, has made a number of acquisitions in the energy storage and battery industry, which is becoming a source of small but rapidly growing income. .
But there is no doubt about the demand for your commodity right now.
After installing the generator last week, Mrs. Collins ran through the neighborhood and noticed that a neighbor was unpacking one on the driveway.
“We’re not the only ones,” he said.