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 during record heat and the threat of wildfire. In February, a deep freeze turned deadly after widespread blackouts in Texas.
The vast majority are made by a single company: Generac, a 62-year-old Waukesha, Wis., manufacturer that accounts for roughly 75% 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% 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 about 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% 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 officer of Generac, whose generators are integrated into existing fuel sources and switch on automatically once a home loses power.
"The air is hotter. The water is warmer," he said. "And the combination of those two things is producing weather events that are more extreme."
That means his company has the attention of investors betting that the confluence of the coronavirus and climate crises is shifting the priorities of American consumers.
"Instead of a nice-to-have, backup power is increasingly a need-to-have when you're working at home," said Mark Strouse, a JPMorgan analyst who covers Generac and other alternative-energy stocks.
SUDDENLY ESSENTIAL
So-called stay-at-home stocks -- including Zoom Video, Peloton and Etsy -- have shone as a result of covid-era shocks and economic disruptions. But Generac and a few other alternative-energy companies have ballooned in value at the same time.
Enphase, which makes devices that convert power directly from solar panels into a format suitable for the home, is up more than 500% since the pandemic began. Over the past two years, investors drove the value of Bloom Energy, which makes small, combustion-free fuel-cell generators for on-site power generation, from less than $1 billion to as much as $7 billion, though it has since declined sharply. Plug Power, another alternative-energy stock, is up nearly 700% since the end of 2019.
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.
THE LAST STRAW
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 a pile of 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 blackout 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.
The 15,000-watt Generac generator was hooked up last week, big enough to keep the house snug if the power goes out this winter.
"I'm not going through that again," Collins said.
Despite dominating the home market, Generac could be vulnerable if competitors are able to serve customers faster. Major manufacturers such as engine-maker Cummins and heavy-equipment company Caterpillar have a relatively small share of the home-generator market but have the expertise to lift production if they see an opportunity.