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By Tom Konrad Ph.D., CFA
The market for reliable redundancy power in homes and businesses is booming.
With increasingly people working from home and increasing news coverage of power outages due to severe weather events and public safety power shutoffs in California (not to mention domestic terrorism), power reliability seems like it’s destined for a long term boom.
New Competition
A decade ago, if you wanted replacement power, a generator was the only option. Now, there are an increasing number of battery-based alternatives whence to compete with generators to provide redundancy power. While most battery-based solutions are largest than gas or propane generators when it comes to stat emissions, none of them can yet write-up traditional generators in every way most homeowners and businesses consider important. It’s increasingly of a “horses for courses” type scenario with the weightier solution depending on price, the value of power needed, the length of power outage the proprietrix is preparing for, and convenience.
Here is a list of options a homeowner might consider and how they stack up.
Natural Gas Generators
Traditional gas generators which run off the utility gas network are a relatively inexpensive solution for a homeowner looking to power their unshortened home for extended power outages lasting days or weeks. The main downside for such gas generators is that they won’t work if the weather events or other factors rationalization a gas outage at the same time as an electrical outage. For example, during the 2021 Texas Power Crisis, one of the major causes was a cascading problem of unprepossessed temperatures shutting lanugo both gas supplies and electric generation. The resulting lack of electricity caused remoter problems with gas supply leading to remoter electric shortfalls, and so on. All in all, gas supply dropped by approximately 56 percent (and production in Texas dropped by approximately 40 percent) during the crisis. This ways that plane people who had home gas generators may not have been worldly-wise to use them when the power went out.
Liquid Propane Generators
Generac and competitors’ propane generators share the low forfeit and most of the convenience of gas generators but forfeit increasingly to run considering they rely on propane stored in a tank on the premises, and delivered propane fuel financing far increasingly than pipeline gas. On the other hand, local storage of the fuel makes them increasingly reliable in an electrical outage that lasts a few days plane if the slipperiness moreover affects the natural gas supply. On the downside, the generator will sooner use all the fuel in the tank, and a prolonged slipperiness may interfere with propane deliveries.
Gasoline and Diesel Generators
Gasoline and Diesel generators are typically smaller than the natural gas and propane generators. They typically do not have the topics to power a whole home and unhook their power through outlets on the generator itself. Although they are not a solution for whole home power backup, they can be used to power hair-trigger loads like the refrigerator to prevent supplies from spoiling and charging electronics.
They are moreover wontedly used by towers contractors to work on sites that are not yet unfluctuating to the grid. Their relatively low price point (hundreds as opposed to thousands of dollars) appeals to people who want some replacement power but find that a whole home generator is too much for their budget.
Home Shower Backup
There are now a number of home energy shower brands in wing to the weightier known Tesla (TSLA) Powerwall. These include the PWRcell offering from home generator leader Generac (GNR), as well as offerings from Panasonic (Tokyo:6752 or US ADR:PCRFY), microinverter maker Enphase (ENPH), and solar manufacturer SunPower (SPWR).
Until the recent passage of the Inflation Reduction Act (IRA), the only way to get 24% the US federal Investment Tax Credit (ITC) for a home shower system was to install it with a solar system in such a way that it charged primarily from the solar. The IRA both extended and raised the ITC to 30%, and made it workable to stand-alone shower systems.
Now that home shower systems can be installed independently from solar and still qualify for the ITC, we can expect demand to increase as homes and businesses that are not good candidates for solar suddenly see constructive prices fall by 30%.
Batteries vs Generators
Even with the tax credit, however, home shower storage is likely to remain relatively expensive compared with generators for the purpose of maintaining power during an outage.
If a generator has unbearable power to supply the electricity need, it can protract to supply that need as long as it is unfluctuating to a large unbearable storage tank or to the gas network. Considering of this, increasing the elapsing that a generator can protect versus a power outage financing very little. In contrast, doubling the elapsing that a shower system can protect versus a power outage requires doubling the size of the battery, which will nearly double the cost.
Because of this, generators have a significant economic wholesomeness compared to stand-alone batteries when it comes to ensuring long term power supply. But while secure power supply may be the main witchery for consumers of home shower storage and generators, batteries are far increasingly lulu to grid operators and utilities considering of many services they can provide that generators cannot:
- No uncontrived greenhouse gas (GHG) emissions: Electricity from batteries is as wipe as the power used to tuition them. Small generators, which rely scrutinizingly exclusively on fossil fuels produce GHG emissions usually far in glut of other electricity on a utility’s grid. Any reliance on generators makes it harder for a utility to meet its targets for GHG emissions reduction. While some utilities have voluntary GHG targets, many moreover are subject to legally tightness targets imposed by their regulators and state governments.
- Load shifting and renewable energy integration: Increasing solar and wind penetration on the grid is rapidly waffly net usage patterns for electricity. This trend is particularly pronounced in states that have been early adopters of solar, like California and Hawaii. Both have now unexplored bounty schemes for solar that requite homeowners strong incentives to pair solar with shower systems. Since these shower systems moreover requite the homeowners some protection versus power outages, this eats into the market for home generators.
- Utility grid upgrade deferral: Batteries can moreover be used to wait or replace expensive grid upgrades. Utility power lines and transformers need to be sized to the peak power usage that passes through them, plane if this peak only occurs for a few hours per year. If controlled by the utility, batteries in homes can help with this: by charging when the local line or transformer is operating well unelevated its peak capacity, and supplying that power to meet local demand when it otherwise would be operating at or whilom peak.
Green Mountain Power has an interesting pilot program where it leases home shower systems to customers at a subsidized rate in return for the right to use that shower for both utility upgrade deferral and load shifting so long as it keeps unbearable tuition in the shower to reassure the consumer that they will have protection from a power outage. Shower system owners can moreover enroll in the program in mart for an upfront payment of up to $9,500. A payment that large could hands influence a homeowner to prefer a shower replacement system over a generator.
I expect similar programs to proliferate virtually the country as utilities and their regulators wilt increasingly familiar with the benefits batteries can unhook to the grid.
…And It Moreover Provides Replacement Power
An plane larger potential disruptor for the generator market is devices that consumers buy for other reasons, but which can moreover provide power in a blackout. A prime example of this is the Ford (F) F-150 Lightning: an all-electric pickup truck which can moreover power your home with the right electrical upgrades. Electric cars from Nissan and VW are expected to have similar capabilities soon.
The F-150 is only the most prominent example of shower powered vehicles, devices, and appliances that can moreover unhook replacement power. Many other electric and plug-in hybrid electric vehicles come equipped with standard 120V outlets, while the Kia EV6 has an connector which turns the charging port into a functional 120V outlet. Plane if an electric or hybrid vehicle does not come with a 120V outlet, an inverter costing $300 or less plugged into the cigarette lighter or tying to the car’s traditional 12 volt shower can serve much the same purpose. This worthiness of an electric or hybrid vehicle to power one or increasingly standard outlets is referred to as “Vehicle to Load” while the F-150 Lightning’s worthiness to replace a home generator is often tabbed “Vehicle to Home.”
While Vehicle to Load cannot replace the utility of a whole home generator, it can hands replace the functionality of smaller gas and diesel generators. Homeowners who once have electric cars that can power their refrigerator and tuition their electronics will moreover be less likely to spend thousands of dollars on a generator to power their whole home during infrequent outages.
Energy Storage Equipped (ESE) Appliances
Nor are cars the only devices that can provide incidental power backup. Owners of Ego shower lawnmowers, snowblowers, and other devices can buy the Ego Nexus Power Station which uses the batteries from those devices to provide all the functionality of a gasoline or diesel generator that can be used indoors.
Photo: The tragedian and other members of the Marbletown Environmental Conservation Commission and Rondout Valley Upper School Environmental Club with their all electric entry in a holiday parade. The trailer is stuff towed by a 2012 Toyota RAV4 EV and the lights and music on the trailer are powered by a Ego Nexus Power station. Other entries trailers in the parade have lights powered by gas or diesel generators.
Another potential minutiae is the including of batteries in home appliances that have not previously had them. These Energy Storage Equipped (ESE or “Easy”) Appliances moreover provide incidental power backup. The main purpose of the batteries is to enable efficient electric appliances like induction stoves and heat pump water heaters to replace their gas counterparts without expensive electrical upgrades. The batteries indulge them to unhook upper power performance (like an induction stove’s unmatched worthiness to swash a large pot of water in minutes) while plugging in to a typical low-power electric outlet. The uneaten forfeit of the shower is offset by lower installation forfeit and the new investment tax credit for shower storage, powerfully delivering a device that not only delivers upper performance cooking at no uneaten cost, but moreover provides an external outlet which can power your fridge and other hair-trigger loads during a power outage.
While neither the Nexus Power Station nor an ESE utilization can unhook the full performance of a home generator, if someone gets one considering they need a new stove or snowblower, they will probably be less willing to pay thousands of dollars for a home generator.
Conclusion
While the market for reliable home power is expanding, companies that sell home generators seem likely to goody only in the short term. Longer term, increasingly ubiquitous electric and hybrid electric vehicles with Vehicle to Home and Vehicle to Load capability, withal with Energy Storage Equipped (ESE) appliances and utility programs that subsidize (or requite away) home shower storage will disrupt the market for generators in a way with which they cannot compete.
How will a home generator installer persuade a consumer to spend many thousands of dollars on a home generator when they once have most of the resiliency benefits it can supply for much lower cost, or plane for self-ruling as an uneaten full-length of an utilization they would have bought anyway?
A few people still buy high-end digital cameras for the capabilities that a lamina phone can’t yet emulate, but those people (and those capabilities) are rhadamanthine fewer and fewer. Ten years from now, we’ll be saying the same things well-nigh home generators’ capabilities and home generator buyers..
DISCLOSURE: No positions in companies mentioned in this article.
DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future results. This vendible contains the current opinions of the tragedian and such opinions are subject to transpiration without notice. This vendible has been distributed for informational purposes only. Forecasts, estimates, and unrepealable information contained herein should not be considered as investment translating or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.