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Demand for standby generators is surging

December 7, 2021      

South Shore Generator - Home Backup Power

Joseph Schwartz and his family live in a wooded part of Delaware County, Pa., where they say power outages occur too frequently for comfort. Without power, his family also loses water and sewer service because their private well and wastewater system rely on electric pumps.

So last winter Schwartz decided to install a standby generator that would automatically power up seconds after Peco Energy’s electric service cut out. The decision to buy an expensive generator system turned out to be the quickest part of the process.

The market for standby power generators has soared in the last year, driven by the pandemic, which suddenly made power interruptions more than a minor inconvenience for millions of families working from home. Severe storms, such as Hurricane Isaias in 2020, also drove up demand. Manufacturers, confronted with supply-chain disruptions, were unable to keep up with orders. Schwartz was told that delivery of a new unit would take many months.

“The lead times are pretty shocking,” said Schwartz, a building contractor who is familiar with supply-chain interruptions that have also challenged his industry. “That’s really what’s happening right now. The whole supply chain is so spotty.”

Schwartz went ahead and put down a deposit on a 20-kilowatt Briggs & Stratton generator from All Phase Electric Co., a dealer in Upper Darby, Pennsylvania. The unit finally arrived and was installed seven months after he placed the order.

Such delays are par for the course these days, said John Phillips, a generator specialist for All Phase Electric. His firm sells Briggs & Stratton and two other generator brands — Kohler and Generac. All manufacturers are experiencing delays in deliveries of new units, he said. Some replacement parts are also back-ordered.

“We’ve been waiting for one particular item from one of those manufacturers for like eight or nine months now,” said Phillips. “So if it’s not a high-volume product, or they get some piece of that from some far-off land, there’s no telling how long it will take to deliver.”

The story is the same with other dealers.

“If I was to place a new order for generators, they’re shipping in August 2022, like 10 months out,” said Sharon Torrisi, president of Power Watch Systems Inc., a Montgomery County, Pa., dealer of Generac units. Business is booked so solidly that Torrisi’s family-owned firm is now scheduling installations of in-stock generators for next April.

A standby generator is different from a portable power generator, which is a smaller device that needs to be manually fueled and connected by an extension cord to electrical systems. A standby generator is an engine housed in a box about the size of an air-conditioner condenser, permanently installed outside a house. They are linked to a fuel supply like natural gas or propane and wired directly into a house’s circuitry through a transfer switch. They turn on automatically, in seconds, if utility power cuts out, and stay on until utility power is restored.

Customers who have installed standby generators say it gives them peace of mind when the power fails.

“Every time the generator comes on, I want to go out and kiss it,” said Diana Gross, a retiree in Fort Washington, Pennsylvania, who has multiple sclerosis. She and her husband, John, had a Cummins generator installed in June 2020 when the lead time for an installation was about a week.

Standby generators are not an inconsequential purchase. They often require a building permit. Because the engines emit deadly carbon monoxide, they need to be positioned away from windows. The zoning in some towns requires them to be located away from property lines because they can be noisy.

Two years ago, the price of a typical installation cost $10,000 to $12,000, said Torrisi, whose firm is based in Eagleville. Those prices have increased about $2,000, she said, because manufacturers are charging more, and the cost of installation has climbed, driven by surging demand.

Higher prices do not seem to have deterred sales.

“The convergence of the heightened power outage activity, broader electrification trends, and people spending more time at home has driven unprecedented demand for home standby generators,” Aaron P. Jagdfeld, chief executive of Generac Holdings Inc., told investment analysts last Tuesday after the Wisconsin company reported third-quarter earnings. Generac accounts for about 75% of standby home generator sales in the United States.

Jagdfeld said Generac sales were up 34% in the third quarter “in spite of significant operational obstacles faced across the supply chain environment.” He said Generac dealers are making three times more home sales calls this year than in 2019. The company, which has two factories in Wisconsin, just opened a third plant in South Carolina.

Last year, Quality Electric Service, a Generac dealer in Woodbine, Pennsylvania, installed 150 standby generators in its territory, which ranges from Cherry Hill to the Jersey Shore, said Brian Ploe, a partner in the firm. The year before, it did 90. It’s on pace this year to surpass its sales from last year.

“The lead time for installation was about 12 to 14 weeks for orders placed early last year,” Ploe said. “The lead time today is 38 to 44 weeks for the same generator. I’m telling customers, if you want one and you’re serious, give us a deposit today and we’ll do everything we can to get you installed in about 10 to 12 months.”

Dealers say they received an influx of inquiries in September after Tropical Storm Ida, as they always do after big storms, though some prospective buyers had only seen infomercials that advertise standby generators starting at $1,999 (that’s for a small unit, uninstalled). One dealer said installation costs, regardless of the generator size, are about $6,000.

“Well, you definitely see an increase in call volumes when a storm hits,” said Torrisi. “But the owner here used to say, ‘If they call on a sunny day, then they’re a real buyer.’”

Ploe, the New Jersey dealer, said the demographic of potential buyers has changed. Before the pandemic, he said, 95% of the firm’s customers were older than 55, and they were concerned about security and comfort.

“Midsummer of 2020 we started noticing it was families with young children who were buying, which was always a really hard market for us to break into because of their incomes,” Ploe said. Younger people working from home or teaching their children were worried about lost income and lost school days, he said.

He said the long lead time for a dealer-installed unit has caused some buyers to order a standby generator delivered from home-improvement stores or online sellers, which the dealers discourage. “Now, you’re stuck with a 500-pound box in your driveway, right?” said Ploe. “What are you gonna do with it?” If the unit is damaged or improperly installed, the manufacturers will refer the owners to a qualified dealer for warranty work, he said.

“It’s a dangerous thing to introduce generated power and utility power,” said Chris Caniglia, the owner of All Phase Electric. “We’ve done probably hundreds of thousands of dollars of repairs of work by unqualified contractors who went in and did a $10,000 generator for eight grand.”

After exploring the costs, many customers may find that the price of a standby generator is not justified by the frequency and duration of power outages.

The Pennsylvania Public Utility Commission says that the number of major storm events has been trending ever higher in recent decades — three of the highest storm totals since 1993 have occurred in the last four years. The number of customers affected each year by the storms has increased over that time.

But the average American household experienced about 7.6 hours without power last year when major storm events were included, according to the U.S. Energy Information Administration. In Pennsylvania, the average was 5.9 hours, and in New Jersey, hit harder by summer storms, interruptions averaged 15.7 hours per customer.

In the hardest-hit state, hurricane-prone Louisiana, customers averaged 72 hours without power last year — three days.

Occasionally a generator’s return on investment is very quick.

Debbie Foster commissioned All Phase Electric to install a Kohler generator at her Bala Cynwyd, Pennsylvania, home last summer, less than a day before a massive storm swept through the area. “It was almost comical because they put in the generator and within 13 hours, we had a power outage and the neighborhood was out for like three days,” she said. Foster has referred so many friends to All Phase that the firm gave her a year’s service for free, she said.

All utility customers do not experience outages equally. Many households in sparsely populated, heavily wooded areas, may find that they experience more outages and longer restoration times than the average customer. Other customers, such as those with medical conditions, have a low tolerance for even brief outages. Torrisi said her firm has installed generators for several physicians who practice telemedicine from home for whom every outage is a big imposition.

Torrisi believes that a standby generator elevates a house’s resale value, and some developers are including them in new builds. “If the house has a backup power generator, that makes it more appealing, like a swimming pool,” she said. Some customers have told her they got a discount on homeowner’s insurance because their sump pumps would keep their basements dry during an outage.

But many say the benefits are hard to measure in dollars and cents.

“We probably lost power last week twice, just for no reason on a sunny day, maybe for an hour,” said Schwartz, the builder who spent $16,000 to install the propane-fueled generator at his home. “It’s definitely a First World problem. But if you have the ability, it’s a great add-on.” ——— (C)2021 The Philadelphia Inquirer, LLC. Visit at Distributed by Tribune Content Agency, LLC.

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