Rich Californians shelling out $30,000 to ease blackout pain

Source: By Sophie Alexander, Bloomberg • Posted: Sunday, December 1, 2019

“It’s been nonstop,” Lopez said. “People are definitely being reactive.”

As Californians face years of intentional blackouts — a strategy by the state’s utilities to prevent wildfires — homeowners are rushing to find alternative sources of power to keep the lights on. Last month’s outages, in particular, swept across affluent areas just outside of San Francisco, hitting people who have the means to pay up for pricey equipment.

The trend isn’t unique to California. With climate change colliding with an aging grid, residents of areas from snowy New England to the hurricane-threatened South face more disruptions to power. But with costs for whole-house generators or solar and battery packages running tens of thousands of dollars, the demand for backup systems underscores a stark reality: Wealthy people will be able to endure outages while the poor are left in the dark.

“Like a lot of things that we’re talking about in society today and the inequality that exists, that gap in inequality could show up in even how you get your power,” said Aaron Jagdfeld, CEO of Generac Holdings Inc., the country’s biggest standby generator company. Its shares climbed 1.6% to $98.84 at 9:58 a.m. in New York and have almost doubled this year on the prospect of rising demand.

Generac sells portable generators for as little as $439, but the higher-end, permanently installed automatic generators the company specializes in run as high as $30,699 for the most robust residential unit, which is strong enough to power a convenience store. Installation costs about $10,000 on top of that for any of its standby models.

Generac’s sales are up 300% in California this year, Jagdfeld said. Demand is so brisk that the Waukesha, Wis.-based company is considering opening a Sacramento office for training, inventory and retail.

PG&E, in bankruptcy because of billions of dollars in liabilities from deadly fires sparked by its equipment, has warned that it may take 10 years to dramatically reduce intentional power shutoffs during dangerous weather. Its blackouts have stretched from lower-income regions in the Sierra foothills to wealthy communities such as Marin County, which has some of the highest home values in the country. The wine-growing areas of Napa and Sonoma counties have been hit multiple times.

While rain was forecast to hit the region yesterday, signaling the much-anticipated start of the wet season and diminishing the threat of fires, Californians are preparing for the years ahead.

The power outages “opened people’s eyes to disaster preparedness and how important it is,” said Ed Lynch, a real estate broker with a home in Napa County. After PG&E cut his power three times this year, he looked into solar panels and backup batteries for his three-bedroom house. The price tag: $61,000.

“I’m definitely going to do it,” he said.

Solar panels are popular in California but are tied to the grid and require backup batteries to keep electricity running during a blackout. Big solar companies promoted their systems during the shut-offs, with Elon Musk offering $1,000 discounts for Tesla Inc.’s solar and Powerwall battery backup for residents affected by wildfire outages.

Brian Urey, a resident of Marin’s Mill Valley, decided to add backup batteries to his home in August after hearing about PG&E’s plans for scheduled service interruptions. The two Tesla Powerwalls plus installation and permits cost him more than $18,000, he said. (He expects to get about $6,000 back in tax credits.) Everything was up and running in September, in time for the most severe part of fire season.

As many of Urey’s neighbors went dark in October, he continued life as normal, watching TV, doing laundry and running the dishwasher. “It was flawless,” he said. He had a couple of friends without power over for dinner and let his neighbor plug an extension cord into his house to charge phones and turn on a lamp. That neighbor is now having their house outfitted with Tesla solar panel and backup batteries, Urey said.

Installing solar panels or large generators is mainly an option for people who own their homes, excluding the millions of renters in California’s pricey housing market. As inequality in the state grows more extreme, backup power systems will be just one more issue that widens the gap, said Reed Walker, associate professor of business and public policy and economics at the University of California, Berkeley’s Haas School of Business.

“The current state of adaptation, which is currently ‘I hope you can afford a generator or Tesla Powerwall,’ is misguided,” Walker said. If nothing changes in the future, “there’d be enormous disparities in the way that people go about their day-to-day lives.”

Still, there are products for everyone, said Generac’s Jagdfeld. The cheaper portable generators have enough power to charge phones and even keep a refrigerator running in some cases. And they can be used by renters, too.

Sally Benson, director of Stanford University’s Global Climate and Energy Project, said she’s more concerned that people may end up using backup power for more than just emergencies, causing greater harm to the environment.

“This idea that you can just be off the grid, we are hearing that more and more,” Benson said. “Under those circumstances the power you’re consuming actually has higher carbon intensity and pollution than the good as a whole.”

In Napa, Lynch said he expects California’s solar credits will shave about $30,000 off the cost of his equipment. But he’s seen a long lead time for installation.

“Demand has gone through the ceiling,” Lynch said. “If people are thinking about it, they probably want to get in line.”