Home buyers generally filter options and upgrades through the same lens: Items are either needs or wants. They want the whirlpool tub, but they need a washer and dryer. Recently, manufacturers of backup generators have seen a surge in interest for their products based on this same concept: Homeowners see backup power as a need for when the utility is down.
“The market [for backup generators] has been growing dramatically for the last five years,” says Clement Feng, executive vice president and chief marketing officer for Waukesha, Wis.–based Generac Power Systems. “The product became better known after the hurricanes of 2004 and 2005 and after the blackout of 2003.”
Simply put, a backup generator supplies emergency power when the grid goes down. A system consists of a gas- or propane-powered unit that is connected to an automatic transfer switch and to the home’s main distribution panel. Constantly monitoring the incoming voltage, the generator senses a power loss and activates automatically. At the same time, the transfer switch closes the utility line and opens the line to the generator. Once the power returns, the transfer switch reverts to the utility line.
Used mainly by farmers, businesses, and the construction sector, power generators have been around for many years. The old units were loud, large, or expensive—and in some cases, all three—but improvements over the past 10 years have made them viable for residential use.
“The units have better aesthetics now; they used to be fairly industrial looking,” says John Klesk, product manager for consumer marketing and residential business at Cummins Power Generation in Fridley, Minn. Many units operate at as low as 68 decibels and require minimal homeowner involvement. For example, the redesigned Cummins RS12000 has an in-home display that lets homeowners know when the unit needs an oil change or routine maintenance. Homeowners may also monitor the system via the Internet. “People don’t want to have to deal with the units,” Klesk says, “so we’ve made them user-friendly.”
Machines for Living
Residential generators generally start at 3 kilowatts and go as high as 45 kilowatts. Smaller units provide supplementary emergency power for general lighting, a refrigerator, or an air-conditioning unit alone, but large units can run multiple AC units and provide power for other household needs such as appliances or sump pumps.
One challenge facing the industry is the perception that a generator is only for the rich. “There is a perception that they are expensive, but prices have come down significantly,” says Melanie Tydrich, senior channel manager of residential generators at Kohler Power Systems in Kohler, Wis. Prices, says Tydrich, generally start at $1,999 for a 7-kilowatt unit, but those generators will not provide power to an entire house. A whole-house system might start at $3,600 for a 12-kilowatt unit, which would handle the power needs for a 2,500-square-foot house.
As expected, the market for generators is especially strong in hurricane-prone areas such as the East and Southeast coasts as well as in areas with severe ice storms. “We’ve been marketing to areas where outages are more prevalent, which is about 21 states,” Tydrich says. Klesk says demand also has been holding up in the Northwest.
Though retrofit sees the majority of sales, the new-home market offers great opportunities, Feng says. Like many products, it’s easier to install when the house is being built. Wiring is easier and the cost can be factored into the mortgage. Some builders are pre-wiring houses to easily accept a generator even if the home buyer chooses not to install a unit. A few custom home builders on the East Coast offer backup systems as standard, but Feng says this is rare.
Manufacturers believe in the new-home market and are eyeing ways to make the units more affordable.
Generac recently introduced the GenReady load center panel that makes it easy to add a backup system. Instead of installing a main load center, an emergency load center, and a transfer switch, a builder would only need the GenReady panel. A home buyer may then install a generator immediately or at a future date.
“This unique panel allows the builder to offer a valuable upgrade to the homeowner at minimal expense,” a company release says. “With the GenReady load center wiring and plumbing in place, the homeowner can save thousands of dollars when the generator is installed, making a home standby system more affordable.”