WEBVTT - Generac CEO Aaron Jagdfeld Talks Higher Generator Demand

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Here to talk to you about your backup plan is

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<v Speaker 2>the CEO of Jenerak, Aaron Yachfeld. Aaron, I thought it

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<v Speaker 2>was great that you were coming on the same day

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<v Speaker 2>that Microsoft was reaching for a big power supply solution.

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<v Speaker 2>In terms of the weather warnings, though they seem to

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<v Speaker 2>be increasing, we're losing power more and more often in Westchester.

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<v Speaker 2>Do you see your sales actually kind of rising in

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<v Speaker 2>line with climate change.

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<v Speaker 3>We see our sales rising in line with lower power

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<v Speaker 3>quality matt which you know, obviously it's clear the science says,

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<v Speaker 3>you know, air temperatures are warmer, water temperatures are warmer.

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<v Speaker 3>This is causing more severe weather, you know, hotter droughts

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<v Speaker 3>and heat waves and colder cold snaps, more rain, stronger hurricanes.

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<v Speaker 3>These are the trends we've been witnessing over the last

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<v Speaker 3>couple of decades. And you know, and you put on

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<v Speaker 3>top of that then the stress that the grid is under,

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<v Speaker 3>and you know, you've got companies like the Microsoft announcement

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<v Speaker 3>this morning with three Mile Island. You know, people are

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<v Speaker 3>companies are are forced to try and find new power

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<v Speaker 3>sources because the grid.

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<v Speaker 1>Is you know, it's stressed right now.

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<v Speaker 2>Do you have more sales in those states? I mean,

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<v Speaker 2>we're always doing stories on Texas with power outages because

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<v Speaker 2>their grid is so fragmented and fragile.

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<v Speaker 1>Do you see more sales and states like that? Yeah.

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<v Speaker 3>Nationally, we're about about six percent of single family homes

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<v Speaker 3>have a permanently installed homestand by generator.

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<v Speaker 1>Texas.

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<v Speaker 3>Actually, you know, it's been a good state for US

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<v Speaker 3>as as of late in terms of demand. But some

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<v Speaker 3>of our best states are not the states you might

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<v Speaker 3>think of. You know, places like Michigan where you've got

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<v Speaker 3>pretty severe winter weather as well as severe summer weather, Ohio, Connecticut,

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<v Speaker 3>you mentioned Westchester. Some of these states actually have higher

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<v Speaker 3>rates of penetration in the product because they experience those

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<v Speaker 3>multiple seasons.

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<v Speaker 2>We're showing the video of, you know, these portable generators

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<v Speaker 2>that are gas or diesel diesel powered. What I want

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<v Speaker 2>for Westchester is the big built in They're like these

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<v Speaker 2>portable ones you can get for less than one thousand dollars, right,

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<v Speaker 2>But the.

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<v Speaker 1>Big daddies are like thirty grand right.

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<v Speaker 4>They're expensive, right, I mean, Aaron. At the end of

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<v Speaker 4>the day, we have gone through a period of you know,

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<v Speaker 4>very stifling inflation. Have people kind of put off this purchase?

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<v Speaker 4>You know, is this something that you find that there

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<v Speaker 4>is kind of a hurdle here for many Americans to

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<v Speaker 4>buy in for a new home.

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<v Speaker 1>There's no question.

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<v Speaker 3>I mean, this is a home improvement project, right, So

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<v Speaker 3>how you feel about your home financially kind of where

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<v Speaker 3>you're at. You know, if you're locked into a mortgage

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<v Speaker 3>that's a low rate today, but you want to move

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<v Speaker 3>in the future, you're probably not doing big projects in

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<v Speaker 3>your home today until rates come down.

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<v Speaker 1>But we are seeing again when out it just happened.

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<v Speaker 3>So the product retails for around five to six thousand

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<v Speaker 3>dollars and then it's another five to six thousand dollars

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<v Speaker 3>to install.

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<v Speaker 1>It, so ten to twelve thousand.

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<v Speaker 3>It's definitely an expensive product when you talk about you know,

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<v Speaker 3>the overall cost, but these are fully automatic. They run

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<v Speaker 3>off of the homes fuel system, and it's protection, protection

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<v Speaker 3>for your home, protection for your family. A lot of

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<v Speaker 3>people are working from home now, right, so it can

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<v Speaker 3>protect your livelihood as well. So we're just seeing these

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<v Speaker 3>trends continue and you know, the product has become very popular.

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<v Speaker 1>What about businesses?

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<v Speaker 2>When I was thinking about you know, having you on

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<v Speaker 2>this morning, I thought about a power outage at you know,

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<v Speaker 2>a hospital for example, can be life is life threatening.

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<v Speaker 2>Do you have sales at big businesses or institutions like hospitals.

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<v Speaker 1>We do.

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<v Speaker 3>Yeah, we have a whole division of or company that

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<v Speaker 3>focuses on much larger generators for exactly as you said, Matt, hospitals.

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<v Speaker 3>They're focused on data centers, manufacturing plants, distribution, government installations

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<v Speaker 3>like wastewater treatment plants, some of the critical infrastructure. We're

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<v Speaker 3>big in the telecommunications industry. So if you see, you know,

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<v Speaker 3>the wireless cell towers along the highway along I ninety five,

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<v Speaker 3>a lot of those are going to be backed up

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<v Speaker 3>by our generators. Anywhere there's critical infrastructure where you know,

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<v Speaker 3>a power loss would cause significant damage or disruption to

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<v Speaker 3>a business or to infrastructure.

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<v Speaker 2>How how big do your single site contracts get? I mean,

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<v Speaker 2>if I'm on the on the one end of the spectrum, right,

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<v Speaker 2>I can go to I guess home depot and pick

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<v Speaker 2>up a generator for a few hundred bucks. What's the

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<v Speaker 2>biggest single site number that you've seen?

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<v Speaker 3>Yeah, I mean, especially you get into some of these

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<v Speaker 3>hyper scale data centers. You know, the Amazons, the Netflixes

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<v Speaker 3>and the Microsoft's of the world. You're seeing some of

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<v Speaker 3>these generator farms are up upwards, you know, to put

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<v Speaker 3>it in context, there there's sometimes twenty thirty megawatts of power.

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<v Speaker 3>I mean, these are again, this is why Microsoft's got

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<v Speaker 3>a contract with a nuclear power plant, a defunct nuclear

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<v Speaker 3>power plant to bring it back online, because the amount

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<v Speaker 3>of power needed for a single site is so dramatic.

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<v Speaker 3>Now that's you know, that's out on the far edge

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<v Speaker 3>of the spectrum of use cases. A lot of times

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<v Speaker 3>you're going to see for a typical grocery store or

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<v Speaker 3>perhaps a you know, a manufacturing plant, maybe a couple

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<v Speaker 3>of megawatts of power to keep those installations running, which is,

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<v Speaker 3>you know, that's still a lot of power, but it's

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<v Speaker 3>not nearly size that you'd see in some of these

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<v Speaker 3>bigger installations.

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<v Speaker 1>With the data centers.

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<v Speaker 4>Today erin we're getting questions from viewers as well, one

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<v Speaker 4>being is do you ever try to work with local

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<v Speaker 4>electric companies to lower the cost for consumers.

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<v Speaker 3>Yeah, for us, we have programs with especially when you

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<v Speaker 3>talk about rural cooperatives where you know, the rate payers

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<v Speaker 3>themselves are part of, you know, solving for what they

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<v Speaker 3>pay for their local utility. It's a little bit tougher

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<v Speaker 3>when you get into bigger you know, some of the

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<v Speaker 3>bigger power networks and some of the bigger utilities, but

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<v Speaker 3>definitely on the smaller utility side.

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<v Speaker 1>We've put programs together in the past.

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<v Speaker 3>I think one of the things that you know, people

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<v Speaker 3>are very concerned about, and this is going to be coming.

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<v Speaker 3>It's not just that power quality is becoming more challenging

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<v Speaker 3>with the storms and some of the grid stress, but

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<v Speaker 3>power prices are going up, right, So just what you pay,

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<v Speaker 3>what we pay every day for our electrical prices, you

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<v Speaker 3>know that is that's rising. I mean, you've seen almost

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<v Speaker 3>the doubling of power prices in some parts of the

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<v Speaker 3>country over the last ten years, and the forecast is

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<v Speaker 3>for another doubling. So you're seeing people take the know

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<v Speaker 3>kind of kind of take the situation into their own hands,

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<v Speaker 3>whether you know, whether it's backing up their home or

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<v Speaker 3>their business, or it's doing something to produce their own

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<v Speaker 3>power like solar or wind or.

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<v Speaker 1>Something like that.

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<v Speaker 4>Aaron, you know, one thing I've been wondering a lot

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<v Speaker 4>about is the stress on power grids across this country

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<v Speaker 4>and what that means you know that we talked a

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<v Speaker 4>little bit about climate change, but also as the needs

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<v Speaker 4>for power increase so meaningfully with this let's say AI revolution,

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<v Speaker 4>you were talking about rising power costs, I mean, would

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<v Speaker 4>the cost of your products also rise meaningfully in the

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<v Speaker 4>next couple of years? Also given that stress and given

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<v Speaker 4>these outages that we've seen, I mean I've lost power

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<v Speaker 4>in my home twice this season already.

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<v Speaker 1>Yeah, I mean our products just moved in.

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<v Speaker 3>Yeah, I mean our product costs have gone up, like everybody,

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<v Speaker 3>you know, kind of with inflation here over the last

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<v Speaker 3>few years, it's been tough.

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<v Speaker 1>Things have leveled off now.

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<v Speaker 3>But I think what what you know, I think homeowners

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<v Speaker 3>and what business owners are very concerned about is where

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<v Speaker 3>do their overall utility costs go in the future. You know,

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<v Speaker 3>we're investing very heavily in decarbonizing the grid. Right on

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<v Speaker 3>the side, which is great, We're adding a lot of

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<v Speaker 3>utility scale solar, a lot of utility scale wind in

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<v Speaker 3>favor of some of the gas plants and some of

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<v Speaker 3>the coal plants that have been traditional sources for power.

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<v Speaker 1>And then on the demand side, you know, you kind

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<v Speaker 1>of hit the nail on the head.

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<v Speaker 3>It's not only were we're electrifying everything, Like we're electrifying

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<v Speaker 3>things in our homes, We're electrifying things in our business.

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<v Speaker 3>We're just at the beginning of the electrification trends in transportation.

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<v Speaker 3>And now you've got this whole artificial intelligence you know,

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<v Speaker 3>kind of a demand cycle here which is driving huge

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<v Speaker 3>construction of new data centers and that's going to put

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<v Speaker 3>a lot of stress on the grid as well.

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<v Speaker 1>So power prices are going up as a result.

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<v Speaker 3>I think our products, you know, buy and large get

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<v Speaker 3>used for resiliency, so for you know, those times when

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<v Speaker 3>power's out, but I think the need for that, you know,

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<v Speaker 3>as the grid becomes under more stress going forward, we

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<v Speaker 3>think that need is going to grow because we think

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<v Speaker 3>power quality, I mean the data is very clear over

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<v Speaker 3>the last twenty to thirty years, power quality has.

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<v Speaker 2>Gotten worse in the US well aired to your last

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<v Speaker 2>couple of points, I mean the rising cost of power, and.

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<v Speaker 1>You know, the the the green side of things.

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<v Speaker 2>Microsoft is looking to nuclear because it's carbon free. You

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<v Speaker 2>relaunched your solar and storage business, and Bloomberg Intelligence is

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<v Speaker 2>focused on that, and your ev charger partnership with wall

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<v Speaker 2>box and and Eco b Are you how optimistic. Are

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<v Speaker 2>you for this business? And does it matter who gets elected?

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<v Speaker 1>Yeah, that's a great question.

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<v Speaker 3>I mean, obviously I think it matters for a lot

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<v Speaker 3>of us on a lot of points on who gets elected, right,

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<v Speaker 3>And when it comes to power, of course, and power

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<v Speaker 3>quality and the cost of power, I think I think,

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<v Speaker 3>you know, from a from a bipartisan standpoint, we all

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<v Speaker 3>agree on we want better power quality and we want

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<v Speaker 3>to pay less for our power. So I think those

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<v Speaker 3>things I think are are are agreeable points for the

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<v Speaker 3>most part. You know, how we get there is maybe

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<v Speaker 3>the you know, is maybe where the details are are different.

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<v Speaker 3>But I do think that with our business, you know,

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<v Speaker 3>when it comes to some of our solar products, our

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<v Speaker 3>battery storage products you mentioned, our EV charging products, Matt,

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<v Speaker 3>you know, this is about the future and trying to

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<v Speaker 3>help homeowners reduce the cast of their power right by

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<v Speaker 3>self production either on the rooftop with solar, but also

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<v Speaker 3>having some amount of storage and the ability then to

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<v Speaker 3>control kind of how those systems work together with your HVAC,

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<v Speaker 3>your EV charging, all of those systems together to make

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<v Speaker 3>sure we're maximizing your ability to have resiliency, but also to.

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<v Speaker 1>Reduce the amount of power you use and consume.

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<v Speaker 2>Such a cool business for the data and me loves it,

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<v Speaker 2>but Janai loves it too, So.

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<v Speaker 4>I do I want a generator before I buy other

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<v Speaker 4>cool things.

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<v Speaker 2>Very cool, Aaron, thanks so much for joining us Aeron Yaxfeld.

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<v Speaker 1>They're the CEO of Generac