With the state of California set to experience the "biggest blackout ever" as a violent windstorm forces local utilities PG&E, Edison and Sempra to shut off power to millions of residents over fears a broken transmission line could trigger another massive fire, resulting in billions in legal costs, a dismal reality is starting to set in: Californians are facing a "decade of darkness" and they are starting to take matters into their own hands by going "off the grid." Literally.
Citing a comment by PG&E Corp CEO Bill Johnson, who last week that "it could take ten years to shore up the grid enough to ratchet down the blackouts", Aaron Jagdfeld, the CEO of Wisconsin-based generator maker Generac Holdings, said that California is offering a huge opportunity for the sale of generators that keep the lights on when the power grid goes down. Because as California unwittingly transforms into Venezuela, and the power grid goes down every time there is a major windstorm, the local population will increasingly seek alternatives such as Generac's products.
Facing sustained criticism over last week’s massive blackouts, PG&E Corp. CEO Bill Johnson told state regulators Friday that his company is working to make forced power outages unnecessary — but the goal could take a decade to accomplish.
Johnson said PG&E will work every year to reduce the breadth of its shut-offs designed to prevent power lines from starting more fires. PG&E is strengthening its electric system by installing more resilient poles and covering bare wires in fire-risk areas, and the company is also putting devices in place to more closely target the equipment it shuts down.
All of that should help PG&E limit the blackouts more over time, Johnson told the California Public Utilities Commission. But it will probably be 10 years before the need for shut-offs is “really ratcheted down significantly,” Johnson said. - SF Chronicle
California's dystopian future is music to Jagdfeld's shareholders: in a Friday interview with the NYT, Generac's CEO said that California could represent as much as $100 million to $200 million of annual revenue, perhaps as soon as 2022. No wonder Generac's shares hit an all-time high the same day.
Ironically until now, California - with its generally mild climate - wasn’t a big market for Generac. That all changed when PG&E filed for bankruptcy following billions in legal claims, forcing an avalanche of intentional blackouts. And while an expansion in the state will take time, Generac is gearing up a sales force and a marketing push to make it work according to Bloomberg.
"It is a situation where we see a long-term upside for building awareness for our products," Jagdfeld told Bloomberg, expecting that California will get about $1 million of the $10 million spent this year on infomercials, while opening an office in Sacramento for training, inventory and retail next year.
And while Generac expects some early hurdles such as the state’s tough regulatory profile, which means that some of Generac’s present equipment may not meet environmental guidelines, in the long run demand by locals for any source of "off the grid" electricity will drown any "green" objections, resulting in a surge in demand for its products.
The trade off is simple: as California's liberal government is set to put most if not all of the state's utilities out of business with its unprecedented response to last year's PG&E fires, in the meantime literally pushing the state into darkness, companies that provide an alternative to legacy utilities will thrive.
Therefore, it is hardly surprising that the company, which expects about $2 billion in revenue this year, is gearing up for an unprecedented surge in demand out of California. Generac currently works with about 6,000 electricians nationwide, Jagdfeld said. At the start of the year, there were only 100 in California. Now that number has risen to 250, he said, and the company is adding about 30 new ones a month.
"The interest level in California has been pretty material,” said Stanley Elliott, an analyst at Stifel Nicolaus & Co. “You are going to continue to have these rolling brownouts." Yes you are... for about 10 more years.
And while a dysfunctional socialist government may be bad for stocks, don't tell that to Generac shareholders: since May 1, Generac shares have risen 65% to $90.71 per share.
There's much more to come: Generac recently acquired Pika Energy and Neurio Technology; the first makes products that let consumers monitor the power they use, the other allows homeowners to direct power from their solar arrays. While they aren’t included in Jagdfeld’s $100 million to $200 million goal for revenue in California, they represent "a nice, natural fit into our existing product lines, that we could start to forge a position in the home, in the utility panel."
It's not just Generac who hopes to capitalize on the Venezuelan clusterfuck that is California: the state's own "renewable energy visionary", Elon Musk, was present, peddling his own alternatives to California's power suppliers.
PG&E says rolling blackouts expected in California for next 10 years! https://t.co/Iv9f0piK82
— Elon Musk (@elonmusk) October 21, 2019
Many people are aware that Pacific Gas & Electric (PG&E) is being held responsible for California’s widespread devastating and deadly wildfires. A recent article reports that documents obtained under the Freedom of Information Act reveal that the company knew for years about fire risks and did nothing to prevent them.
After rallying in the 'good' news that the company has entered Chapter 11, PG&E's stock is lower today, not helped by a federal judge's comments slamming the triple-bankrupt utility for serially starting fires.
Perhaps the only people less worthy of receiving a bonus of any kind than the Moody's and S&P analysts who as recently as three weeks ago rated now bankrupt PG&E as investment grade is the management of PG&E, which one year after the most destructive fire in California history sparked, literally, another "most destructive fire in history" with no hedges or fallbacks in place. And yet as part of its first day bankruptcy motion, the California utility that filed for bankruptcy early on Tuesday is seeking to pay employees about $130 million in performance bonuses for last year, an amount which is due to be paid in March 2019.
The largest utility in the United States, Pacific Gas & Electric Corp (PG&E), filed for bankruptcy on Tuesday as it faces billions of dollars in potential damages from wildfires in California. The utility filed documents in a US court seeking Chapter 11 reorganisation despite state investigators determining last week that its equipment was not to blame for a 2017 fire that killed 22 people in Northern California wine country.
In what's expected to be one of the most complicated bankruptcies in recent memory thanks to the involvement of indignant state and federal regulators, activist shareholders, worried bond holders and angry fire victims, PG&E has officially filed for bankruptcy.