California Power Outages Hit Small Businesses—but Bolster Generator Companies

California’s power woes are making things worse for small business owners—but business is booming for the makers of backup generators. Across the state, hundreds of thousands of small businesses lost power in multi-day outages during the month of October. The most recent widespread “public safety power outages,” aimed at preventing wildfires in northern California, took place last week. For small business owners, outages lasting days are creating big problems—problems that can’t always be solved by the purchase of a gas-powered backup generator.

Standby generators that come online when the power goes out are either powered by diesel or natural gas, which fuels a combustion engine, not unlike the one in a car. Their fuel is expensive and burning it contributes to climate change—the very thing behind the unstable weather that’s made California so dangerous these past few years. Companies from Generac to Tesla are engaged in a race to cost-effectively develop microgrids that can store power generated by solar panels or other renewable sources of energy and act as backup power when there’s an outage. The batteries these microgrids need are currently prohibitively expensive to produce, so for the moment, small businesses looking to stay electrified through a blackout need to invest in a generator.  

Small business clients make up about 20% of his company’s overall business, said Aaron Jagdfeld, CEO of Generac, a generator company that has benefited from increased demand in California. Another 50% of the business is serving homeowners.

Some stores are staying open thanks to generators, like 6,000-square-foot Santa Venetia Market, a grocery store in San Rafael whose owner, Scott Day, drove several hours to buy a used generator for $19,000. When he brought the generator back to his store, the costs of hooking it upset him back an additional $6,000, he said, and the diesel to keep it running cost more than $1,500. But his product losses would have been over $40,000 without the generator, Day said, making the $26,500-plus investment worth it. It also allowed him to keep serving the community.

For the moment, however, small businesses in California are weighing their options—portable generator, hardwired standby generator, no generator—and, like everybody in the state, wondering what the future will hold. The most stable option for many small business customers is likely to be a natural gas generator, which can run off an existing natural gas supply. Fortunately for Generac, that’s the kind of generator the company specializes in producing. -All Information is credited to The Fortune Newsletter

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