Home Generator Sales Surge in U.S.

Issue 11 and Volume 110.

American homeowners hopng to avoid interruptions to their increasingly electricity-dependent lifestyles are buying more home backup power systems than ever before.

“The demand for home standby generators has never been bigger,” says Charlie Habic, vice president of marketing for the Standby Division of Gillette Generators of Elkhart, Ind. Backup power supplies were rarely found in residential applications before 1990, when the choice was between portable generators and industrial-sized backup systems. But manufacturers saw a spike in the home backup power market as 2000 approached, spurred by fears about the power grid’s readiness for Y2K.

Since 2000, gas-fired product lines have appeared that are quiet, aesthetically appealing and that feature automatic start-stop technology that makes them user friendly

Homeowners also found they could afford to have their own backup power, with average installed prices running between $5,000 and $8,000 for 3,000 square-foot homes. Today the U.S. residential standby market is estimated to be about $400 million. Forecasters put this market on an annual 8 percent growth rate through the next decade.

A typical residential backup power system. Courtesy of Gillette Generators
Click here to enlarge image

“We’re selling as many units as we can make,” says Habic. Gillette employs 60 people and has yearly sales of $15 million. The standby line has a diesel group of units powered by John Deere engines in sizes ranging from 15 kW to 150 kW. The company also sells transfer switches, battery chargers, circuit breakers and other equipment.

Part of the demand for home generators comes from recent experiences with power outages resulting from hurricanes, ice storms, extreme heat and other weather-related problems. Habic reports that 45 percent of Gillette’s orders presently go to the Gulf Coast. Other markets include upscale residences in the coastal Northeast and in south Florida. Homeowners in the Midwest are slower to buy into the technology, he says. “It can be a fickle market. You get lots of sales immediately following an incident when people want to get ahead of the next crisis before it arrives. Then interest cools off.”

Part of the demand comes from worries about the national electric grid, including worries about susceptibility to terrorist attack as well as its perceived deteriorating condition. Concerns were fueled during the blackout that affected the Northeast, Midwest and part of Canada in the summer of 2003.

Home power systems are more sophisticated than they were just a few years ago. For instance, they can remain in a “watch” mode alert to power flowing from the grid. When the machine notices that power is no longer coming from the grid, it automatically switches itself on to power the home. When grid power is restored, the generator shuts down and transfers load back to the utility.

Also spurring residential backup power is the fact that many American homes have computers that need almost continuous Internet access, a necessity for the growing number of people who maintain business offices at home.

Residential generators require professional installation. That includes a poured slab for the equipment, a natural gas line and connections of the system into the home. Retrofits cost about $800 more than installation in homes under construction. “A lot of people will put them in as they build their home,” Habic says. “That’s why one of our big marketing pushes is to contractors.” A 12 kW system costs about $7,000 to install in an existing home and about $6,200 to install while a house is under construction. That’s ordinarily enough power for a 2,000 to 3,000-square-foot home.

“In the South, we sell 30 kW units because the air conditioner loads are a staple,” he says.