Generac Selected by the U.S. Department of Energy to Receive $50 Million Award to Support Grid Resilience Through Clean Energy Solutions with California's Water Utilities

Rhea-AI Summary

Generac Holdings (NYSE: GNRC) has been selected by the U.S. Department of Energy to receive a $50 million award as part of the Grid Resilience and Innovation Partnership (GRIP) program. The project, in collaboration with the California Water Association, aims to integrate clean energy solutions with water utilities across California, with a total investment of approximately $100 million across about 100 sites.

The initiative will focus on Disadvantaged Communities (DACs), with at least 55% of sites located in these areas. The project will implement microgrids utilizing battery energy storage and distributed energy resource management systems to form virtual power plants, enhancing grid reliability and resilience. It is expected to create 200 union construction jobs and 33 direct jobs, with 59% of project benefits directed to DACs.

Positive

• Generac selected to receive a $50 million DOE award for grid resilience project
• Total investment estimated at $100 million across 100 California water utility sites
• Project expected to create 200 union construction jobs and 33 direct jobs
• 59% of project benefits directed to Disadvantaged Communities (DACs)
• Implementation of microgrids and battery energy storage to enhance grid reliability

Negative

• None.

Insights

Energy Policy Expert

This $50 million DOE award to Generac is a significant development in grid resilience and clean energy integration. The project's focus on water utilities in California, particularly in Disadvantaged Communities (DACs), addresses critical infrastructure needs while promoting energy equity. Key points:

• The total investment of $100 million across 100 sites represents a substantial commitment to grid modernization.
• Utilization of microgrids with battery storage and DERMS to create virtual power plants (VPPs) is an innovative approach to load management during grid stress.
• The project aligns with California's clean energy goals and addresses the state's grid challenges, including aging infrastructure and extreme weather events.
• With 55% of sites in DACs, the project demonstrates a strong focus on environmental justice and equitable energy distribution.

This initiative could serve as a model for other states facing similar grid resilience challenges, potentially opening up new market opportunities for Generac in the utility-scale clean energy sector.

Financial Analyst

This DOE award represents a significant business opportunity for Generac, with several positive financial implications:

• The $50 million grant, part of a larger $100 million project, provides substantial revenue potential in the growing clean energy sector.
• It strengthens Generac's position in the critical infrastructure market, particularly in California, a key state for renewable energy initiatives.
• The project's focus on microgrids and VPPs aligns with Generac's strategic shift towards energy technology solutions, potentially driving long-term growth.
• With an estimated 200 union construction jobs and 33 direct jobs created, the project could enhance Generac's reputation and open doors for future government contracts.
• The $27 million contract with underrepresented businesses demonstrates commitment to diversity, which can positively impact ESG ratings and investor perception.

This award could serve as a catalyst for Generac's expansion in the utility-scale clean energy market, potentially leading to increased market share and revenue diversification.

The project will invest in approximately 100 sites across California, with a focus on Disadvantaged Communities (DACs)

WAUKESHA, Wis., Oct. 21, 2024 /PRNewswire/ -- Generac Holdings, Inc. (NYSE: GNRC), a leading global designer, manufacturer and provider of energy technology solutions and other power products, today announced the company has been selected to enter into negotiations by the Department of Energy (DOE) to receive an award for a grant of $50 million as part of the DOE's Grid Resilience and Innovation Partnership (GRIP). Established by the Bipartisan Infrastructure Law, the Grid Resilience and Innovation Partnerships (GRIP) Program is a $10.5 billion investment to enhance grid flexibility, improve the resilience of the power system against extreme weather, and ensure American communities have access to affordable, reliable, energy when and where they need it.

Generac, in collaboration with the California Water Association (CWA), aims to integrate clean energy solutions with water utilities statewide. The total investment is estimated to be approximately $100 million across about 100 California water utility sites, particularly in Disadvantaged Communities (DACs).

"We've been providing reliable backup power solutions to critical infrastructure, such as water and wastewater utilities, in California and across the US for more than 65 years," said Aaron Jagdfeld, president and CEO at Generac. He added, "We are honored to be selected by the DOE to expand that scope by delivering these innovative solutions of clean, resilient, and efficient power for California and its grid."

Under the project, microgrids, which will utilize battery energy storage and be managed by distributed energy resource management systems (DERMS), will form virtual power plants (VPPs) capable of delivering reliable load reduction during times of grid stress. Additionally, the project, with at least 55% of sites in DACs, will lead to improved air and water quality, reliability, and operational savings.

"I am thrilled Generac Power Systems project has been selected for funding and thank the U.S. Department of Energy for their ongoing support of innovations that advance California's clean energy goals," said California Energy Commission Chair David Hochschild. "This effort will install battery systems at water utility facilities across the state, supporting resiliency during local outages and enhancing grid reliability by offering backup power during extreme events." 

California's electric grid is increasingly challenged by aging infrastructure, rising demands from electrification, and the effects of extreme weather. As an example, during a 10-day heat wave in September 2022, the grid was pushed to its limits, and water utilities played a vital role by providing backup power through fossil-fueled generators. This situation underscored the urgent need for more sustainable and resilient energy solutions.

"Made possible through our close partnership with Generac Power Systems, the California Water Association and our members are honored to be beneficiaries of this $50 million grant from the DOE GRIP program. This funding will help our member water utilities leverage clean microgrid and advanced storage solutions to improve local electric power resilience in the communities we serve," said Jennifer Capitolo, CWA Executive Director.

The project will create an estimated 200 union construction jobs and 33 direct jobs, contract approximately $27 million with businesses majority owned or controlled by underrepresented persons or groups of underrepresented persons, and direct 59% of project benefits to DACs. Some or all of this project will be executed in collaboration with the Northern California Laborers, Northern California Operating Engineers, Operators Local Union, Teamsters Local Union, Laborers Local Union, Carpenters Local Union, Masons Local Union, or the IBEW Local Union.

For more information, visit the following link https://www.energy.gov/sites/default/files/2024-10/Generac_Power_Systems_GRIP2_Fact_Sheet.pdf for a background document on the project.

About Generac 
Generac Power Systems (NYSE: GNRC) is a leading energy technology company that provides backup and prime power products and energy storage systems for home and business applications, as well as energy monitoring and management devices and services, along with other power products. Founded in 1959, Generac introduced the first affordable backup generator and later created the automatic home standby generator category. The Company has continued to expand its energy technology offerings in its mission to lead the evolution to more resilient, efficient, and sustainable energy solutions.

Media Contact: Jonathan Stern
Jonathan.Stern@Generac.com | (312) 402-7167

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SOURCE Generac Power Systems, Inc.

FAQ

What is the value of the DOE award Generac (GNRC) received for the grid resilience project?

Generac (GNRC) has been selected to receive a $50 million award from the U.S. Department of Energy for the grid resilience project in California.

How many California water utility sites will be involved in Generac's (GNRC) grid resilience project?

Generac's (GNRC) grid resilience project will involve approximately 100 water utility sites across California.

What percentage of Generac's (GNRC) project sites will be located in Disadvantaged Communities (DACs)?

At least 55% of the project sites in Generac's (GNRC) grid resilience initiative will be located in Disadvantaged Communities (DACs).

How many jobs is Generac's (GNRC) grid resilience project expected to create?

Generac's (GNRC) grid resilience project is expected to create 200 union construction jobs and 33 direct jobs.