Generac likely not done with energy management acquisitions

Company looks to leverage home standby capabilities

Generac's headquarters in Waukesha.

Last updated on June 27th, 2019 at 12:54 pm

Waukehsa-based Generac Holdings Inc. recently made two acquisitions as an entrance into the energy monitoring and management market, but those likely will not be the last as the company moves into a new line of business.

“I think that we have a lot of great pieces,” Aaron Jagdfeld, chairman, president and CEO of Generac, said during the company’s earnings call. “I think there are some other areas that could be potentially bolted in to augment some of these things in energy management and energy storage”

He declined to go into specifics of Generac’s pipeline of potential deals.

Generac announced the acquisition of Neurio Technology Inc. in March and this week announced the acquisition of Pika Energy Inc. Neurio is a Vancouver-based provider of energy monitoring hardware and software while Pika is a Maine-based developer of energy storage systems.

Each of the companies has $5 million to $10 million in revenue currently, Generac CFO York Ragen said. While the acquisitions are initially a slight drag on the company’s profitability, Jagdfeld said within a couple years they will be accretive to earnings.

“The market is forecasted to grow dramatically,” he said, noting in three to five years energy monitoring could become a substantial part of Generac’s business.

The company’s primary focus has long been on home standby generators for homeowners. It is a market Generac helped create through targeted marketing, a distribution network and in-home selling. Jagdfeld said the company has been looking for a related market to enter that would take advantage of the capabilities Generac built in home standby generators.

“We’ve looked at a lot of different things and we haven’t really found the right thing that fit naturally, that didn’t distinct from what we were trying to do in home standby,” he said. “This energy monitoring and storage market is spot on and it could be huge.”

Jagdfeld said the emphasis on centralized energy distribution is coming to an end and property owners are increasingly likely to use on-site solar, wind, geothermal or gas power generation to supplement or replace the current model.

“The need to manage, monitor and store the power that is generated in this decentralized fashion has the potential to develop into new enormous market opportunity,” he said.

Generac’s first target will be the solar industry, where Jagdfeld said just 2% of the roughly 2 million installations in the U.S. have battery backup systems. He also said the western U.S. could potentially be an opportunity for energy storage. That portion of the country has historically been a weaker geography for Generac compared to areas that frequently see power outages from hurricanes and winter storms.

Get our email updates

Arthur Thomas
Arthur covers manufacturing for BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.