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COVID Creates Challenges and Opportunities in Power Gen
If you were hoping for COVID-19 to disappear from the news by the school year, it’s obviously not going to happen. With major companies like Google announcing they won’t be sending employees back to their offices until the summer of 2021 and COVID metrics climbing again in the South and West, we probably will be working on the impact of the pandemic well into next year.
Tyler Wiegert It could almost be considered a truism to say that COVID-19 has been bad for business. The 33% annualized decline in GDP in Q2 2020 would apparently confirm that, and even the most positive about the economy must concede that a 9.5% single-quarter contraction is painful, to say the least. With businesses closed and housing starts in June lagging 4% behind last year, even with the brief reprieve when states began to reopen, the power generation segment has been hit hard by the pandemic.
Cummins, a giant in the industry, announced at the end of July that its revenues for Q2 2020 had fallen 38% from Q2 2019. That increased to 48% when looking at North America alone. Engine sales were down 47%, and power generation revenues declined by 37%. While Cummins was able to achieve positive net income because of a quick ramp-up in production in China after the worst of the virus had passed there, it was less than half of net income from Q2 2019.
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PowerTracker™ Report Q2 2020: Coronavirus Generates its Own Demand
Looking by application, Portables and Standbys were slightly positive, while Temporary, Peak Shaving, Baseload, and Cogeneration were all negative by double digits compared to Q1 2020. This translated into a 5% increase in sales to Private consumers, and about 6% decreases in Institutional and Industrial sales.
On a Year-on-Year basis, overall unit sales for Q2 2020 were up 1% compared to sales levels in Q2 2019, with Q1 2020 having almost completely wiped out the gains earned in Q3 2020 of last year.
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Pandemic Leads to Accelerating Losses For NA Gen-Set Dealers in Q1 2020
SUMMARY: Gen-set sales in Q1 2020 fell 9.8% from Q4 2019, as the United States faces perhaps its most serious economic and public health crisis since the Great Depression. No power range was immune to the decline.
Sales in the 51-100kW range dropped 13%, the largest drop of any range, while the 101-300kW range faired the best, only shedding 6.5% of sales from Q4 2019.
The losses were felt fairly evenly across applications, with temporary power falling the least at 7%, and standbys the most at 10%. Looking by customer type, commercial sales had their worst first quarter in at least the last five years, falling by 9.5%.
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Is COVID-19 a Natural Disaster?
In late March, about halfway through the United States’ first round of social distancing, Generac CEO Aaron Jagdfeld spoke with Yahoo Finance’s Seana Smith about whether Generac was seeing a spike in demand from COVID-19.
Tyler Wiegert Smith noted that the power generation segment tends to do better during and after a natural disaster, and wanted to know the answer to a question that has also been on our minds at Power Systems Research: “Is COVID-19 a Natural Disaster?”
Like many of the other questions surrounding COVID-19, like “Is the United States heading into a recession?” or “How do we distribute scarce medical resources?” the answer isn’t clear cut.
Additionally, hotels and other buildings are being converted into temporary hospitals as states prepare for their regular ICUs to reach capacity. He states that those buildings might not have typically had back-up power, but now need to be quickly outfitted to meet regulations for critical care centers.
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We Expect 2020 NA Overall OEM Production To Be Flat
This article initially appeared in the February 2020 issue of PowerTALK News.
SUMMARY. The North American economy remained stable in 2019 and pure economic conditions as well as fundamentals in the region were favorable. Most industries performed very well, and the short-term outlook remains stable to flat for most market segments. However, we see many new developments that could suggest a shift in the trend.
Yosyf Sheremeta Consumer confidence declined slightly in December, following a moderate increase in November. The Conference Board’s Consumer Confidence Index stood at 126.5 in December, 1.4 points higher than in September 2019.
Per Lynn Franco, Senior Director of Economic Indicators at The Conference Board: “While consumers’ assessment of current conditions improved, their expectations declined, driven primarily by a softening in their short-term outlook regarding jobs and financial prospects. While the economy hasn’t shown signs of further weakening, there is little to suggest that growth, and in particular consumer spending, will gain momentum in early 2020.”
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PG&E Blackouts Lead to Best Fourth Quarter for Mid-Range Power in Five Years
SUMMARY: Gen-set sales in Q4 2019 rose 3.5% from Q3 2019, driven primarily by growth in the middle power ranges. The 21-50kW range experienced the fastest growth at 7.5%, followed by 10-20kW at 3.7% and 101-300kW at 3.5%.
When looking at this growth by application, we see that standbys were the only application to experience meaningful growth this quarter, ending with a strong 7.5% increase. Unlike previous quarters, this increased demand came from more than residential consumers. Institutional and industrial consumers increased their demand by 2.5% and 3.75%, respectively. This is the strongest fourth quarter showing for these consumer types in the last five years.
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Winter is Coming and Consumers Are Ready
SUMMARY: Gen-set sales in Q3 2019 rose 7% from Q2 2019, due to a continued strong demand for standby power systems. Standby systems in both the residential and commercial sectors drove this growth (the highest QoQ growth of the year so far), with the 10-20kW range increasing sales by nearly 12% and the 21-50kW, 51-100, and 101-300kW ranges growing 5-7%.
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Winter is Coming…(and Consumers are Ready). Q3 2019 Report
SUMMARY: Gen-set sales in Q3 2019 rose 7% from Q2 2019, due to a continued strong demand for standby power systems. Standby systems in both the residential and commercial sectors drove the 7% growth (the highest QoQ growth of the year so far), with the 10-20kW range increasing sales by nearly 12% and the 21-50kW, 51-100, and 101-300kW ranges growing 5-7%.
On a Year-on-Year basis, overall unit sales for Q3 2019 were up 2.9% compared to sales levels in Q3 2018.
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Power Systems Research Assists on Gen-Set Emissions Project
WHITE PLAINS, NY – The Pace Energy and Climate Center (Pace) has announced a new data analysis tool and research model in a report titled “Estimating the Air Emissions of Stationary Engine Generators under Two Megawatts,” both developed with support from Environmental Defense Fund.
The project drew upon data provided by Power Systems Research (PSR), a Minneapolis-based research firm, from its proprietary PartsLink database.
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Moscow Heat and Power Show
MOSCOW–The fourth annual Heat and Power Show was conducted here Oct. 22-24, and a significant part of the fair was dedicated to small generation and co-generation applications.
Although at the moment this fair is rather small, it has a good potential to become a large international show because it is only fair in Russia with such a specialization. There were about 100 participants from 12 countries.
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