Generac Holdings Inc. GNRC recently entered into a negotiation to secure a $50 million grant under the Grid Resilience and Innovation Partnerships (GRIP) Program from the U.S. Department of Energy (“DOE”). The program, established by the Bipartisan Infrastructure Law, is part of a $10.5 billion broader investment focused on transforming the U.S. power grid. It aims to boost grid flexibility, enhance power system resilience and ensure that communities have access to reliable, affordable energy, especially during harsh environmental conditions.

By joining forces with the California Water Association (“CWA”), Generac plans to expand its reach and further integrate clean energy solutions with vital water utilities across California. The aggregate investment in the project is approximately $100 million, targeting almost 100 water utility sites across the state, with a particular emphasis on Disadvantaged Communities (DACs).

This federal initiative aims to deploy microgrids powered by battery energy storage systems managed through distributed energy resource management systems. These microgrids will not only enhance the resilience of water utilities but also form part of a larger virtual power plant (VPP) network. These VPPs are crucial in reducing load during peak demand on the grid. At least 55% of these sites will be located in DACs, affected by environmental hazards and infrastructure challenges. By focusing on DACs, the project aims to raise the air and water quality while providing operational savings for water utilities.

GNRC to Address the Need for Grid Resilience in California

California has been struggling with aging power infrastructure, increasing energy demand due to electrification and the growing impacts of climate change. Generac noted that during a 10-day heatwave in September 2022, the state's grid was severely strained, and many water utilities had to rely on fossil-fueled generators to maintain power. This highlights the pressing need for more sustainable, resilient energy sources to support California’s critical infrastructure during periods of grid stress. 

As extreme weather events become more frequent and the demands on the grid continue to rise, Generac’s advanced power backup solutions are instrumental in ensuring that communities, especially those in disadvantaged areas, have access to reliable, affordable and clean energy as well as economic opportunities. Through its collaboration with the CWA and support from the DOE, Generac is helping to build a more resilient future for California and its residents.

GNRC-CWA grant for integrating clean energy solutions is likely to generate around 200 union construction jobs and 33 direct jobs. Also, nearly $27 million will be awarded to businesses owned or controlled by underrepresented groups, with 59% of the project’s overall benefits directed at DACs. The collaboration between Generac, the CWA and local labor unions, including Northern California Laborers and IBEW Local Union, among others, underscores the project’s commitment to supporting underrepresented communities.

GNRC to Gain From Expanded Alliance With DOE

Generac’s continuous collaborations with the DOE to provide clean and resilient energy to the residents by leveraging GNRC’s cutting-edge technologies bode well for the company. 
 
In May 2024, GNRC was granted a hefty sum of up to $200 million, spanning over five years, by the DOE. This grant belongs to the $1 billion Puerto Rico Energy Resilience Fund (PR-ERF). Through the PR-ERF's Programa Acceso Solar (Solar Access Program), Generac will fuel the installation of residential solar and battery storage systems for underdeveloped Puerto Rican households.

Headquartered in Waukesha, Generac is a leading manufacturer of backup and prime power generation systems for residential and C&I applications, solar + battery storage solutions, advanced power grid software platforms and services, energy management devices and controls along with engine and battery-powered tools and equipment.

Higher Residential product sales drove Generac’s performance amid declining C&I product revenues. Power outage activities surged in the second quarter of 2024 owing to Hurricane Beryl, leading to an improvement in sales of home standby and portable generators, as residential product sales rose 8% year over year to $538 million. The company tweaked its sales guidance for 2024 owing to the surging demand for backup power, now expecting revenues to increase 4-8% compared with the earlier view of 3-7%.

GNRC’s Zacks Rank & Stock Price Performance

GNRC currently carries a Zacks Rank #3 (Hold). Shares of the company have gained 88.7% in the past year compared with the sub-industry's growth of 97%.

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Stocks to Consider

Some better-ranked stocks from the broader technology space are Workday Inc. WDAY, Cirrus Logic, Inc. CRUS, and SS&C Technologies Holdings, Inc. SSNC. WDAY presently sports a Zacks Rank #1 (Strong Buy), whereas SSNC & CRUS carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

WDAY is a leading provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system, making it easier for organizations to provide analytical insights and decision support. In the last reported quarter, it delivered an earnings surprise of 7.36%.

SS&C Technologies Holdings delivered an earnings surprise of 3.1%, on average, in the trailing four quarters. In the last reported quarter, SSNC pulled off an earnings surprise of 4.9%. The Zacks Consensus Estimate for its earnings is pegged at $5.18.

Cirrus Logic’s performance is driven by increasing shipments in the smartphone market. Steady momentum in the laptop market and standout next-generation flagship smartphone design cushion the top line. CRUS delivered an earnings surprise of 56.6%, on average, in the trailing four quarters.

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