California power cuts could drive sales of gas-powered generators

The risk of wildfires in California prompted what may be the largest deliberate power cut in U.S. history. The growing frequency of such precautions could incentivize residential and commercial customers to turn to on-site power generation.

Why it matters: Such a shift could mean a boon for solar energy systems, but also a comeback for gas-powered generators in areas bearing the brunt of extreme dry weather exacerbated by climate change.

What's happening: The fires and power cuts are intertwined due to a complicated mix of factors, including ineffective management by energy companies, insufficient regulatory oversight, climate change, poor urban planning and suburban sprawl.

• As PG&E considers power cuts over the next decade, people and businesses in California are looking at alternatives, whether solar and storage systems or more “traditional” generators that run on gasoline, diesel, liquid propane or natural gas.

Between the lines: Gas-powered generators are priced at roughly $100 per kilowatt, making them a relatively affordable, and easy-to-source, fallback.

• Many also have multiple fuel options, making them resilient to shortages or price fluctuations.
• Solar energy systems might also get a boost from power cuts, but the upfront costs of a solar system (especially with battery storage) can be significantly higher than those of a generator.

What to watch: Because a solar energy system requires no fuel, the equipment's lifetime cost is lower than a generator's.

• However, the upfront cost of a solar energy system could still be more than most people or businesses are able or willing to cover when facing imminent power cuts.

Morgan Bazilian is a professor of public policy and director of the Payne Institute at Colorado School of Mines.