Our guest spent his early years without grid electricity and now he is a driving force behind the first fully integrated whole-home, plug and play, solar power solution. Host Bill Nussey talks with Ben Polito, President of Energy Storage Systems at Generac, the leader in secure home power systems. Polito shares the background and vision of how his company is shifting from fossil fuel based systems to a home energy storage platform that connects solar PV, smart batteries, loads, and the grid. And for the innovators and entrepreneurs listening in, he also shares how acquisitions and partnerships have played a key role in the company’s strategy to accelerate the transition of the world and itself towards a clean, local energy future.
Here are some of the highlights from their discussion…
“I think broadly, we see this heading towards Generac evolving to become a leading energy technology company. Our purpose now, not just of the clean energy business, but of the whole company is to lead the evolution toward a more resilient, efficient, and sustainable world.”
“…then I think the writing was on the wall that the clean energy technologies were coming, they were going to be disruptive. So, let’s treat it as you say, as an opportunity rather than a threat.”
“We started from a perspective of building connective tissue. So, we weren’t just about the solar inverter. We weren’t just about the battery. We were trying to build an ecosystem and we knew we needed differentiation…We looked at the market and said, “Well, there are all these competitors focusing on retrofits while there’s 2% market penetration of residential PV today. That means there’s 98% non penetration. So we focused on building the right system for those customers, the 98% of customers who hadn’t yet installed solar.”
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Generac Power Systems – Clean Energy Integrated Ecosystem
Full Transcript
Bill Nussey:
Well, hello to everybody in the freeing energy world. This is your host today, Bill Nussey, the founder and CEO of Freeing Energy and a happy spring to all. We have a really, really interesting guest today. And the problem was that there are so many things that he could talk to us about. We should probably do three different podcasts because his professional background, his personal background, the position he has today in one of the most well known and respected companies in small scale energy, just a ton of things to talk about. We’re going to try to pack into a single episode. He actually knows a little bit about electricity and he knows about it because he didn’t necessarily have it the same way many of us did when he was growing up.
Bill Nussey:
It didn’t seem to slow him down. Maybe it even spurred him, but he can tell us more about that. But it wasn’t long before he became a clean energy innovator and an entrepreneur. And now a top executive, as I mentioned at one of the world’s leading manufacturers of backup power equipment. Our guest is a president of the energy storage systems at Generac Power Systems. So, from studying by the light of kerosene lamps to the prestigious halls of MIT from scrappy entrepreneur to global energy executive here to tell a story and tell us about the clean local energy initiatives he’s leading is Ben Polito. So, welcome Ben.
Ben Polito:
Hey, thank you, Bill. Pleasure to be on the show. Really appreciate what you’re doing here.
Bill Nussey:
In preparing for our discussions today, we learned something really interesting about your background and it sounds more like a story from the 19th century or the early 20th century than the late 20th century. You grew up in a farm in rural Maine with no electricity. And you were raised with using oil lamps and had to pump water by hand and use generators for power tools. I mean, I guess for the modern era, that’s an unusual way to grow up in the United States. What was it like for you and how do you think that shaped your journey into the world of renewable energy?
Ben Polito:
It was interesting because while we didn’t have electricity, in the center of town, everyone else had electricity, they had electricity at the school, they had electricity at the store, et cetera. So, knew what it was and it was truly fascinating. And so I started to, I was kind of a handy kid by nature. I like to take things apart. I like to put things together and there was a whole generation of old timers in town who, for instance, there was a gentleman in his 80s, a retired school teacher, shop teacher who taught me how to solder. There were other guys in town who had put battery charging wind turbines up in the top of a tall pine tree. And so I started to tinker with gear that could make electricity, gear that could capture energy. So, I built small wind turbines out of junk and put them on the roof of our barn.
Ben Polito:
My father was a carpenter and a sort of a small time building contractor. So, we had lots of bits and pieces around. I shutter to think actually there was one time when I wanted to build a solar hot water collector. And we had piles of old pipe around. We had piles of scrap copper flashing, and I remember cutting up strips of lead flashing and taking an Oxy Acetylene torch and soldering the scrap copper pipe to the scrap copper flashing to make a solar hot water collector. Again, this was back when PV was something they put on satellites. So, it was a real fascination for me. But I would say that it genuinely gave me an appreciation for the difference that energy makes in people’s lives. If you ask the average person how much difference does modern energy make in our lives?
Ben Polito:
They think back to well in pre-industrial times, life was hard, but it wasn’t that different. What you think maybe people have two or three times more energy now than they had in pre-industrial times. No, the answer is a hundred times more. In the developed world every man, woman and child has access to a hundred times more energy than our ancestors did even a couple hundred years ago. And 85% of that energy of course comes from fossil fuel, which is grossly unsustainable and warming the planet and leading us into all kinds of trouble like we’re seeing in Europe now. So, I think it did give me a different perspective on how important energy is to living a satisfying modern life.
Bill Nussey:
Well, you obviously learned a great deal and were raised very well. You decided to go to college at a university, a few people might have heard of called MIT. Tell us about what you did as you graduated and some of the steps along the way before you ultimately started Pika.
Ben Polito:
After graduating from MIT, I worked a bit in three dimensional printing and I did a short stint at a MEMS drug delivery startup. And then my wife and I, classic young person thing to do, we got on the road with no forwarding address. We spent a summer in the mountains and then when it started to get cold, my friend Joshua, who I had met at MIT got a job at this company in Flagstaff, they were building battery charging wind turbines. But they have gotten a DOE grant to build a more mainstream wind turbine product, an on grid, home wind turbine. Essentially a home energy appliance. So, he and I did the development on that, that became the Sky Stream. And this in the days before the PV revolution, the Sky Stream was the cheapest way to make a kilowatt hour at home.
Ben Polito:
Particularly if you had some wind resource. This was before, of course the PV manufacturing revolution. And then I did some consulting, working for a company called Green Mountain Engineering in the heyday of the clean energy venture revolution. This was back when PV grade silicon was in short supply and expensive. So, I learned a lot about concentrating solar, little bit about algae biofuel, et cetera. And through all of this, what Joshua and I saw was that the individual technologies, be that PV or wind or batteries, what have you, were in impressive and we’re developing nicely. And it was really the connective tissue that was weak.
Ben Polito:
So, and from the customer perspective, for example, you see this when you put a PV array on your roof and that’s great, you turn your meter backwards, you generate low cost electricity. But then when the power goes out, you’re in the dark, just like your neighbor. And that’s a real pain point post sale for the customers. And so we saw an opportunity to build, using the experience we gained in the industry, using the power electronics expertise that my co-founder Joshua had developed to build a platform that would make for more powerful plug and play building scale energy systems. And we founded Pika in my basement in 2010 to pursue that goal.
Bill Nussey:
And the story only gets more exciting. In 2019, you sold Pika to Generac, and now you’re leading the company’s energy storage division. So, what was that like personally and professionally to go from being a scrappy startup to working and building a key division of one of the world’s most respected companies?
Ben Polito:
Well, first of all, I would say it’s been an incredible learning experience, as you can imagine. I like to learn new things. And previously I’d always worked at small startups, never more than a hundred employees. And so I remember going to the first annual strategy meeting, and there were more executives in the room than there had ever been employees in any company I’d ever worked for. So, I don’t have a whole lot of perspective. I haven’t worked for IBM or any other large company really. But my sense is that Generac is more exciting and scrappier than average for publicly traded companies. It has an incredible track record of growth since becoming private equity and then going public. It’s I believe two decades now of on average, about 15% CAGR.
Bill Nussey:
Wow.
Ben Polito:
So, it’s a track record that’s hard to beat. Particularly for a company that does hardcore physical technology as opposed to something purely digital.
Bill Nussey:
And for a lot of companies that are in a position like Generac that have built a strong position in a market, particularly based on fossil fuels, they see all these emerging systems as threats and this Generac has clearly looked at the other way. What makes able to do, in your assessment, what so many other incumbent companies can’t even begin to start thinking about.
Ben Polito:
Generac’s best years were the craziest years, right? Once they established this, really created this category of the automatic home standby generator. It was basically disruption was good, right? If there was a natural disaster, if there was a disruption somewhere, of course that’s a tragedy locally, but it’s also a very strong signal that people should buy technology, buy products that can protect them, protect their families, keep their lights on, keep their food cold, keep their furnaces running, et cetera. So, I think the company was accustomed to thriving in chaos and growth. When the weather was nice and everything was normal, that was an average year.
Ben Polito:
When there was a significant weather event and everything went crazy. That was a really good year. So, I think by instinct, the company sort of developed a tradition of running toward the fire. They saw peer companies failing to adapt and going in a less advantageous direction by continuing to do the same thing over and over again. So, even before the clean energy transition, there was a strategy of using M&A and a to diversify internationally into CNI, et cetera. And then I think the writing was on the wall that the clean energy technologies were coming, they were going to be disruptive. So, let’s treat it as you say, as an opportunity rather than a threat.
Bill Nussey:
Well, building on that incredible story about Generac and running towards the fire, which I love as a metaphor. Pika was acquired a couple years ago, and now you’re running the division formed on it. So, what are you doing today at Generac? What’s your mission?
Ben Polito:
We are continuing to grow the business into this opportunity, and really it’s just a challenge to run fast enough, given the really thrilling growth in the market in the opportunity. So, among other things, we’re doing a ton of hiring at our local site here. We were about 30 people at acquisition in 2019. Now we’re over a hundred. And with all of the additional acquisitions, we have opportunities across a huge number of really attractive geographies. And I would be remiss if I didn’t mention here that we are hiring, not just technical, but sales, service, manufacturing, everything here in Maine.
Ben Polito:
We’ve opened a tech center just outside of Boston. We have a ton of openings at headquarters outside of Milwaukee. We have our grid services division in Denver. We have our sister company formerly Neurio in Vancouver, BC. So, Neurio is our sister company from the acquisition. They’re focused on energy, monitoring, energy intelligence, AI machine learning for home energy systems. So, for instance, adding the capability outage guard, we call it to predict when an outage is likely to occur in your area and making sure your battery is fully charged. So, we’ve been working together closely together with the Neurio team since 2019.
Speaker 1:
Ben’s story and the Generac vision are outstanding examples of the core drivers behind the Freeing Energy Project. We believe that through innovation and entrepreneurship, we can accelerate the shift to safe, reliable, and resilient electricity built around local energy systems for homes, communities, and businesses. This happens through science, engineering, the evolution of business models and finance. But most importantly, it happens through the actions we as individuals take on our own with our neighbors and in our communities. Ben and Generac are doing just that. We are just at the beginning of this historic transition. And it is a transition that promises to contribute to a cleaner, more vibrant, more equitable, and more economical future for more people than ever before.
Speaker 1:
Importantly, this is a transition that requires that each of us reflect on how we can or will contribute actions to make the promise come true. Our host today and author Bill Nussey writes in his new book, Freeing Energy, that whether you live in an apartment, in the suburbs, in a city skyscraper, in a hut or on a farm. Whether you are a conservative or liberal, whether you are an employee or an entrepreneur, or a global 1000 executive, regardless of which county, state, or country you live in the world. Whether you are wealthy or barely getting by, you can lend your voice. We invite you to join the local energy revolution, visit freeingenergy.com/localenergyrevolution to learn more. Now, let’s get back to Ben and Bill to hear more about the exciting Generac story.
Ben Polito:
We started from a perspective of building connective tissue. So, we weren’t just about the solar inverter. We weren’t just about the battery. We were trying to build an ecosystem and we knew we needed differentiation. So, we saw much larger competitors like Tesla, like Sonnen focusing on retrofitting to existing PV systems. And we knew we needed differentiation. We looked at the market and said, “Well, there are all these competitors focusing on retrofits while there’s 2% market penetration of Rezi PV today. That means there’s 98% non penetration. So, we had to focus on something. We focused on building the right system for those customers, the 98% of customers who hadn’t yet installed solar. And so that led us in the direction of building an integrated solar plus storage platform where everything worked smoothly together, as opposed to pulling in this component from manufacturer A, this component from manufacturer B.
Ben Polito:
And that puts a lot of weight on the installer who doesn’t really want to be a system design engineer. They just want to install systems. So, having a plug and play system where everything comes from one supplier, more like the Apple model, as opposed to having the installers take a PV inverter and try to connect that to a battery inverter, et cetera. So, we built what became the [PowerCell 00:18:17] system as a plug and play solution for pure play solar plus storage Greenfield system.
Bill Nussey:
Now, when I think about a product like PowerCell, I recall my early experience of trying to design a home and make it basically go off grid. And I needed an integrated fossil fuel system, diesel or natural gas or propane in order to run it when the rain for a while. And at the time, this was probably five years ago, power wall still doesn’t do that as far as I know. Is this a part of what Generac solutions offer? Can they integrate not just with batteries and solar, but also with generators?
Ben Polito:
This is another example of what Generac, what a company like Generac can do. So, we’ve recently launched what we call our power generator, which is a dedicated battery charging generator. It’s designed specifically to recharge the battery and provide that long running, long duration support because range anxiety, of course, just like in the EV world, you want to be able to survive and thrive throughout a longer duration outage. And the power generator product gives us that opportunity. It really combines the excellence that Generac has on the generator side with the power sell technology and the energy intelligence, et cetera.
Bill Nussey:
That’s really cool. And is it a special generator that is made to be part of this system?
Ben Polito:
Of course it leverages Generac’s strengths, but it adds additional technology as well coming out of the clean energy side. So, it’s really a best of both worlds sort of ecosystem opportunity that really, I think only Generac can do.
Bill Nussey:
So, lots of people ask me about listen, I want solar battery and I really want to be able to be truly independent. So, I need a genset or generator as well. That’s what you guys have. Where should we point my friends who are asking for that?
Ben Polito:
Well, you can start at generac.com. One of the things that Generac really excels at is demand generation is creating new markets for our products. So, we’ve done that with the home standby generator and as anyone who’s been in the space knows, customer acquisition is a huge pain point for our industry. We sell through distribution, we sell into the traditional channels, but we also support our installation partners with lead generation with, I mean, a really a very strong program. I think this is credited to the founding president of the energy technology business, Russ Minick, who’s also the head of marketing for Generac. And Generac, I think one of the key things to understand, Generac didn’t just invent this idea of an automatic standby generator.
Ben Polito:
They also invented the idea that it was something that mainstream customers could afford and would want to the point where impressively there are at least as many home standby installations at American households as there are PV installations, Rezi PV installations of any brand. So, we are truly the leader already in secure home power systems and the move into clean energy is an obvious one. And we can do that from a really strong position, thousands and thousands of independent dealers in 50 states, incredible brand recognition, et cetera.
Bill Nussey:
Yeah. Incredible brand recognition.
Ben Polito:
Here in Maine Generac is truly a household name. We may be close to 10% market penetration here because of the ice storms. I mean, on an island in rural community, like where I grew up, when the power went out, sometimes it would stay out for a week or two. And a backup generator really isn’t optional.
Bill Nussey:
Wow. Wow. So, folks who want to take a look at this product, go to the website and that website will direct them towards someone who’s a certified installer. Who’s going to be able to answer their questions about their specific installation.
Ben Polito:
Absolutely.
Bill Nussey:
Perfect. Well, on behalf of the subset of freeing energy aficionados, I am compelled to ask the most important question that can the Generac systems allow me to go entirely off grid?
Ben Polito:
Yes. We do have customers who operate off grid. And for a long time, I didn’t believe that typical Americans would go for that. But as this technology, as we bring these technologies together, and as conditions evolve, for instance, in Northern California, where you have the persistent public safety power shutoffs, you take these systems that combine the solar, the batteries, the energy management technology, the generators for long duration. And I think grid defection really does become a live option.
Ben Polito:
Now that’s philosophically not where I would like to see these things go. Of course, especially with the Enbala acquisition, we would rather see people connected to the grid and participating in virtual power plants. But I think it’s going to be this very interesting interplay and tug of war where people have those options and it really changes the balance in that conversation.
Bill Nussey:
It changes the balance of power, no pun intended in the industry. And you don’t have to have a, in my view, a very large number of people choosing to actually defect from the grid. But the fact that they can realistically do it tells the utilities and the regulators and the legislators who are setting utility policy that a greater balance towards the interests of communities and families is probably overdue. We won’t go into … we have plenty of guests who have gone into deeply with the entitlement that utilities feel. They do a great job and they’re critical and the world needs them, but they have grown a little complacent in my view with that. And to the point, it’s an entitlement in the view of many.
Bill Nussey:
But that’s another conversation, Ben. Let’s talk a little bit about where this is going. So, you guys have done several acquisitions. You’ve most recently acquired the home automation leader Ecobee, which is a product many people have, certainly everybody knows. You’ve also acquired some other cool tech companies that I’ve followed, including Neurio, which was one of the first founders of energy tech that I interviewed Enbala, CHILECON. So, where does this take you? Who is your evolving customer for this? And where do you think this rolls in the next couple of years?
Ben Polito:
I think broadly, we see this heading towards Generac evolving to become a leading energy technology company. Our purpose now, not just of the clean energy business, but of the whole company is to lead the evolution toward a more resilient, efficient, and sustainable world. So, we’re putting these pieces together. We’re not slowing down to make it all perfect. We’re driving forward with that tenacity and verve that Generac brings by tradition. But we do see these pieces coming together. Be it the home energy monitoring and management, the thermal side and the other aspects that Ecobee to the table. The virtual power plant piece that Bud and Enbala bring. All of this comes together in a really exciting picture for Generac and for the energy future.
Bill Nussey:
Well, given all that, I think we can say with some confidence in the freeing energy world, we talk about a concept of local energy, which is a small scale technology systems that are also part of the communities and families. And I probably would say the Generac is the largest pure play local energy company there is. And people ask me, they read the book, they love it. What can I do? I want to make a bet. I’m not a venture capitalist. I think one answer I’ll start giving them is you should take a look at Generac. I’m not a stock person. I can’t say whether it’s a good stock or not, but in terms of a very large pure play local energy, I don’t think there’s an equal.
Bill Nussey:
It’s kind of cool. And so all of us in the free energy world are really pushing you guys on and cheering for you loudly. And just talk just a bit about the non-technical side of this. I mean, you were careful to qualify that you think that the world still needs electric grids and that’s our perspective as well. There’s some real benefits to it and resiliency and costs and things like that. But do you guys ever sit back and think about ultimately how you, more than most other companies, can change the nature of the electric utility industry?
Ben Polito:
In the same way that Generac isn’t a company that’s about engines. Generac is a company about secure power. Utilities don’t need to be about burning fossil fuels. Fundamentally utilities are about deploying capital to build infrastructure and getting a return on that. So, why can’t that infrastructure be distributed? Why can’t that infrastructure be clean and digitized? I think that the landscape will change tremendously without necessarily having everyone unplugged from the grid.
Bill Nussey:
Well said. I completely agree. Do you guys actively work with electric utilities across the US? Is that part of what your day to day world?
Ben Polito:
Absolutely. I mean, this has primarily led from the Enbala side out of Bud Vos’s group in Denver. But we have programs in Southern California. We have programs in the Northeast. We have programs in Texas and Michigan. And really, again, we aren’t slowing down. One of the challenges, I’m sure, as you interview people in this space, in the startup world, people talk about startups pitching to utilities. There’s the phenomenon of death by pilot. So, as a company, as a small startup company, that life cycle is really hard to manage. Whereas from a multifaceted perspective, with a strong consumer angle, we can put the assets on the ground and deliver resiliency, deliver savings to homeowners from day zero, and then wrap those customers into virtual power point programs, as those programs evolve in any given market.
Bill Nussey:
So, the last question, before we jump to our lightning round. Take off your hat about the future of energy and divisional president and thinking about many, many of our listeners who are in early stage energy tech startups, or want to get into the industry. You have, and congratulations to you and your colleagues, you have been uniquely successful. You created energy tech company from scratch. You built it to be a leading brand in the world.
Bill Nussey:
And then you exited to one of the top companies in the space, and now you’re playing a meaningful leadership role within that company on its most exciting flanks. So, is there any general advice, any lessons that you’ve learned that you can share with some of our on entrepreneur listeners, any things you might go back and wish you could tell yourself now that you see how it all works as a seasoned vet?
Ben Polito:
Sure. I guess the first thing I would say is start by spending some time in the industry, get to know what’s going on, get to know what customers are saying. And so early on, for instance, we kept hearing about how there was this big pain point post sale for solar customers. The power would go out. The customer was in the dark and that wasn’t what they were expecting. They were expecting something different. They weren’t expecting to be in the dark, just like their neighbors. Next, I would say, get networked, get mentors. Strive to be coachable. A great thing about this mission focused industry is that there’s a whole ecosystem out there that wants you to be successful. People like Bill, who spend their spare time promoting this industry.
Ben Polito:
So, that is a whole world of successful men and women on any given day can choose between playing a round of golf and helping the next generation of clean energy startups get off the ground. So, that’s a huge asset that you have. And finally, I would say, just be thrifty and persistent. Joshua and I as farm kids, we were thrifty by instinct. We had a saying that we should never use aluminum if a two by four would do to build some piece of R&D apparatus. The best advice I got from one of our local entrepreneurs here was to spend and hire carefully and pivot when it’s necessary. But keep at it until you get lucky. That’s the best advice I can give.
Bill Nussey:
I love of it. I have a similar, far less eloquent and inspiring recommendation, which is just be too stupid to give up. But yeah, I like yours better. I’m going to switch over and use that from now on.
Ben Polito:
Yeah’s something that Frank van Mierlo always said was, “You get a lot of points just from putting your name on the paper.” The final exam is like … That’s a [crosstalk 00:32:28]-
Bill Nussey:
I like it. I like it. But I mean, you really are-
Ben Polito:
Just show up, just show up.
Bill Nussey:
You are a real entrepreneur and it’s all the more impressive that Generac’s had the benefit of your contributions these last couple of years.
Ben Polito:
Yeah. I’m not a sort of swash buckling entrepreneur by nature. I drive a Prius and invest in index funds. But for me, the mission is the thing that drives me forward here. For folks who have the good fortune to be able to choose how they spend their time and how they make their living, working for something that is clearly necessary for a brighter future for our children is really energizing.
Bill Nussey:
Let’s wrap up with our four lightning round questions. Are you ready?
Ben Polito:
Absolutely.
Bill Nussey:
All right. So, what excites you most about being in the clean energy business?
Ben Polito:
Definitely the mission. For those of us who have choices in what we do, how we make our living working on something that is directly leading to a brighter future for our children is really energizing.
Bill Nussey:
If you could wave a magic wand and change just one thing in the industry, what would it be?
Ben Polito:
Well, I’m not a policy guy, but I have to go with getting a meaningful, predictable price on carbon that escalates. There’s been a lot of boom and bust in the business. A lot of location, specific policy, where you get a bunch of activity, all of a sudden, and then it dies out. And the net effect of all of that, of course has been positive. We have 10% wind and solar electricity in this country now as a result of that. But business thrives on predictability and a meaningful escalating price on carbon would give us that.
Bill Nussey:
A lot of us agree with you on that. Third question, what do you think will be the single most important change in how we generate, store and distribute electricity in the next five years?
Ben Polito:
I would say the continued electrification of everything. Here in Maine, we have the highest consumption, relatively speaking of fuel oil for heating anywhere in the country. We export about 5 billion dollars a year out of state for energy. A few years ago, my wife and I were doing some remodeling. We tore out our oil fired boiler. We installed affordable air source heat pumps. We already had the solar in the battery piece. We both drive plug-in vehicles. People tell me the price of gas is over dollars a gallon, but we hadn’t really noticed until we took a long trip out of state recently. So, if we add in electric trucks, vehicle to home, vehicle to grid technology, people are even talking about short hop aviation for electrification. So, the continue electrification decentralization of everything is the big trend that I see continuing.
Bill Nussey:
And last question, I’m sure you get asked all the time. I’m excited, I’m passionate, I’m scared. I’m angry. This big change needs to happen sooner. What can I do, Ben? What should I do to make a difference personally? Is there something I can do professionally? What answers do you give folks?
Ben Polito:
I mean, honestly, it’s really simple. They can invest in the great products that are driving this transition. People talk about how there’s so much money in politics. And honestly, that’s a real problem. But if you look at the math, the last presidential election cost about $40 per capita. The average American family spends that in a week on energy. Every energy dollar is a vote. You can’t see that anymore clearly than in Europe right now where the natural gas flows west and the dollars flow east. And they fund this nightmare in Ukraine. So, here at home, a solar plus storage system that gives families lower electric bills, secure power, and a sense of being part of the solution is really a no brainer.
Bill Nussey:
Well, there you go. Thanks a bunch.
Ben Polito:
Bill. Thank you so much. Really appreciate the opportunity.
