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Backup generation breakthrough for the smaller scale business

Maryland-based Pyxis Energy recently teamed up with Generac Power Systems to provide environmentally friendly, automated generator solutions to homes and businesses. The company has launched their new product Alternative Market Power or AMP, a reliability service that aims to keep their customers’ energy grid independent.

Del Hilber, Managing Partner at Pyxis spoke to Decentralized Energy about the challenge of providing a service to smaller businesses and consumers, that’s been familiar to larger enterprises for years.
Del Hilber of Pyxis
The energy brokerage and consultancy has had to take time to reach the point of launch, but remained highly motivated given the need they saw for the AMP service in the marketplace.

“This is our distributed generation product, what we call Alternative Market Power, and we’ve been working with Generac for the last two years on this offer, finally getting to the point where Generac was able to get the EPA (Environmental Protection Agency) certifications for their backup generators to be used for limited prime use which was key for our product to be workable here in the US.”

“We are looking to serve a market that really hasn’t been served before. This is because it either hasn’t been economically advantageous or for other reasons such as it being too complex to manage. So, we are really targeting small and medium business and residential customers who have a desire to have onsite generation for backup purposes.”

For the geographical base Pyxis and Generac are currently serving, the offering is highly relevant.

“Here in the mid-Atlantic we are prone to hurricanes in the fall and late summer and ice storms in the winter. There are also normal summer thunder storm issues and grid reliability issues that impact our customers. There is a real base of customers that value reliability but don’t want to spend the upfront capital to have those installations done,” says Hilber.

The partnership has found a way to provide that back-up reliability in a suitable way for that client base.

“Instead of a resident or business owner writing a cheque for $12,000 up front, we actually buy the generator and have it installed by a certified Generac dealer, we maintain ownership of the asset and the asset is available to the person. Should the power go out the generator will run. The flip side of that is that we use that asset to participate in deregulated energy markets.”

“For example, it could be a demand response program, could be a call option or price responsive program into which we monetize that generator.”

“We collect that reliability fee on a monthly basis from the customer- they don’t have to maintain the unit, don’t have to change the oil or monitor the engine ” it really is a turnkey solution, not unlike what bigger commercial customers have done in the past- we have just taken that kind of offering and brought it down to the residential and small business level.”

Already the company is seeing a demand for the service, and their main concern at the present is coping with orders and potentially interested parties in a manageable way. First unveiled, in Maryland it is slowly being rolled out inà‚ Pennsylvania, New York, New Jersey and Texas over the coming months.

“We are staging things to better manage the roll-out, as we don’t want to get to far ahead of ourselves and overwhelmed by doing it too quickly. We have had some success already in the Maryland markets and got a great deal of training done with the Generac sales channel in that market. We have the top four Generac dealers on board with us so they are actually offering our product when they meet with potential customers.”

When clients are involved in an assessment, the Pyxis option, with monthly reliability fee, is another avenue for Generac’s team in closing a sale and it gives the buyer an option for purchase, that doesn’t require that large capital up-front outlay.

Pyxis also did their homework in other ways before deciding to launch.

“We had a number of focus groups in Texas, New Jersey and New York to gauge acceptance over the last two years ” and we crafted the product on the level of feedback from customers in those groups and found the pain points.”

“With large residential customers- people aren’t interested in having to maintain repairs or do oil changes- and they don’t want to have to do that for the equipment at the back of the house or business. It’s something they rarely think about. Not having to have that concern really resonates with those customers.”

While others may follow the partnership’s lead in offering this type of service, they have to an extent got a first-mover advantage.

“This is a state-by-state thing. Here in the US you are required to have all sorts of licenses and certifications from local entities and in Maryland we had to go before the public service commission and be granted a license to provide electricity for natural gas sales and brokering and that process is onerous.”

“Others can certainly do it but it’s not going to be the guy in his garage ” you have to have industry experience and background to get through in most states. Some states are less regulated but the ones who have the best market potential have these kinds of regulations in place.”
Generac back up power generator
So, in their submissions, did Pyxis have to talk to authorities about the general benefit of their proposed offering?

“Yes, there is a little bit of proof of concept and proving that it’s something that resonates in the market.”

“Most of us on the Pyxis team worked for a long time at Constellation Energy, we built industry relationships while there that are very in tune with what we are doing. We are working with them as a supplier for our products and they are one of the suppliers that we support. Having that type of network helps in what we are doing.”

The service also complements the trend towards more environmentally-friendly energy.

“The generators we use run on natural gas or liquid propane and what Generac has done is to calibrate the engine to make it certified for limited prime use. So we have certain amount of hours they can run for non-emergency purposes. They can run unlimited for power outages but for economic use, we have a certain number of hours we are allowed to use those generators for.”

“Not to be too specific about numbers of hours but it is a high number and right now we have two that are air-cooled units and in early 2018 we will have two liquid-cooled units, that are of a larger size. We have larger products for the more medium sized business that will be available in 2018.”

“We aren’t doing anything today with diesel or fuel oil engines. Obviously if we had customers that required something of that scale you could do that with catalytic converters or emission scrubbers to get those units certified one at a time for prime use. That’s typically is an expensive undertaking and wouldn’t address the market we are going after today”

For more information go to https://pyxisenergy.com/alternative-market-power-amp/