Generac acquires smart thermostat maker ecobee

Generac, the venerable manufacturer of backup generators, has lately been going big into clean energy and digital home energy controls. On Monday it secured another piece of the home energy puzzle, announcing it will acquire smart thermostat vendor ecobee for up to $770 million.

The deal calls for Generac to pay $200 million in cash and $450 million in stock to ecobee’s shareholders, along with an additional $120 million in stock if undisclosed performance targets are reached by the end of June 2023.

Ecobee is a third-place rival to Google Nest and Honeywell in the U.S. smart thermostat market, and it has raised about $150 million from investors including the utility-backed investment firm Energy Impact Partners and Amazon’s Alexa Fund.

The Toronto-based startup was also until recently the thermostat partner of choice for Amazon’s Alexa home automation product line. But in September, Amazon launched its own smart thermostat, designed in partnership with Honeywell Home thermostat maker Resideo, at a much lower price than the ecobee or Nest smart thermostats.

This shift by Amazon came after The Wall Street Journal reported in April that ecobee had refused to collect data on its customers and turn it over to Amazon, a decision that led to Amazon threatening to retaliate by making it harder to buy ecobee products on its online retail platform.

After news of the ecobee acquisition came out, Generac CEO Aaron Jagdfeld told the Toronto Globe & Mail that Generac would also resist pressure to collect data on its customers. ​“I see us doing something different, going after the home energy ecosystem,” he told the newspaper.

Generac has been embracing cleantech

Generac, based in Waukesha, Wisconsin, is the U.S. market leader in natural-gas-fired generators for homes and businesses. But over the past few years, it has been making big investments in sectors such as solar-powered batteries, home energy controls and software to aggregate and control these behind-the-meter resources. 

Its 2019 acquisition of Pika Energy, a Massachusetts-based battery startup, provided the technology for Generac’s PWRCell batteries. Now Generac is competing against companies including Tesla, LG Chem, sonnen, Sunrun, Sunnova, Enphase, SolarEdge and others to provide batteries for stand-alone or solar-linked home energy backup.

Generac has also integrated the home energy management software platform of Vancouver, Canada-based startup Neurio, which it bought in 2019. Last year it acquired Enbala Power Networks, another Vancouver-based startup with software that’s aggregating about 600 megawatts of distributed energy resources and providing grid services in the U.S., Canada and Australia.

In September, Generac launched a grid services group built on its Enbala acquisition, aiming to aggregate its generators, batteries and home energy controls as virtual power plants for utilities, grid operators and energy markets.

“Utilities trying to keep their supply and demand in balance need additional tools to do that, as they bring more renewables on board, and as demand increases, and as we electrify vehicles and heating and cooking…in the home,” Jagdfeld told Canary Media in a September interview. ​“We’ve got a pretty exciting roadmap of additional products we intend to bring to the market in the next 12 to 24 months.” 

In the past two months, Generac has acquired U.K.-based mobile battery vendor Off Grid Energy and Apricity, a Bend, Oregon-based maker of devices including a water heater disconnect switch used in utility demand response and energy conservation programs.