Rental Power with a Plan

Intro (00:00):
Welcome to the Power Bytes Podcast, brought to you by Caterpillar Electric Power with your host, John Thomas. Each month we deliver the latest insights, trends, and cutting-edge tools to keep you ahead in the dynamic energy industry. Whether you're streamlining operations, embracing new technologies, or staying informed, Power Bytes is your go-to source. Join us as we explore innovations shaping the future and the resources you need to succeed. Welcome to Power Bytes, where energy meets innovation.

John Thomas (00:27):
Time for another installment of the Power Bytes Podcast. And in this episode, we are going to be talking about everyone's favorite topic, (laughs), emissions compliance! Okay, so we can insert the groaning noises here, right? But we are going to blend that with a topic that you might not think about when you think about emissions compliance – and that's rental power. And to educate us on that today, I'm joined by Mike Kuzminski from Finning Cat in Canada. Hey, Mike, welcome!

Mike Kuzminski (00:53):
Hey, John! Thank you for having me.

John Thomas (00:54):
I appreciate your taking the time to talk to us today. Give us a real quick overview of who you are, and what you do, and how you ended up in rental power.

Mike Kuzminski (01:02):
My journey started probably back around 2000 when I graduated from college, and I ended up getting into the Cat dealer back then in Winnipeg. And [I] started out doing a little bit of everything between rental power, sales, industrial. And then six years later, I ended up in Finning, out in Edmonton, and started my career in outside sales doing rental power and then working my way up through business development, sales manager. Then [I] took the role as district manager for our power systems rental team. So [I’ve] been supporting rentals now for over 20 years.

John Thomas (01:35):
Holy smokes, that's a long time! Like I mentioned, a lot of times we think about emissions compliance and people will hear things (specifically in North America) about Tier 2, Tier 3, Tier 4, Tier 4 Final compliance. What I'd like to ask you – to get kicked off today – is when a customer reaches out to you to help do some site planning for rental power from the ground up, what are some of the key things that you're looking to understand early to make sure that the power solution that they are requesting is compliant and is set up for success?

Mike Kuzminski (02:03):
Every customer's a little bit different in terms of their journey around rental power. You’ve got some customers that have rented many generators in the past, are very familiar with the products that are out there, and you’ve got some customers that [have] an emergency situation and they've never rented a generator in their life. So [I think] understanding the customer and the application that they're looking at doing [is really important]. Rental fleets today are made up of products from Tier 4 right down to Tier 2, and different products can be used in different applications. So really [we need to acquire an] understanding [of] where the customer is, what the customer's facing, and the local codes and compliancies for those generators within the location and application they're operating in.

John Thomas (02:38):
When somebody comes to just rent a power product from you, do they always know whether they need to be compliant or not?

Mike Kuzminski (02:45):
No, and I think that really comes down to the conversation and making sure, is there municipal requirements around what it is? Is the product running standby? Is it running prime power? As an example, we have some areas within Western Canada where local jurisdictions have requirements around Tier 4. And if you actually want to operate Tier 2 or Tier 3 products, you have to have those products registered – and there's a cost to that. So we're starting to see more and more of that, but it's very specific to the location and the jurisdiction of the municipality that you're operating those generators in. So we try and educate our customers in that.

John Thomas (03:19):
That's something for people that are in the construction industry, or some other industry, [who] might be doing a project and might need temporary power in an area that's not their home base. They may be coming up against different rules for emissions compliance than they're used to. You mentioned a minute ago that you've got – in your rental fleets, you've got everything from Tier 2 all the way up to Tier 4 Final. When is it appropriate to use a lower tier compliant product?

Mike Kuzminski (03:45):
Here in Western Canada, we have a lot of remote sites that are either really far up north or outside of major metropolitan areas. And when we're running Tier 4 Final products specifically, urea is a substance that's required. Rhino [Equipment] fluids are required. And there's not always good accessibility to that. So in some cases, we're running Tier 2 or Tier 3 products where we just don't have the accessibility to urea in those applications.

John Thomas (04:11):
If a customer calls and says, "We've got to be compliant," what does that sound like in real life? I'm sure that's not how the conversation starts. Are they asking you guys to quote something that immediately goes to Tier 4, or are they just worried about inspections…?

Mike Kuzminski (04:24):
First off, I think everybody needs to be compliant. That could be “compliant,” whether it comes down to electrical code, how we tie in the generator, making sure we have a right size generator, the right size cable, the protection. So there's always the electrical side when it comes to the compliancy. And then of course, there's the emission side and making sure the customer's compliant on that end as well. Tier 4 Final is certainly always a good solution to go to, because you know you're always running the latest and greatest in tiering technology.

(04:52):
I think that's better for everybody. At some point, Tier 2, Tier 3 products are not going to be available. They'll eventually be phased out of the market. Manufacturers are always working on what the next latest and greatest is going to be. We're also starting to see other things factor in towards compliancy. Noise can be an issue for a customer. Doesn't matter if you're running Tier 4, Tier 2, “Tier Whatever.” And in some of those cases, we look at other options like battery energy storage – or how do we tie in other sources of power that also provide emission reductions to support those types of projects? There's not always one way to look at the project. We look at many different ways to support that.

John Thomas (05:28):
Do you have any examples you can share with us about a company that was reaching out to you for a rental unit and knew that they had to be compliant, but they maybe were unsure (because of jurisdiction or whatever else) what level of compliancy they needed?

Mike Kuzminski (05:41):
A lot of this is also attached to sustainability and the goals of the client or the customer themselves. So if they say – for instance, it's a large construction site. How do they support some sustainability goals that they have? We're seeing a lot of it actually being driven from that end. They'll come to us and, and say, "Hey Mike, how can we reduce our overall carbon footprint on our jobsite?" So we look at different ways. Traditionally, maybe it was a diesel generator running 24/7 out in the back and really noisy.

(06:09):
Today we look at, can we go to a Tier 4 Final generator? Does that make the most sense? That can certainly help reduce lower overall emissions and provide better fuel efficiency. But then we could also look at other fuel sources like, "Hey, does propane or natural gas make sense?" Because then that can have some benefits. Or do we look at bringing in battery energy storage and supporting? And maybe we don't need to run that generator 24 hours a day. If we're in a residential area, maybe the battery supports the load through the evening and night hours. And then when the loads increase during the day, the generator is supporting that, alongside of the battery. So there's many different ways to look at it. It's not just necessarily Tier 4 Final as your only way to achieve your goals.

John Thomas (06:49):
As you think about the different applications for rental power – everything from a data center, to temporary utilities, to construction – are there some trends in those different applications that you guys have been seeing? To help people meet emissions compliance?

Mike Kuzminski (07:04):
When I see a lot of large-megawatt prime power projects, when we start talking into 2, 4, 5, 10, 50 MW+ projects where we're requiring – whether it's bridge power, maybe eventually utility is coming in or they're going to have a permanent source. We're looking at it and saying, “From a cost perspective, what makes the most sense?” A lot of that is driving actually towards natural gas, which can provide reduced fuel costs. When we start thinking about backup power, in terms of even data centers as an example, most of that is leaning towards diesel, right? Around that Tier 4 Final. This is going to be critical power required only in emergency situations – supports large transient loads very quickly, can get up and running, very reliable.

John Thomas (07:50):
When someone comes in and says that we need either Tier 4 or Tier 3 (or whatever) level of compliancy, I want to understand what that actually means in practice for them at the jobsite. And what I mean by that is what do they really need to [do to] prove that to whoever it is – the local jurisdiction or whatever? If it's some kind of aftertreatment documentation, is it fuel data? What are the things that they are looking for to prove that they've met that need to be emissions compliant?

Mike Kuzminski (08:18):
Ninety percent of the time, customers are calling us up saying, "Hey, I just need a rental generator." They're not necessarily coming to us and saying, "Hey, I need to be Tier 2, Tier 3, or Tier 4." I say the majority of those customers, they already have a good understanding of exactly what they want, what they need to meet those regulations, and they're already asking for that specific product. So now it becomes our jobs to now go and say, "Okay, perfect. You need Tier 4? We have that product. Now we need to figure out what size is that product going to be?” Are we going to compliment it with other things in order to be able to ensure they have reliable power on that site?

John Thomas (08:52):
What I'm asking more is how do they prove it to the local jurisdiction? How do they prove that they were compliant?

Mike Kuzminski (09:00):
There'll be EPA certifications on each generator, so they could provide that EPA certification to that local authority, which would then be able to confirm that – in terms of what emission ratings that particular engine has on that site.

John Thomas (09:15):
Now, as you think about customers who come in and are renting power from you, and they are educated enough that they need a specific level of emission compliance – as they're doing the planning, are there any “gotchas,” any things that they miss regularly in that discussion that people should be looking out for?

Mike Kuzminski (09:32):
If customers have primarily only operated Tier 2 or Tier 3, there's an understanding that there's different technologies inside of Tier 4 when it comes to the emission control system. So there are some additional maintenance requirements when it comes down to the Tier 4 Final product. I mentioned earlier that there's the urea fluid. So now you're not just typically looking at your coolant and your oil now and your diesel fuel – now you're also looking at urea as another fluid that needs to also be incorporated in. I think there becomes a lot of education and a lot of discussion with that customer, just to ensure that they understand what some of the differences are when you start getting into the Tier 4 product and some of those additional maintenance requirements.

John Thomas (10:15):
Those might be some logistics that they aren't used to, right? Especially if they're using a fuel service or somebody, they might want to make sure that that fuel service has that urea or that DEF [diesel exhaust fluid] available. Those are good things for people to look out for.

(10:25):
Anything else that you think customers that are going to be facing these challenges should really be looking for? Is there anything else that you would say you want to bring to the attention of those folks that might be renting product – and if they're worried about emissions – at this stage?

Mike Kuzminski (10:40):
I think the technology and the reliability of Tier 4 products [have] come a long way from when they were first introduced. I think manufacturers have also learned a lot about Tier 4 Final products and continuing to advance those products to operate in different environments, different climates too. I think it's really getting customers comfortable with that product. Doesn't matter if it's a generator or anything for that matter. When new technology comes out, we'll always have our hesitations to move to that, right?

(11:07):
And it's no different with this. So that's one of the things that I like to promote with a lot of our customers out there is, don't be scared of the technology. Embrace technology. The technology's not going away. You need to figure out how do we make this technology work and work effectively for your projects? And when working effectively, it has a lot of benefits. There's lots of different things that it can do to help support. And ultimately, it could also help potentially (in some applications) reduce overall cost.

John Thomas (11:33):
Mike, you mentioned earlier that sometimes they'll come in and they'll just say, "Rent me a generator." But are you seeing a trend or a change where they're actually saying, "Build me a temporary power plan,” or “Help me with my power problem?" Is that happening in the market today?

Mike Kuzminski (11:46):
I would say more so now than we ever have seen in the past. And the projects aren't getting smaller. The projects are getting larger. A 1-2 MW project used to be big for us. And now we're adding like 5, 10, 20 MW projects. And with the data center growth, we're starting to see 50, 100 MW type projects. It's happening and it's happening fast. We see the amount of electrical load across the country, across North America, across the world continuing to grow. And this isn't stopping as we look at some of the supply chain challenges around lead times, around utility. Rental power plays a really key role in bridge power, whether (like I mentioned earlier) you're waiting for utility…

(12:27):
We could be looking at one-year, two-year-plus type projects. When you start thinking about the types of products that you want to put on site to manage those loads, whether it's prime power, whether it's standby power, duration plays a really key role into that. And when you start looking at permitting some of the larger power plants, there's additional permitting required based on jurisdiction. I know in our area, over 10 MW has a certain permitting requirement versus something that's under 10 MW, as an example. So there's lots of different factors, but projects are not getting smaller. They're getting more complex, they're getting bigger, they're getting longer, and rental plays a big, big part in terms of the growth.

John Thomas (13:07):
Do you think it's the increased size or the increased power need that's driving these customers to ask you more to help with a power plan than just coming in and saying, "Give me a gen," or is it something else?

Mike Kuzminski (13:19):
I think it goes back to, again, the permitting of it. The larger you get, the more permitting requirements and the [more] stringent those are. Because you're not running 100 kW generator on a construction site. Now you're running a 10 MW power plant. So there's a lot more factors that go into that. Everything is 100 times of what it was with just the smaller stuff. And the good news is the rental market and the rental products that are out there, they're available to meet those requirements, regardless of what those are.

(13:45):
I think a lot of customers (what I find) … is they're usually like, "Oh, I didn't know that was available in rental. Oh, I didn't know we can get that." Sometimes it comes as a surprise to our customers that you could actually do that. They only looked at it as, "Oh, rental's available when I need an emergency." You could actually plan for rental. Customers plan for rental.

John Thomas (14:04):
There are so many new approaches to producing, storing, generating, optimizing your power that it's hard for all of us to kind of keep track of all of it. And so it is good to get a [collaborator whom you] can bounce that off of. Now, you talked about some of these bigger projects – and certainly leaned into data centers a little bit there as well. Are there any specific regulatory requirements that pop up as you're looking at these projects, just because they're bigger?

Mike Kuzminski (14:29):
When we get into the larger power requirements, we ask a lot more questions to our customers around that. And we'll help support them and make sure they're talking to the right agencies around temporary power plant or rental plant. We know where to go, where to direct our customers. The last thing that we want to do is supply a power out to a jobsite or a data center or here, and then all of a sudden it gets shut down because the incorrect permitting was [submitted] or they didn't do the right paperwork.

(14:57):
And I think that's really important when, as a customer, working with a supplier that understands that – I think that's really critical. Not only understanding what their products are, but what are “those other factors that I'm not thinking about? Because I've never rented a generator before.” I've never put up a power plant before. Understand which providers can give you that full turnkey service, that full turnkey solution, because it isn't just about, "Oh, here's a generator, go power it up."

John Thomas (15:24):
I think that's a really great place to leave this conversation. Come to the table with a good understanding of what you're trying to accomplish in your business objectives, because depending on your objective and the application, you could have a great [advisor] who's going to recommend the right solution for you. But [also], don't be scared of the new stuff, right? Don't be scared of the new stuff. Mike, hey, thank you so much for helping me understand and helping our listeners understand this topic better today. It's not something everybody wants to talk about all the time, (laughs). It's emissions compliance. It's not everyone's favorite topic. But thank you for taking the time, and we look forward to talking to you again in the future.

Mike Kuzminski (16:01):
Thanks for having me, John. It was great!

John Thomas (16:03):
To our listeners, thanks for listening and we hope you hear us again soon.

Outro (16:08):
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