Episode 3 – Sustainability in the Rental Industry

Kevin Sturmer 0:01
This is leading the charge where we talk innovation and insights in the industry of sustainable energy. Leading the Charge is brought to you by POWR2 a global provider of energy storage solutions. Let’s simplify sustainability. And now from the POWR2 studio, and broadcasting everywhere from Leading the Charge.io, here are your hosts Tim Doling and Kevin Sturmer. Hello, and welcome to Leading the Charge, where we talk battery energy storage, insights, innovation and the industry of sustainable energy. My name is Kevin, and I work in the marketing department of a company called POWR2 with us is our fabulous co host, the incredible Tim Doling, he is the Director of Innovation here at POWR2, how are you doing? Tim?

Tim Doling 0:45
Doing very well, Kevin, how are you? It’s good to be back in the office.

Kevin Sturmer 0:48
I was I was gonna say, it’s good to be back in the office. Because we’ve been traveling a lot, multiple countries, multiple conferences, multiple conversations all circling around the rental industry and how sustainability fits into that future. We had a chance to talk to a lot of vendors and hear how sustainability works in their business plans. We also sat down with Patrick Flannery, he’s the editor of the Canadian Rental Service magazine. And he gives us his insights where he thinks sustainability and the rental industry are headed. But before we get to any of that, Tim, what are your biggest takeaways from all of these different conversations?

Tim Doling 1:26
Well, it’s been a busy time of year, as you say, I was trying to recall all the cities, we’ve been to as thinking like San Diego, Indianapolis, Miami, New Orleans, and then over to England to Coventry. So we’ve been everywhere. But I think the biggest thing is the different conversations we’ve had from country to country about the battery energy storage systems. So we start off with the UK, which is clearly the most advanced country in battery energy storage systems. They’ve been doing these systems for a lot longer than us, I guess it started out with a guy called Andy Mead and a company called Firefly, which he started in 2010, followed by another company called Off-Grid Energy, Danny Jones started in 2012. So they’ve got a big head start on us. So when we go to the UK and talk to them about battery energy storage systems, we’re not exactly starting at first base and talking about the basics, we’re really going on to advanced functionality, advanced controls, how they can monitor things a bit differently to reduce energy usage and make things much more effective on site. The other thing I found interesting in the UK, just going to that trade show was the focus on solar. Now, that seems a little bit odd to me, since they didn’t really have a great track record of sunny days, I was doing a bit of research on it. And I did come across a Daily Telegraph article, which looked like propaganda to me, but it said that London had more daylight hours than Sydney, Australia, which seemed a bit strange, but I believe them on that. But yeah, there’s a big focus on solar, lots of solar light towers, lots of fold, fold out solar arrays. So they’re really focusing on the sustainable aspect of things there. Then from there, of course we went to the USA, American rental Association show, we had some big vendor shows with some of our large global rental company clients. And I think the biggest difference this year to previous years was I was I think I counted seven different battery energy storage systems at a show, whereas five or six years ago, there wasn’t even any. So there’s obviously a big uptick in in adoption. And this really speaks to rental companies finding value for the product finding return on investment, finding customers that are actually asking for the product and really want to use it. I even had one branch manager tell me this year that his his clients are starting to request a battery with every single generator they rent. So that’s just speaks to how the adoption has come so much further forward in the last five or six years. And that’s where we is POWR2 have to come in as an advisor, really to the clients. So we have to be completely transparent about what the costs of the systems are, what the returns that can be expected are and the types of client and applications where you can use the product. So I think there’s still a big education piece to be done in the US still. But it’s definitely being taken on more than we’ve seen in the past.

Kevin Sturmer 4:16
Yes, yes. 100%. Agree. And even at the Canadian Rental Association show, we saw conversations, very focused around education to the point where we had people asking what is a battery energy storage system? And it reminded me of my time in market research. I spent about 15 years in the market research industry. And there was one study, in particular, for a streaming app, a very well known streaming app that we did across 26 countries. And the app wanted to know, what are people doing while they’re using the app. And the deliverable was to be this large poster to hang in front of their marketing team at their global headquarters to remind them the story of their ideal customer and And early on, we discovered that the activities and the culture is varied significantly from country to country. And what was needed was not one global story. But in fact, 26 individual stories told the 26 individual audiences, the result was that each of these audiences felt like this company was speaking directly to them, it was always the same app, always the same general story, but it was about delivering the right parts, of the right story, to the right audience. And rental companies can take a cue from that understanding the need to message differently to countries or their different audiences based on their education level. So we’ve got, again, Canada, just learning about sustainability, battery, energy storage all the way up to the UK, very experienced in the industry. And so tailoring the message to the needs of the audience is very important. Any thoughts on that?

Tim Doling 5:58
Thats’ so interesting, absolutely true. So you can have the same product. But as you speak to different people in different localities, they have a maybe a different need, or a different view of how they’re going to use that product. So tailoring that message so that it suits the audience you’re going after is so important. So yeah, Canada is when I was sorry, not to be up. But you and Anne did a great job up there. But there’s been very little as far as product available to that market, because of the additional Canadian Standards Association listings that are required, they haven’t really had access to a product until now. So again, we’re back at first base talking about the very basics of what is energy storage? How does it work? How does it reduce runtime, how does it reduce costs? So it’s all conversations we’ve had in the past, but not for a few years in the United States. But definitely starting over in Canada.

Kevin Sturmer 6:49
Exactly. Okay, let’s get to some of these interviews. We sent our very own Luis Corona around to multiple vendors at the American rental Association show. And we talked about how sustainability fits into their business plans. Let’s hear what they had to say.

Luis Corona 7:05
I’m here with Jamie from Polaris. And we’re here to talk about how players is contributing to sustainable technology healing rental space.

Jamie Bianchet 7:12
Yeah, absolutely. Thanks, Luis. Earlier this week, we launched the Polaris Pro XD Kinetic, it’s a 14.4 kilowatt lithium ion battery, you are going to get 45 miles of range out of it, it can actually charge through a 110 or through a 220 outlet. We’re really excited about the product. It’s brand new for us here in and we start production later on this year. So

Luis Corona 7:35
I’m here with Brad from Morbark.

Brad Boehler 7:38
We have a hybrid machine that actually has some super capacitors that allow us to put less, less power into the machine as a whole, store it when when it’s available, because there are lots of intermittent periods where we’re not actually using any power, and then bring it forth when we need to in those highs, high power cycle times, right. And so really, they charge those super capacitors that just charge very quickly when they’re needed. And overall allows us to have a better environmental footprint for the machine.

Luis Corona 8:10
I’m with Josh from Genie. And we’re talking about some of the sustainable technology that his company is contributing to the rental space.

Josh Schaan 8:17
So for customers that have our machines out on site, they can expect to get up to eight days of operating runtime on one tank of fuel versus where an XC would would burn considerably more. And you get that from the efficiency of the hybrid technology in here, where the machine is going to try to keep the battery at an optimal level. And as you’re working throughout the day on just battery power, the engine is going to kick on when it needs to start to recharge. You also have the added benefit if you were to take the machine indoors, to run purely on electric.

We’re here with Daniel from Wanco.

Daniel Lorine 8:52
We’re an industry leader on battery and solar technology sustainable products is a core focus for us in our three strategic business divisions. Behind me we’re showcasing a surveillance product over to my left or we’re showcasing a unique lithium ion battery powered solution. And then behind us we have some traffic safety products as well.

Luis Corona 9:14
We’re with Arley from Yanmar.

Arley Bedillion 9:16
So yeah, Yanmar’s got a multi-pronged approach. There’ll be some diesel, there’ll be electric, pure electric, hybrid applications. We’re working on a hydrogen combustion engine, hydrogen fuel cell. So Yanmar’s is working on all of those. And we don’t feel that there’s going to be one technology that’s going to solve all the problems. There’s going to be multiple technologies dependingt on the site. So if you’re out a big site, there’s no power. Pure electric is going to be tough. The hydrogen application or a hybrid electric hybrid, diesel hybrid application would work. If you’re in a inner city or you have good electricity, pure electric is going to be so they’re working on all All those technologies,

Kevin Sturmer 10:01
some really great insight in there, Tim, what sticks out for you as you hear these interviews?

Tim Doling 10:07
Well, there’s a few things, Kevin, super interesting interviews, and thanks to Luis for doing them. But starting with Polaris, so Polaris, their tagline is Think Outside and the whole brand is built on ruggedness and outdoor use. In fact, the founders started out making snowmobiles for the outdoors up there in Minnesota, I think. And they found a way to run one of their full size UTVs off lithium ion batteries. And I find that super cool and exciting because I go to job sites all the time, you see the UTVs lined up outside the job site trailer, ideal option opportunity for them to be charging more than not in use, as long as we can find a sustainable way of charging them, I think Polaris are on something with a great way to use the UTVs with lithium ion batteries. So I thought that was really impressive as a start with the very first interview. Moving on the next one, I think was Morbark. And I have to say I never thought of that application that was really surprising for me, that you could run a wood chipper of batteries and incorporate super capacitors into that. So if I looked a little bit into what they’re doing, and it’s really amazing that they’ve been able to downsize the engine on the wood chipper by using the super capacitor, and thereby they’re reducing their emissions, reducing or improving their efficiency. So really impressive what they’ve done, they got the same amount of power out of a smaller engine, and they’ve used some batteries. So really impressed with that. Genie, we’re great what they’re doing with hybrid technology, they can use a machine that is typically been used outdoors, they can take that indoors because there’s no fumes. So really cool there. Wanco, we’ve known Wanco for a long time we see them all the trade shows very good old company. I think what stood out there is this year, they’re just adding more and more things that are battery powered. So we saw things like the antenna towers, and the surveillance towers, not just lighting towers that are being powered by batteries. And then Yanmar really tied it all together for me because what he said that one, not one technology can solve all the problems, you do need to have a mix of things like diesel, diesel electric, pure electric, hybrid hydrogen, there’s really a mix needed to cover all the needs on a job site or even anywhere in the world. So for me that really tied it together with what they said over it Yanmar. But what did you have some thoughts yourself?

Kevin Sturmer 12:23
Yes, yeah, you’ve covered it very well, I have some similar thoughts to you also want to add that Genie had a full electric option, in addition to the hybrid option we heard about in the interview, that was award winning for them. So some really great takeaways from those interviews. And then we had a chance to sit down with Patrick Flannery, he’s the editor of the Canadian rental service magazine and hear his thoughts on sustainability and where he sees it connecting and going in the future with the rental industry.

Patrick Flannery 12:52
Obviously, I deal mostly in the in the Canadian market. And but you know, that the biggest differences are we go through these cycles of consolidation, and then and then some and then some splitting apart, you know, United came in, I guess, through the 90s and the early 2000s and started really buying up a lot of stores across Canada, that change the rental culture in a lot of places, especially the smaller places that maybe didn’t have a whole lot of rental stores. And then and then it was Sunbelt, and and Herc and now we have a homegrown Cooper is becoming almost almost a mini national franchise of its own it’s it’s it’s been growing very aggressively and buying a lot of stores and and but every time that happens I don’t know if this is a difference between the Canadian the American market or not. But you asked me what I’m seeing in Canada and this is what I’ve been noticing lately is is there’s there’s a consolidation with where the big chain buys a number of stores, they like to get small chains when they can if there’s if there’s a company that has three or four locations, they like to snag that all at once. And then you see the little green shoots of the new guys all pop in, they just they just pop up in the disturbed ground they and they and they start little stores again just like you know the whole thing started originally and I’ve noticed especially around the GTA, or the Greater Toronto Area, a lot of smaller shops, orphans, just specializing in one or two things maybe landscaping equipment, maybe lifts you know and they just do those few things their their capital by is not very big to get going. And and they and they pop up there and they actually work with the large chain very often I mean this is common in the rental industry right and they do their they do their re rent and and so they sort of they sort of help each other out but they they just fill that gap where maybe somebody isn’t, doesn’t doesn’t want to work with the chain can’t work with the chain can’t find what they want at the chain can’t get the response time or something like that out of them. And they and they and they just fill in these fill in these gaps, and they do quite well. And they tend to grow and the cycle starts again. And once they get big enough, they get bought themselves. But that’s it as far as a trend that that I’m seeing in Canada is maybe we’re seeing the return of the independent rental store a little bit in, in some of the larger areas. And I think there’s, there’s opportunity there, still.

Kevin Sturmer 15:21
And that was great to hear from Patrick on the Canadian rental market, where he thinks things are going and maybe representative of a mix of things right now, but where he thinks it’s headed with those independent stores popping up, but still some consolidation. Tim, what are you seeing, or what’s your take on where the rental industry is headed in terms of that business level of consolidation versus independent companies popping up?

Tim Doling 15:46
Well, we definitely see continued consolidation in the US market, the majors are continuing to buy up companies. And I believe there’s a few more to be announced shortly. So that’s continuing to happen. As far as a wholesale return to the independent, we do see some of it springing up for sure. From my conversations at the trade show, I did hear a number of instances and it seemed to fall into for me three categories, I would say. Firstly, there’s a person who has sold their rental business in the past, their noncompete has ended, or they’ve got tired of playing golf as the case may be. And they’re looking for something to do. So they’re trying to get back into rental in some shape or form. So that’s a previous investor or previous owner of a company getting back in. The second I thought was interesting was an employee that worked for an independent that has since been acquired by a large company or PE company. And they don’t like working that large company culture. So they’re looking to branch out on their own. And then the third was an established independent rental company that we’re just looking at a different silo or a specialty sector to get into. And that’s what’s interesting to me, because often it’s in power of HVMCE. They’re looking to move into these different areas that they maybe haven’t done before. So they’ve been a general rental company or an investment company, and they’re looking to go into a different sector. So it really broke down into those three silos, if you will.

Kevin Sturmer 17:04
Yes, I had very similar conversations, both in New Orleans, and in Miami, younger people wanting to start their own rental company curious about battery energy storage, and how it can fit into their business model. You know, some renting on a broad level, some niching down, I had talked to one couple who wanted to specifically focus on the wedding rental industry and how battery energy storage could be used there, the value is not only no co2 emissions, but they run completely silent. So if you want to hear the vows, you’ll be able to hear them. The conversation with Patrick continued, and we started to talk a little bit about regulations and what he’s seeing in Canada, let’s take a listen.

Patrick Flannery 17:45
It’s been interesting to see that even ahead of regulation and being forced to do anything, a lot of the big OEMs have made have made significant strides and are and are and are trying very hard to bring out sustainable solutions. It’s only going forward any any rent. And here’s the thing that rental stores have to be mindful of, in my opinion. Very soon, the Canadian government is going to be talking about putting what they call embodied carbon into the actual building codes. Okay? So they’re going to be asking, like, they already ask people to build netzero houses, or they’re very close to being I think by 2030, they want people to build netzero houses. Okay, so that’s a house that doesn’t doesn’t use any more energy than it produces for itself, basically. That’s on the energy side. So that’s a house that is saving a lot of energy, right? But there’s another element, how much carbon did you emit making the materials that go into that house transporting the materials there and then ultimately disposing of them that’s called the embodied carbon of the project, okay. The code authorities in Canada are already talking and sending out the warning signals as they do for for several years before the cycle comes around, that they are going to be asking for at least measurements and possibly restrictions on the amount of embodied carbon that goes into a project. What is the factor in the embodied carbon that goes into a construction project? The power and the carbon emitted by the equipment that is used on that construction site that is part of the calculation that goes into this, okay. Now, if your power source is coming from hydroelectric or nuclear, as for instance, pretty much all well, Quebec is almost all hybrid and Ontario is both and a BC is very, very good on hydro electric. A battery power when you power a battery off of that power source doesn’t count. Right? You haven’t emitted any carbon creating that power. Whereas if you burn diesel or gas, it is it is inevitably counted into the into the power. So I’m predicting – this is me have my, I guess my science fiction hat on but it really is it really is coming – I am predicting that there will be a day when the large contractors will be asking rental stores. We even if we’re outdoors, even if there isn’t a specific restriction on it, even if there isn’t an air code restriction on it, we still need to use electrical equipment because because it’s going to be driven by this embodied carbon standard. So there’s my there’s my crystal ball for you.

Kevin Sturmer 20:27
And that was a great crystal ball coming from Patrick Flannery of the Canadian rental service magazine, some interesting takes on sustainability and the rental industry and regulation. And some of our conversations at these conferences, especially when it comes to regulation. It’s interesting, they’re almost two camps of people, one who’s heard about something like a battery energy storage system and say, hey, I want to immediately integrate that into my fleet. I think it’s a fantastic idea. It’s where the future is going. And they want to be ahead of it. There are others who are saying, hey, you know, diesel is working really well, for me right now. I’m just gonna wait until regulation probably forces me to do it. And I don’t know, it could be a number of years until that happens. Tim, what are you hearing when it comes to that kind of conversation, or netzero housing, embodied carbon? Anything like that here in the US?

Tim Doling 21:19
Oh yeah, definitely. Embodied carbon is such a big topic, probably a topic for at least another couple of episodes. And I know there’s a lot of specialists in this field that we could talk to. But with embodied carbon, a lot of the large construction companies are talking about it, I think some of the large customers of theirs are talking about it. So that’s when we get into really scope one, two and three emissions. And that deals with energy that’s consumed, but directly and indirectly. So if we just put it simply scope one, emissions is direct emissions from the company, such as owned assets, vehicles that they drive, scope two emissions is indirect emissions, that has to do with the energy we purchase we use as we’re building something or as we’re providing a service for our clients, and scope through is everything else. So this is stuff in our supply chain, things that we buy in and use, how are the emissions affected that whole supply chain, so embodied carbon as follows that whole scope, one, two and three emissions. So it’s a massive topic, and where it relates to battery energy storage is, as Patrick said, we need to look at the way we charge it. So if you have charging ports that use hydro electric, or nuclear, you can claim that as a net zero energy source. So if you can charge the power bank with that power source, take it to site and use that energy, then you really have seriously zero emission power on site. So it really does relate back to our industry. And it’s something that we’re going to be talking a lot more about in future.

Kevin Sturmer 22:42
Fantastic. And yes, we’ll have future episodes on that. Now, if you want to keep up with all things Leading the Charge, head over to LeadingTheCharge.io. Scroll down to the bottom, and you’ll see a place where you can join our mailing list, enter your email address, and you can keep up with whenever a new episode comes out or some more information as well. We end each episode with questions for Tim and, Tim, you’ve been in the construction industry for quite a long time. When we’re talking about a rental company, and they want to integrate battery energy storage into their fleet, what are some of the considerations they might want to keep in mind?

Tim Doling 23:18
Yes, good. We we do get that a little bit from customers. And I often say to people get some applications in mind. So look at where you have your generators already running 24 hours a day, don’t look at his applications, talk to the client, and explain what the potential benefits could be, and see if they’re interested, see if you could actually monetize that. So you have to be thoughtful about it. Bearing in mind that if you add an energy storage system to an existing generator rental, you could actually dilute some of your existing revenue streams. So where you have a shift rental rate, you may be cutting from a three shift down to a single shift, where you’re selling fuel, you may be reducing how much fuel you’re selling, where you’re charging for servicing, you may reduce your service charge because not servicing it so often. So you have to be thoughtful about the fact that you could take from those revenue streams, but then you’re also offering another asset where you can reclaim that in a profitable way. So it’s all about making sure your customer is able and willing to pay for it, and that you have a thoughtful pricing structure. And then I guess the final piece is training. There’s a big need for training for not only the service technician, so they know how to set up the unit on site to be successful in its application. But also training your salespeople in incentivizing your salespeople to go out and offer it and talk knowledgeably about it to the customer. Over the years I think the most damaging thing we found is actually over selling the product and under delivering under delivering with performance. So you need to know the application is going to work and you need to be able to sell the features and benefits accurately without over embellishing what you’re going to provide them.

Kevin Sturmer 24:52
Yes, well. And speaking of selling and you kind of touched on it a little bit in your previous answer. How can companies identify customer As who would benefit from using a battery energy storage system, the

Tim Doling 25:03
key thing is carbon emission reduction goals. So if the project has a stated goal, or the company running a project has a stated goal for carbon emissions reduction, you can often point to that and say this is a benefit to you because it has demonstratable benefits or reduction in carbon emission goals. And that data is actually tracked and reported on and is verifiable. So that’s probably the number one thing that you can talk to then look at customers that are having problems with downtime due to wet stacking, or inefficient running of generators, if the generators cutting out every couple of weeks, or you have to go there and regen the exhaust because it’s not running efficiently. Well, downtime is no good for anybody add a battery in there, you’re actually going to save a solar problem or save a headache for them. And the third one is very remote sites where fuel is extremely expensive. If there’s a way to reduce fuel, you can calculate reduction in fuel, you can actually pencil out there may be some savings if fuel is expensive.

Kevin Sturmer 26:01
Fantastic, Tim. And that’s about it for today’s episode of leading the charge, whatever platform you’re on, head over and hit the like button, the subscribe button, leave a review, do all of those good things also go visit leading the charge.io you’ll have shownotes there links to everybody we talk to and so much more. Our legal team wants me to say that any statements or views expressed by the hosts or guests on Leading the Charge are entirely their own and do not necessarily reflect the opinions or positions of power to their partners or affiliates. Hey, Tim, thank you. It’s been a blast talking with you today.

Tim Doling 26:35
Thanks for having me. Enjoyed it.

Kevin Sturmer 26:38
And finally, we want to thank you, we know your time is valuable, and we appreciate you spending even a little bit of that with us. So let’s simplify sustainability and keep working toward a world powered by sustainable energy. See you next time.