An Old New Idea; The Natural Gas Back-up Alternative
Allan Schurr discusses the opportunities of natural gas backup power resiliency as a service for data centers.
Announcer: Welcome to Not Your Father’s Data Center Podcast, brought to you by Compass Data Centers, we build for what’s next. Now here’s your host, Raymond Hawkins.
Raymond Hawkins: Welcome to another edition of Not Your Father’s Data Center. We are recording on Cinco de Mayo, May 5th with Enchanted Rocks, Chief Commercial Officer, Allan Schurr, Out of Houston, Texas. Allan, thank you for joining us today. We appreciate you being here.
Allan Schurr: It’s great to be with you today and Cinco de Mayo.
Raymond Hawkins: That’s right. The world is still thinking about a global pandemic, but it seems to be getting better every day. I think I saw on the news where over a hundred million vaccinated in the U.S so it feels like there’s optimism. How’s it feel down there in Houston?
Allan Schurr: I think the same. People are talking about traveling. I’ve been on planes now in the last couple of weeks for the first time in a long while and it’s busy at the airport it seems.
Raymond Hawkins: Well, I will say I’ve checked into hotels twice in the last 30 days, which I hadn’t done twice in the last 15 months. So it feels like we start to feel a little more normal.
Allan Schurr: It should be an interesting summer, I think the same news story that I saw with a hundred million figure said, they’re trying to get up to 160 million by 4th of July. So I think the summer is going to be an active outdoor center.
Raymond Hawkins: I’ve heard the term many times of a pent-up demand. I think we’re going to get to see what pent-up demand really looks like over the course of this summer.
Allan Schurr: I agree with you there.
Raymond Hawkins: People are tired of being home and excited to go see friends and family and travel, and I’m interested to see how the global supply chain of all things, cars. I know we hear about chips and I just think everything. I think we’re going to stress the system on the upside now that we stress it on the downside here in the next few months, I think it’ll be fun to watch. All right. So we want to talk about enchanted business of providing backup power and generation, but doing it through natural gas. I think that’s the headline, as I think about what you guys do. And for those of us and our audience that are data center folks, we all think a better generation. We think about getting permits and rolling out a diesel generator and talking about fuel contracts and polishing the fuel and belly tanks, and how many hours can we run? And we’re consumed with the, oh, when you say generator, you mean diesel and your way of doing it is totally different. So just at a headline, tell us at a headline, how that differs?
Allan Schurr: Yeah. So natural gas has not historically been a suitable substitute for backup applications, and there’s some reasons for that, but we’ve… both from an engineering standpoint and a business model standpoint changed out those fundamentals. And so now we meet the same kind of technical performance at a actually a lower price point than diesel. So it really is a place where you can have cleaner, cheaper, and same, or even better performance diesel backup, maybe heresy in the data center world. But innovations often are something that are completely unexpected. So that’s our business. We do it at over 200 locations today, providing backup as a service to customers that want ultra high levels of reliability, that’s cleaner and cheaper than buying and operating and maintaining their own diesel backup plan.
Raymond Hawkins: So Allan, I’m fascinated by the… and now we can do it at a lower price point. So let’s come back to that, but you said 200 plus locations, let’s start there. This is not you all first rodeo. And for those of us that don’t know, Allen in Houston and I’m in Dallas. So, rodeo talk is very much comfortable for us. We recognize that might not be for all of our audience, but not Enchanted Rocks first rodeo you all have been doing this for other people in other industries. So give us a little of that history, a little bit of feel that’ll make people go, “Okay, this is new to us in the data center space,” but it’s not new.
Allan Schurr: It’s not new. And it’s really been a long time to get where we’re at. So we started providing resiliency solutions to customers in 2009. Hurricane Ike came through the Houston area in 2008 and created a tremendous stress on the electric grid. A lot of long duration, power outages and we observed some very large customers in the form of water districts in particular that lost their diesel plant because of both maintenance practices and difficulty getting fuel. And we saw an opportunity to provide higher levels of maintenance and the operation support to ensure that backup plants perform like they were supposed to. So our first Genesis was actually diesel generators. We simply installed diesel plant and then had higher levels of performance based on a more aggressive or thorough maintenance cycle that was attached to that. So we did that for probably two years, building out over a hundred megawatts of backup plants and very large installations in the water district and water supply field.
Allan Schurr: We then did a bit of a probably 45 degree pivot and we saw it in the ERCOT market in Texas, the wholesale market that governance wholesale power transactions was in the news a lot in February. So a lot of people know, even around the world, that ERCOT was starting to create market conditions where peaking energy could be supplied in a competitive market. And so using similar diesel technology, we built merchant plants. Those were not backing up power for a particular customer. They were connected to the grid in different regions around the ERCOT market, and they would be dispatched when economic conditions were showing tight supplies. And so again, diesel power, they were both tier four I, and ultimately tier four final technology. And we would dispatch those when the price at ERCOT went above the strike price for running those generators.
Raymond Hawkins: That’s a lot of info and I want to make sure I unpack it and I understand it correctly. So you see demand coming out of Hurricane Ike, or you see a market opportunity coming out of Hurricane Ike that said, “Hey, folks that have been responsible, particularly water authorities with preparing for an outage did this based on diesel, but they didn’t have rigorous enough maintenance schedules or robust enough fuel contracts, or even just the physical ability to deliver the fuel. So they had outages.” And you said, “Hey, we can help with that.” And you started to help with diesel plants. That was the beginning of the business. That’s how you guys saw a market opportunity. Did I get that one right?
Allan Schurr: You got that right. That’s exactly right.
Raymond Hawkins: And then the second phase is, so you guys started to say, Hey, we can maintain these generators better than other people can. A more rigorous, robust diesel generator, maintenance and operations process will help our customers. So that was phase one. Then phase two, because of ERCOT allows you to supply energy onto the grid in peak and they pay peak prices for it. You guys saw a market opportunity to provide, and I’m not going to use the right term, but provide adjunct generation onto the grid. That’s not your primary business, but you did that as a way to capture financial opportunities when the prices were right. Did I get that phase properly?
Allan Schurr: Yeah, I think phase two was that set of assets, which we developed, then at about 10 or so sites were exclusively for what we call Gid Support Services, your adjunct services. So they were not-
Raymond Hawkins: Grid Support Services. I like that phrase. So really meant not for a particular client, but rather meant for the grid where it’s having constraint, which is causing price increases, allowed you to support the grid at economically favorable conditions for enchanted.
Allan Schurr: That’s correct. That’s correct. So-
Raymond Hawkins: Okay. Got it.
Allan Schurr: That was 2012 to 2014 or so.
Raymond Hawkins: Got it. Love that.
Allan Schurr: And then we decided, sort of like the peanut butter and chocolate, we decided to marry those two models together and say, “If we could provide backup as a service that also could access the wholesale market, we could really grow as a substantial offering in the market.” And we decided then too, we didn’t want to do that with diesel. We didn’t want to do it with diesel because the logistics of managing hundreds and ultimately thousands of sites, the fueling contracts, the logistics during emergencies, when you really need power in an emergency, often the road conditions and other situation makes it difficult to get that kind of refueling. So we felt that the low price of gas, the clean environmental properties, the fact that we use an underground fuel delivery network and are subject to above ground risk conditions, we put all those things together, so what we need is a natural gas generator to do the same thing and it did not exist in the market.
Raymond Hawkins: I got to be careful here because right to… you used the word at the beginning that could be viewed as heretical, right? This notion that we’re doing something different. On my industry the resiliency and the reliability of my industry is built on diesel generators and a fuel contract to back it up. And people look at that and go, “Okay, that’s bulletproof. We’re always going to be up.” But I think the point I hear you making is, “Hey, Raymond, when all the roads are flooded, having a truck somewhere that says, they’ll bring you a diesel fuel. If they can’t drive over the roads, there’s an issue there.” Right? And ultimately, there’s a finite supply of fuel on site and to me, that’s what makes this fascinating. So I want to be careful because I still run diesel generators at all our facilities today and we still have fuel contracts, but the notion that we have underground fuel delivery, I think is an incredible risk mitigator. So take it from there, that is a fascinating angle to me for why this works.
Allan Schurr: Right. And I can cite examples where those diesel contracts don’t mean anything when proverbial hits the fan, you can’t get those deliveries. They can be commandeered by others, not just the roads are causing problems. The winter storm, just a few months ago, we actually rented diesel trucks. So we still run that diesel fleet that I talked about before the merchant plants. We rented trucks in advance. We had our own dedicated drivers. They showed up at the racks to refuel and the racks were without power. There was no fuel to get.
Raymond Hawkins: They couldn’t. They just had no energy because the grid across the board was down. So they couldn’t pump out of their tanks into your truck.
Allan Schurr: That’s right. And hurricane Harvey, the area shut down. There weren’t shipping to the rack. So there’s so many risk factors in the above ground fuel delivery network that we want to do avoid that. So in 2014, we decided to pivot to natural gas, go find the right technology that would allow us to meet the technical performance requirements of backup generation and they’re rigorous, has to start fast, above all it has to have very strong transient responses, has to be utility grade power. Most natural gas, virtually all natural gas still today has a different mission in mind, they want to be grid synchronous machines. They lean on the grid for voltage and frequency and don’t have to start fast. They just want to be efficiently running and that’s not the mission of backup power. Backup power doesn’t run many hours and it needs to start very fast.
Allan Schurr: And it has to be able to carry transient loads like a diesel does. So we engineered with our engine supplier a very specific technical package that meets those requirements. So we can get into the technical questions if you want, but we can match the diesel performance requirements. We’ve been told by data center operators and others that what we do doesn’t exist. And then they look at our test data and they say, it now it does. So it gave us many advantages, the engineering performance of the generator now we can check that box. Now we had to demonstrate that because of the cleaner environmental footprint, particularly air emissions but also things associated with sound that we could scale faster. We can achieve the air permits that are more administrative in nature don’t require public hearings because the emission levels are orders of magnitude cleaner than diesel, even clean diesel were at least 20 times cleaner than most emissions.
Raymond Hawkins: Oh my goodness. So dramatically…
Allan Schurr: Yeah. Yeah. That’s a very friendly thing for permitting that also lets us have a more predictable scaling and it lets us run without hours limitations, and that is what lets us do non-emergency runs in support of grid services. And those revenues are sufficient to offset the premium price of a typical gas generator compared to diesel and then some.
Raymond Hawkins: So you made the point early, Allan, that, “Hey, we could also may do this at a lower price point.” Is that how you get there is by being able to generate some revenue from the… I shouldn’t say generate some revenue from the generator, that sounds a little funny. But is that how you achieve the lower price point is by being able to sell back some of the power?
Allan Schurr: That’s how we do it. And we do it better than company because it requires seven 24 monitoring of complex grid, price signals, operating margins across many different.
Raymond Hawkins: You got to catch it when the window’s right, you got to catch it. Right. You can’t show up on Monday and go, “Hey, we should have done that Thursday.”
Allan Schurr: Well, not only that, but the window sometimes lasts only 10, 15 minutes. So we do pay attention to those. We have the algorithms to automatically dispatch we’ll capture those streams when the price is more than our marginal cost of operation.
Raymond Hawkins: So let me ask a silly question there, Allan. Being a Texas and being here with the ERCOT grid, I understand how it works in ERCOT. Tell me how this works in the east grid or the west grid.
Allan Schurr: Yeah. So those markets are somewhat different in that instead of it being a mostly all energy market, which ERCOT is, they are [inaudible 00:14:01] and less on the energy side, but still there’s opportunity in the energy market. So in the California independent system operator or the PJM Market, which spans from Illinois to New Jersey down to Virginia and other markets like that, there are capacity payments that you can bid into and qualify for it.
Allan Schurr: So you get paid to be on standby, but in exchange for being on standby, you have to bid in your price of operation every day. And sometimes you get a day’s notice that you’re going to run in. Sometimes there’s an emergency and you just have to run. So it’s a little different mix of revenues, but it’s nonetheless the same, same basic principle of the grid needs help. They’re willing to pay for that help. The structure of those payments might be different by different market and certainly the market rules are very… in a localized on how you have to participate. That’s where scale matters, the economies of our ability to operate in each of those markets at scale. So we can do that better than most people can stand up that same capability internally.
Raymond Hawkins: So the principle it’s the same outside of a Texas where it’s an non-regulated market. The mechanism and the process might be a little bit different, but the principle is the same. You can generate revenue from your generators when the grid is stressed and the economics make sense for your business.
Allan Schurr: It even happens around the world. We’re seeing the same kinds of price signals from grid operators all over the world. We’re active in the Europe market where they’re seeing the same kinds of dynamics.
Raymond Hawkins: We kind of jumped off the deep end. Allan, how does a UC Davis guy get into this business, tell us a little bit of your journey. We probably should have started there and so shame on me for jumping right in, go back to the beginning and you started at PG&E and they make the news occasionally these days go, go back to the beginning and tell us how you ended up at Enchanted Rocks.
Allan Schurr: So I did get an engineering degree at UC Davis, a different kind of Aggie from Texas, UC Davis-
Raymond Hawkins: That’s right. Exactly right. Different Aggie, correct?
Allan Schurr: But I went to work actually right out of college, working for PG&E and started working in big super critical gas power plants and decided even within my engineering background. I didn’t feel like that was the right direction to go at PG&E. I wanted to do something that was a little less formulaic and routine. So I moved into working with large commercial industrial customers on energy use issues, and spent about a dozen years in different roles at PG&E, including the deregulation at the California market. And in fact, I met my wife over a power outage. So I think it was destiny that there was going to be a-
Raymond Hawkins: It worked out, yeah that’s good.
Allan Schurr: It worked out. Yeah, exactly. So I’ve always been in the energy space sometimes in the technology side, sometimes working directly with the commercial industrial customers, sometimes working with utilities. I spent about 10 years at IBM. I worked at a startup software company and I found myself seeing the Enchanted Rock model as the right place at the right time where the grid is really undergoing a big change. The character of the grid is transforming a little bit all the time. Coal power plants are retiring. Nuclear plants are retiring. More renewables, are creating a more uncertain mix of energy supplies. And so the grid operator is desperate for these grid support services that I described earlier. They really do want fast ramping, quick response, long duration assets, and well battery storage can provide some of those services. When there’s a long duration event, they aren’t going to cut it until there’s a innovation along racial storage, which is the path.
Raymond Hawkins: Yeah, just because we can’t get enough stuff stored for a long enough period of time, just that technology doesn’t exist. Yeah. All right. I’m going to give you a couple of questions to think about. We’re going to rattle off our first three trivia questions as our listeners know we do four trivia questions. You got to answer all four, not you Allan, but our listeners to get entered in the drawing for the $500 Amazon gift card in honor of Allan being in Houston, even though he’s a California guy lives in Houston. Now I was thinking, okay, energy companies in Houston, what do we go with? I think Enron probably is the most infamous energy company in Houston. So no guilt by association that’s just how we picked it. So the infamous Enron, first three trivia questions let’s go with, who was their CEO? Who was Enron’s CFO? And what year was Enron founded?
Raymond Hawkins: So those for our listeners, those are your first three questions. Yes, you can Google them. Everyone asks that. Yes, you can Google them, but we need for right answers for you to get entered in the drawing, who is the CEO of Enron? CFO of Enron? What year were they founded? And we’ll give you the fourth question at the end. All right, Alan, back to you and now that we got our trivia questions out of the way. Tell me as you in your personal experience, do you see Davis look like lifetime California guy move into Texas in the late teens. What’s it like making the switch from California to Texas?
Allan Schurr: Well, I actually moved to Colorado for about 15 years in the middle there, so-
Raymond Hawkins: Okay. All right. So a new guy at Texas either way. Okay.
Allan Schurr: Yeah. Well, I’ll tell you a quick, personal, funny story. When I was living in Colorado, one of my daughters was looking for an engineering school herself to go to, and she looked all over the country, ended up at SMU and just loved the field, that vibe of Dallas. So we started coming to… moving her in, moving her out as parents do. My second daughter ends up going to TCU. So it was destiny that I needed to come to Texas anyway, I couldn’t avoid it.
Raymond Hawkins: And your girls they were just early indicators. They were just canaries in the coal mine.
Allan Schurr: That’s correct. [crosstalk 00:19:41] one’s a Mustang. One’s a Ferrari. So-
Raymond Hawkins: Well, good stuff. Now they both finish up at SMU and TCU?
Allan Schurr: They sure did.
Raymond Hawkins: Great schools by the way. All good, good stuff. Well, as of this recording, my two graduated from college on Saturday. So both of mine’s finished up school. So I just got a raise. So I’m not sure how I’m going to manage life for now that I’ve got two college graduates, but exciting stuff. Well, good things. All right. So we welcome you to Texas.
Raymond Hawkins: Glad that your kids led the way with their SMU and TCU adventures, both great places to go to school. All right. So I love this idea. I love the concept. Do you mind and you don’t violate any NDAs or anything, but do you mind telling us one or two customer stories? And what I’d love to hear from a customer stories is two, if you could. I’d love to hear one that’s not in our industry and one that is if you could, but I’d love to hear how does the conversation start, because I think to your point the diesel is sort of in our… is ingrained. How do you guys start that talk? And if you can reference the name, that’d be great, but no pressure to do that if you can’t.
Allan Schurr: Well, let me break the market into two different parts of the market. There’s those businesses that today already buy diesel for every new facility and data centers fit that, a new hospital would put diesel generation today. So in that scenario, we don’t have to convince them that resiliency is a problem that they need to put a solution behind. They already know that, it’s part of business, there are some subtleties to that. In that situation, we’re really trying to make the case that we have a better, faster, cheaper solution, cleaner for sure. Cleaner means faster permitting times, less community objections in some markets. The flexibility to generate a revenue stream that makes it cheaper and most importantly for those types of businesses, they have to know that it meets their performance standards for start times transient response. The ISO85, 28 standard is what we can pay our test data to.
Allan Schurr: And we can demonstrate that we meet those same performance difference. We’ve been told by engineers that they haven’t seen diesels that work as well as we do. So we’re very proud of that technology, but that’s only for those businesses that already have resiliency as part of their design. There’s a much bigger market of businesses that can’t afford resiliency, even if they had wanted it. And we’ve looked into it and it’s been too expensive and maybe it’s expensive in a headache, and there are much bigger numbers of customers. The market is bigger for companies that would love to have no power outages, because that’s just about everybody. But having found a way to afford backup power and because of our economic leverage of these assets, we can drop that price of resiliency so low that they suddenly are now in the market and that opens up a lot for us.
Allan Schurr: So as an example with hospitals, even though they might put in some diesel, they rarely will back up the whole hospital into expensive. We’ll back up the rest of it. So we’ll actually coexist on a hospital campus with diesel for compliance, because there’s still a belief that you have to have diesel for the life safety roads, even though, well, the problems we mentioned earlier, the [inaudible 00:23:09] has not caught up with that and most states are changing that.
Allan Schurr: But we can wrap the rest of the campus. So when the power goes out, both systems start up the natural gas micro grid along with the diesel generator. The diesel generator senses the grid is backup and shuts back down, and we can carry the entire hospital four days to weeks using that underground infrastructure you talked about earlier. Why is that important? Well, because beyond the ICU loads and the red plugs in the rooms, if there’s an extended power outage, the rest of the hospital, all of their patients in other words, they have to be prepared for evacuation. Procedures get canceled when there’s a power outage. Some of those procedures of some of the highest revenue procedures for hospital. So there’s an economic case that’s very strong with backing up an entire hospital. That hospital story is different for every industry, but there’s a story just like it, HEB stores.
Raymond Hawkins: As I hear you describe it. You said that the natural gas micro grid, the diesel generator senses that utilities back on that looks like utility power to the diesel generator and he can go back offline.
Allan Schurr: That’s correct. It looks just like utility power and voltage is backup. The frequency is stable and so it thinks that the grid is back up and it just goes in and shut down.
Raymond Hawkins: And you’re running that all off of a gas delivered underground. So it’s reliable and steady and you can run for as long as you need in that backup mode. But back up on this, you called it the natural gas micro grid. I like that. Okay. All right. So I get hospitals and I get data centers, those are clear applications that I’m familiar with. Talk with me about people, I liked your comment that, “Hey, there’s a whole industry that hasn’t embraced the notion of backup power because it’s out of reach economically.” What are industries that they look at this and go, “Hey, this is good for me.”
Allan Schurr: Well, one that’s shown to be very important and is now you considering themselves critical infrastructure is grocery and pharmacies. So the grocery industry does not routinely backup grocery stores. They may back up some of their distribution centers, but even that is not as common as you would expect. Grocery stores now can cost-effectively maintain higher levels of inventory in their stores.
Allan Schurr: It’s very expensive when there’s a power outage, hundreds of thousands of dollars of perishable food can be tossed out when there’s a power outage. And so we have a partnership with HEB grocery stores in Texas. Grocery chain coming up your way to Dallas-Fort Worth soon. A relationship with Walmart, we’re doing the same thing for them, where now their stores can maintain continuous operation even in emergencies. They never have to be closed. So in the hurricanes or in the recent cold snap, when people had to throw out their own food, they were able to go to their local HEB buy food, buy medicine, buy water. The stores were open. Lights were on. They were charging their phones. They were charging their medical devices. They were getting on the store’s wifi. So they’re becoming like community centers.
Raymond Hawkins: Oh, emergency community centers because they can be online. Yeah.
Allan Schurr: So that’s an example, I think of an industry that has changed it’s common practice because prices for backup can be lower than what they had before. It’s much easier for one to do as we… just a quick example, last summer is hurricane season. So 2020 Hurricane Hannah hit early in the summer on the Gulf Coast of Texas. It was supposed to come ashore Corpus Christi. It actually came to shore about a hundred miles South, and McCallan Texas near the border. Predicting where that was going to come ashore and trying to mobilize portable diesel generators, which is the standard practice, if you do have backup often they’re temporary and you move them around where you think you’d need them, would have been extremely difficult for a grocery operator or others that are taking that strategy.
Allan Schurr: For us we energized 28 micro-grants in advance of landfall. We let the storm come to shore and that there was no interruption whatsoever in utility service for those customers and that once the storm came ashore, after it had moved and wobbled a little bit south, that power was restored a couple of days later of those 28, 14 of them would have had power outages but didn’t. The other 14 experience, no interruption and probably would not have anyway, but proactively we put them in an island mode so they were protected from the grid during that hurricane coming to shore.
Raymond Hawkins: Were those 28 customers multiple industries? Were they all grocery stores or were they multiple?
Allan Schurr: There was a large number of our grocery customers in that area, but there were others too.
Raymond Hawkins: All customers though that said, Hey, I don’t want the risk of going down. I’m going to proactively be ahead of this curve and at least 50% would have lost power and to your point, grocery store loses power and only this, the cash register not ringing anymore, but the negative cash register in the back of the freezer go off, because things are perishing.
Allan Schurr: They only have a few hours to make some moves there. So, but we have customers in assisted living facilities, hospitals, chemical plants, food processing, distribution, logistics.
Raymond Hawkins: Assisted living. I would think manufacturers where planting equipment maximizes its economic utility by running 24/7. I think that those robust manufacturing facilities just would be a solution for.
Allan Schurr: Yeah, especially when they’re making a very high value product or when you have an outage, it takes sometimes days or even more than a week to get back into production because of the impact on the production equipment of continuous process. So those are all candidates, as well as we talked about data centers, we actually do have a data center we can’t yet disclose it, but we have a data center customer that is coming online this year.
Raymond Hawkins: Got it. Well, you told us 2009 and the Hurricane Ike was the beginning of Enchanted Rock thinking about this, is that when the company started? Give us a three minute and Enchanted Rock, how the business got started and where it is today and where the future looks.
Allan Schurr: It was actually started in 2006. It was a bit of a distributed energy consulting business at that time until the vision I think emerged post Hurricane Ike and I went through the Genesis of those different transformations. Where we’re going from here is a significant amount of expansion outside of Texas. We’ve already got projects now going up in the Great Lakes region, we’ve got some work going on outside of Texas, along the Gulf Coast. We’re even active with possible clients in the Dublin Ireland data center market, in your of world. In part because the grid conditions there are extremely impacted by data center growth and they have a similar grid, volatile amount of wind in the Irish market. They need those grid support services, you combine those circumstances with the EU focus on greenhouse gas reductions in other emissions requirements. And it’s again, a great situation for making that change from traditional diesel to a more modern and lower cost gas equipment.
Raymond Hawkins: Allen, early on you mentioned 200 customers. Is that 200 micro grids installed or is that 200 customers and some of them have multiple micro grids installed?
Allan Schurr: Some of them have multiple micro installed, again, Walmart and HEB would be good example. So it’s over 200 sites and over 20 accounts, probably.
Raymond Hawkins: Allan, my industry in the data center space, we’re pretty comfortable with the diesel footprint. What’s the footprint look like for these micro grid facilities?
Allan Schurr: I’m glad you asked because natural gas is a less dense fuel. So usually to get the same output, you need a bigger footprint. One of the innovations that Enchanted Rocks went through when it was back in 2014, looking for that prime mover engine was also a unique design that we’ve patented that gives you the same power and the same amount of output per square foot as diesel, that’s hard to believe for many people, but what we’ve done is we’ve innovated the airflow of the exhaust heat to go vertical. So instead of having a radiator on the drive shaft, we’ve instead just associated with the drive shaft and use electric fans to exhaust the heat vertically, we can now sit generators side-by-side very dense installation so that we match the diesel footprint with clusters of generators.
Raymond Hawkins: It’s a crude analogy, but you’ve turbocharged it. You’ve allowed to move the air off so you can have turbocharged micro grid natural gas generators, all right.
Allan Schurr: Right. And because of this same design, they’re also much quieter. The current gen set that we provide doesn’t require additional sound attenuation typically, 68 decibels at seven meters is the ISO standard. So very quiet, very neighborhood friendly. So with low emissions and no smoke with quieter, we know that that is a big plus for a lot of our customers that are looking for backup power.
Raymond Hawkins: Well, I’ll tell you our customers in the cloud space, you’ve hit on two home runs, right? All about permitting and making sure that we’re not damaging the environment with our exhaust fumes, right? Those diesel generator permits are tough to get and then how much noise we make. You want to talk about two hot button issues, those are big and the fact that those fit nicely into your solution and then tied into your underground delivery, I think you guys got yourselves a winner.
Allan Schurr: I can add one more thing that I think you’re probably hearing, we’re hearing it too. And that is the sustainability goals of your customers, the companies that we try to serve. They’re trying to reduce their carbon footprint and we can substitute normal methane natural gas with renewable natural gas. It’s done on a displaced type arrangement, much like a solar power purchase agreement that might not physically be delivered to your site but they are annual accounting basis, you’re generating enough renewable electricity to offset your electricity consumption. The same thing can be done with renewable natural gas. This comes from landfills, dairy farms, other capture mechanisms for methane that would otherwise be vented and it’s much more potent as a greenhouse gas anyway.
Raymond Hawkins: It’s still a greenhouse gas. Right. Yeah. Right. Yeah. Fascinating.
Allan Schurr: So we can buy that, inject it into the pipelines and we can have a zero carbon or even a negative carbon backup plan that meets ESG goals of our customers as well. You can technically do biodiesel, right? You can do that. It does not perform in the engine like normal diesel. This renewable natural gas is a methane molecule and it’s blended in with the pipeline so effectively it has no impact on the performance of the backup generator.
Raymond Hawkins: I got to think, Allan, you are my master around subjects, you mentioned… I got to think that you guys would be such a great fit in Europe. So much tougher to permit there and the grid’s got issues there. I think you guys would be a great story in Europe.
Allan Schurr: Especially in the UK and Ireland, where they don’t have the benefit of what they call the copper plate grid in Europe, where there’s significant cross border of energy transfers. There is local shortages going on in some data center markets in Europe, Amsterdam is pretty well-documented, Frankfurt-
Raymond Hawkins: Dublin, Ireland.
Allan Schurr: And Ireland is our starting point because we know that there’s a lot of U.S companies with Irish operations.
Raymond Hawkins: Well I can tell you, Allan, this has been a great story to hear. We got to cram in another trivia question in honor of your kids. We’re going to go with three trivia questions, they’re not one. We’re going to go with the year Enron closed its doors. What is SMUs mascot and what is TCUs mascot? So for those of you who listened to our podcasts, that’s six trivia questions to get in for the $500 Amazon drawing. Allan, chief commercial officer at Enchanted Rocks, love the name. Okay. Before we go, you got to tell us how does Enchanted Rocks tie into the business? Because, that’s a great name.
Allan Schurr: Well, so for people not in Texas, Enchanted Rocks is like the air’s rock of Hill Country, Texas. There’s a granite hill of… I wouldn’t call it a mountain, coming from Colorado, but it’s a hill outside of Austin and it’s a very popular destination for hikes. And our founder would go there frequently when he was figuring out his next thing to do back in 2006, would camp there and hike there and he named the company after Enchanted Rocks and in a world where so many company names are indistinguishable from others, Enchanted Rocks always creates a pause by our customer, really wanting to know the same story. So Enchanted Rocks is really just a place, but it’s a unique name and just as a quick piece of trivia on chanted rock, when it heats up in the afternoon during hot days, it sounds like rice krispies and sort of a snap crackle pop of the-
Raymond Hawkins: As it expands. Yeah.
Allan Schurr: So it was called Enchanted because of that effect.
Raymond Hawkins: How cool is that. Well, so Enchanted Rock was the founder’s muse and it got in the name and it gets people to ask questions and it’s memorable. I love that. I love how a Colorado guy shows no respect to the bumps and Hills in Texas. The man from the land or the 14th, what you going to call them? The 14 or something, I think is that what they call all the peaks. Yeah. Yeah. So I ride a road bike and they call us the flat landers down here. Right? A hill to us is 200 feet, people in Colorado laugh at us like, “No, no, no, we’re going for 8,000 feet to climb today.” We just can’t do that here. You could climb every hill in Texas and not get 8,000 feet of climb.
Allan Schurr: You said it, not me.
Raymond Hawkins: It is flat down here. So well, Allan, we really, really appreciate it. I want to remind everybody of our last three trivia questions, Enron closed the stores. SMUs mascot, TCUs mascot. Thank you for joining us. A great story. Love seeing what you guys do in the future. I think it’s a unique way to think about backup power and love how you’re opening the opportunity to industries that couldn’t do it before, those are all great. And I’d love to see where things go for our fellow Texas company Enchanted Rock. Allan, thanks so much for joining us.
Allan Schurr: Thank you for having me. I enjoyed it.