Episode 24 – Scott Martin and Kyle Klahre: The Future of Refrigeration

On this episode of BUILT2SUIT, how Greg Simpson is joined by Scott Martin, Senior Director of Industry Relations and Compliance at Hillphoenix, and Kyle Klahre, Director of Refrigeration at Cuhaci Peterson to explore the future of commercial refrigeration.

They break down the impact of the AIM Act, shifting regulations, and the industry’s move toward low-GWP refrigerants like CO₂ and propane, along with the uncertainty surrounding timelines and state-by-state rules.

This conversation covers system options, energy efficiency, and how innovations like electronic controls, AI, and digital twins are transforming how stores operate and maintain refrigeration systems.

From regulatory challenges to emerging technology, this episode highlights what’s driving change and what it takes to stay ahead.

This is the show built to build what's next. This is BUILT2SUIT.

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Transcript

SPEAKER_02 0:00

I think we're really on the cusp of really kinda like dynamic changes in our industry. And it's being driven because we're going to this electronic control platform.

SPEAKER_01 0:30

Hey Gang, Greg here. Welcome to the Built to Suit Podcast, the pod built to build what is next. And today, we have with us a pretty cool and exciting guy all the way from the Big ATL from Hill Phoenix. And we also have Kyle, our resident expert, no real expert in refrigeration, all here with us today. Welcome in, Scott. Thank you. Thanks for having me. Great to be here. Going to be a lot of fun today because normally when I try to dig out somebody's personal background, I find that they started way over there and ended up way over here. With you, that's not really the case at all.

SPEAKER_02 1:09

Not at all. I was born and I was in this business nine months before I arrived.

SPEAKER_01 1:16

So what did that look like?

SPEAKER_02 1:18

Yeah, as my grandfather started this journey for our the Martin family. And uh then my dad behind him, and and like we talked about earlier, you know, if I wanted to hang out with my dad and do father-son type things, we went to work together working on refrigeration equipment. And installing it too. So it was a lot of and I didn't mind it. It wasn't like work. You know, it was just me, a little boy hanging out with his dad doing fun mechanical guy things, right?

SPEAKER_01 1:51

Ace refrigeration.

SPEAKER_02 1:53

Yeah.

SPEAKER_01 1:53

Dad's business, granddad's business.

SPEAKER_02 1:55

Both. So started by your grandfather. My grandfather started Ace Refrigeration in Albany, Georgia, and sheesh, I don't even know what year in the 30s, early 40s. And then my dad, he was born in 38, so he came along and took over the family business.

SPEAKER_01 2:16

Okay, so the family business is could have been your family business.

SPEAKER_02 2:20

Why not? Could have been. If you ask my grandmother, it should have been. She I thought she was gonna disown me from the family, and uh, you're excommunicated. What do you mean you're not gonna take over the family business? What's wrong with you?

SPEAKER_01 2:33

So what was wrong with you?

SPEAKER_02 2:36

Well, I went to four years of engineering school and uh told my dad, it took me weeks to build up the guts and courage to go talk to him and say, hey dad, you know, I could have worked for you and never gone and gotten my engineering degree. So I'd like to like give it a go in engineering world and see where I can take this. He's like, Oh yeah, you should. So where's a go? Well, my first uh job out of school was working for a company called Engineered Refrigeration Systems. It was uh it was one of the predecessor companies to Hill Phoenix, believe it or not. Um founded by a man named Grant Brown, and I used to I saw that equipment working in my hometown of Albany, Georgia, um, in a piggly wiggly store, working on that equipment, and I remembered the name and the address of that company, and when I got ready to graduate and start sending out resumes, I sent one to him and he called me for an interview and hired me. So pretty cool story.

SPEAKER_01 3:50

Nothing wrong with that. Having a job's a good thing, and being in Atlanta in refrigeration, at least being in Georgia in refrigeration is probably not the worst thing.

SPEAKER_02 3:59

Yeah, you people don't know this, but uh Atlanta's like the capital of refrigeration for the United States.

SPEAKER_01 4:07

So you got a better job now. Talk about your current job.

SPEAKER_02 4:11

Yeah, so now I'm um my my official title of senior director of industry relations and compliance and engineering fellow that I'm pretty proud about. Um for Hill Phoenix. So I'm responsible for all the regulatory compliance activities, making sure that we're building compliant product for UL, NSF, DOE, EPA, all the government agents that agencies that regulate our equipment. You know, we gotta make sure that we're we're following the standards. And also a big part of my job is is representing Hill Phoenix and in the industry, you know, uh uh industry associations um like HRI and FMI, which is the reason that that we're in town here now, and being on a lot of committees for those those um industry associations. So that's pretty easy stuff. Yeah. It's time consuming, let me tell you.

SPEAKER_01 5:25

I tell you what, are you the director of compliance for uh Kuhatchi Peterson? Is that what you are in some ways.

SPEAKER_00 5:32

In uh some ways, yes. But now director of re-affrigeration, so leading in all uh efforts when it comes to our re uh re-affrigeration.

SPEAKER_01 5:40

So the question I have to ask is you chase one line of regulation and you chase another line of regulation. Do those regulations even cross?

SPEAKER_02 5:49

Yeah, oh yeah.

SPEAKER_01 5:51

Not in a good way?

SPEAKER_02 5:52

No, in a good way. We were talking earlier about uh Ashray is another industry association, and standard fifteen is the safety code for mechanical refrigeration, and it governs like a lot of the work that you guys do, and us as well, because it spills over from the agency listing like UL into the field connection of of Ashray. So the same codes apply, same standards apply.

SPEAKER_00 6:28

You're really focusing on the manufacturers who like the uh the uh equipment side of things versus we're looking at the at the full system and making sure that that it's that it's safe for the public.

SPEAKER_02 6:38

Yep, exactly.

SPEAKER_01 6:39

So you've been in this role for how many years?

SPEAKER_02 6:43

This role? Good question. I've been at Hill Phoenix for since ninety-five, so thirty-one years now. I would say this role for about six or eight.

SPEAKER_01 6:57

You seem pretty comfortable in your skin, but you don't seem you seem part designer, uh, part engineer, part salesman. You really seem to be this kind of mashed up role. And I I'd like you to comment just a little bit on what that feels like when you're at trade shows like FMI. Are you paling around with the engineers? Are you paling around with the design crowd? What what what gets you up in the morning is really what I'm looking for.

SPEAKER_02 7:25

Yeah, and to that's a good, you know, the school that I went to catered to that, being able to communicate with everyone, you know, from the PhD level, engineer right down to this new purchasing agent. But you have to understand who your audience is and how to speak to that level. So that's exciting to me, you know, who who am I gonna meet with today? And what is the the ask? And is it a government regulator? Am I gonna be meeting with the EPA office in Washington, D.C. and be able to speak to that and talk to them in a language that they understand? And then, you know, the other people and you're trying to help sell the equipment. So it that's what excites me is is catering the message to the audience.

SPEAKER_01 8:25

Well, let's get into the fun. Let's frame AIM. Uh obviously the AIM Act is is probably one of the more profound things that's happened in refrigeration in the last four decades. It's probably fair to say. Um maybe Kyle, you need to kind of help us shape it uh from your lens, and maybe then you can join in and shape it from your lens.

SPEAKER_00 8:47

Yeah, absolutely. So I think to see where we're going, and AIMACT is currently where we're at, but it's helpful to look back where we were. So all this really started in the uh mid mid-80s. Um there's a hole in the ozone layer, it was later contributed to different foams, aerosols, and then gases on our refrigerant system that we were using. Um, so that has been a phase out method. Now it's a phase down method of what our solution was to that problem. Um so we went from gases that were were using chlorine to now HFCs. Um HFCs have a higher global warming potential. Um we are now looking to what the future is going to be, so that way we're we're not solving one problem with another problem. Um enter AIM Act. Um the the uh the uh AIM Act um was signed in in uh to a law in uh 2020. Um there's three main uh pillars. On the first pillar, it's the production and and uh consumption of it, um, so meaning how much we are able to produce and then sell. Um on the middle tier, which is probably what we're gonna talk about most today, is the technology transition rule. Um so it's for new equipment being being built and then put in. And then on the final side is is is uh the maintenance of existing uh gases that are being used in our uh system to a day from a reporting standpoint. It's a mouthful.

SPEAKER_01 10:24

That's a lot to digest. Uh what was its purpose, its true purpose, you think?

SPEAKER_02 10:30

To to limit the amount of global warming gases that are in the atmosphere. Cause right, the Montreal Protocol started all this with ozone depletion. And we did a good job and we closed up the hole, but we're using refrigerants that had this high global warming potential. So nobody wants to warm the earth and all the bad things that that happened, so we have to find some refrigerants that have low global warming potential. And so that's what the AIM Act was aimed at, pardon the pun. Well to try to lower the GWP of the refrigerants that we use in commercial refrigeration, air conditioning equipment.

SPEAKER_00 11:16

And to piggyback off of that, so global warming potential is centered around CO2. So CO2 is a baseline, it's number one, right?

SPEAKER_02 11:24

Yes, a unit of measure of one. Yeah, correct.

SPEAKER_00 11:27

Um the gases that we're using today are 4,000 times, so it's 4,000 times worse than CO2 from a global warming standpoint.

SPEAKER_02 11:36

Well, we were using those gases. Now we're using like 12, yes, 1,300 GWP refrigerants in 448 and 449.

SPEAKER_01 11:45

Yeah. So how does AIM affect you, the OEM?

SPEAKER_02 11:50

Yeah, so it limits the refrigerant uh types that we can use in our equipment. Um the the rule that was issued and passed into law that we all invested millions of dollars in to be ready uh limited it to 150 GWP, so that CO2 equivalent, you know, of 150 or 300, depending on the type of equipment. That was the max. And the first date for the equip our equipment that we manufacture was 2025. For self-contained equipment, the GWP limit was 150. So we made the decision years ago to invest and build propane equipment. So most of that equipment that's self-contained is medium temp uh refrigeration equipment, so like you know, plus 25, 28 degree, 30 degree discharge air over the product. So that was all self-contained, propane, medium temp, and the date was 2025. The next date was for remote cases connected to a single condensing unit was 2026, supposed to be the effective date for that, and then large charge traditional refrigeration equipment, January 1st of 2027. But there was a lawsuit about those dates that the EPA acted too quickly, the industry wasn't ready, this was the alleged suit. So EPA pulled the rule back and reissued it last October and modified that rule to move those dates out, 26 and 27 dates, to 2032. So we're waiting to see where the final dates are gonna shake out. A lot of people believe it will be 2032, but I'm afraid that if if it is, then a lot of trade associations are gonna file suit against the EPA for, you know, you passed a law, we invested millions of dollars to be ready for this law, and then you just said, Oh, we were just j joking, you know, we were kidding, and now you have to 2032. And that'll just cause all kinds of upheaval. All of us in the industry want some certainty. Retailers want certainty, you guys want certainty. We as OEMs definitely want certainty so that we know what the rules are, and we won't is if this thing gets tied up in another lawsuit.

SPEAKER_00 14:43

So where I know, and you kind of mentioned it there, so the re-consideration came out in October, but condensing units and and a smaller units was January 1st of 2026. So how is that in impacting your your business now?

SPEAKER_02 15:03

Well, you know, most people are still hesitant to put in because the rule still is in effect.

SPEAKER_01 15:10

Correct.

SPEAKER_02 15:10

However, the EPA came out and said, well, we're not gonna be enforcing the rule. So, you know, if a retailer or customer wants to gamble, uh, they can put in that equipment using 448 and 449, and some of them are. Um so yeah, that's the the un the gray area that we're all living in right now.

SPEAKER_01 15:36

Ah, the gray area. That would be state regulation. Yeah, oh my gosh. Let's talk a little bit about if the AIM Act does anything to smooth out some of those uh state regulations, or are we still gonna get caught with you know state regulations punching through the AIM Act? What do you think?

SPEAKER_02 15:55

Well, there's three states: California, Washington, and New York, that already it's too late. The ship has sailed. They already have their own rules. And speculation is that states that belong to the U.S. Climate Alliance are gonna write their own rules, that there's no national standard, which is what we were all hoping for. We wanted one national standard, then we'd have to deal with New York, Washington, and California, who already have their own rules out uh separately. But now if if the AIMAC gets pulled back or there is no AIM Act because it's hung up in courts, U.S. Climate Alliance states are gonna go full bore with their own regulation, which that's really tough. If you're a national retailer or a retailer that has stores across several states, you know, you gotta make sure that you're following that state's rules.

SPEAKER_00 16:59

So let's dig in on that. What what are the options from your uh point of view based off system type to go in if you're building a ground up store today?

SPEAKER_02 17:10

Yeah, good question. I mean, we made the decision uh bat we acquired a company in 2011 called Advancer. They're from Denmark. They were the one of the pioneers, leaders, and still are, of building CO2 equipment. So using CO2 as the refrigerant instead of HFCs, HCFCs, or HFOs, um using natural refrigerant, CO2, it's in the atmosphere. So those guys uh really pioneered and set the standard. We saw that this was coming, and you know, it did in California uh several years ago, and so we wanted we we had plans to build that our equipment in our own lab. We had all the CO2 compressors, valves, all separate, everything that you need to build a CO2 rack in our lab, and we had not started construction, and we go and meet this company Advancer, and you know, we decided we made them an offer, would you guys be interested in selling? And they said yes, and so they built us a a rack in 2011. They started we got that rack in 2012 and installed in our lab and started testing it. So that you know, that was 15 years ago the acquisition of Advancer. So it really gave us a kind of a big jump head start. Those guys learned what to do. So yeah, it really gave us a a head start in CO2. So that's that's for large charge equipment, and then like I talked about, we're building small charge, self-contained equipment um with propane. And the UL the safety standards have uh expanded where you can use larger charges for propane now. So we can refrigerate uh an entire 12-foot display case or a five-door case with a propane condensing unit and stay underneath that that limit.

SPEAKER_01 19:39

Yeah, let's talk about adoption and you let's go back to Europe because obviously your Denmark, you know, your Denmark roots, I they may not think of them as roots, but uh that acquisition certainly made a difference in their trajectory, but Denmark's not a warm climate. Um, so it must perform a hair better in cool climates. There must be some challenges. We we talk about Canada, so we see those two zones of the world who, like you said, twenty plus years ago were we're doing CO2, and yet and there's probably a little smoke and fire in the conversation around heat and and ambient temperature. I mean, what is that real argument? What dig into that a little bit so we just kind of.

SPEAKER_02 20:32

But that's also true of any refrigerant. As the ambient temperature increases, the energy efficiency decreases. The the with CO2, it's a little bit more dramatic. That that line is steeper for CO2. Um so in the cooler climates, it's much more energy efficient than traditional refrigerants. And but with warmer climates, it it is not. So there you have to deploy some type of technology to offset that loss in warm climates. And traditionally, the easy way was to just use an adiabatic gas cooler that drops the the ambient temperature going across the coil down to the wet bulb temperature, which is a lot less than dry bulb. I mean, even here in Florida, the wet bulb temperature can be 20 degrees less than than the dry bulb. So you get much cooler air going across the coil, making that system more efficient. You know, 10% even it could be, depending on the location. But there are other technologies like ejectors, parallel compression, other things that we're doing, um, like using the CO two equipment to heat the building. So you can increase the pressure in the winter time to offset the the cost of heating the store in the winter. So that's something that you you can do. You can get more heat reclaim out of an HFC, um, but it's not nearly as significant as a CO2 system.

SPEAKER_00 22:20

Yeah, and and and and I definitely agree and totally like agree with everything that was mentioned. What's the biggest hurdle in my standpoint for the industry is we are able to gain a lot of that energy back, but it's gonna come with either extra costs for those different components or complexity for the tech that's trying to like work on it. Um, if they're not familiar with it and now we're adding more and more stuff to it, how do we bridge that a gap when it comes to technicians?

SPEAKER_02 22:48

Yeah, one one of the let's talk about that technician gap for a second, because that's another myth. Because you need electronic valves with CO2, and those electronic valves are computer controlled. And I equate it to the automotive industry. You know, way back in the day when we were kids, everybody knew how to adjust carburetors, adjust valves, but you also had to do it, and you had to know what you were doing. Well, along comes the automotive industry implementing computers, now everything's electronic, and it'll tell you which sensor has failed. You know, you got an O2 sensor that needs to be replaced. That technology is on the cusp of happening in the refrigeration industry, and it's pretty exciting to see. So, not only do you get about a 10% energy lift, you go ask Dan Foss, for example, they'll tell you it's more 10% is a minimum. It's greater than a 10% energy lift just by using electronic expansion valves in the case. Because if you read the fine print in the thermostatic mechanical valves, it says you really should adjust superheat in the spring and the fall. So when the pressures change between winter and summer, that you should readjust those valves. Nobody does that. Correct. Nobody. Yes, it's different. Yes, my my dad and some of the men that work for him, you know, didn't really appreciate electronic controls. But now, you know, you fast forward thirty years, that is the standard. And case controls are becoming the standard. So, you know, it's just you those are the a explanations that you have to teach people that yes, it's required, but look what you get.

SPEAKER_00 26:05

What do you say to an end user that says, I'm just trying to make a profit. I want to keep our system running today. Is there another solution that you would recommend or talk about?

SPEAKER_02 26:18

Yeah, we we have a group that's called AMS, and they they will coordinate the install and commissioning of that store. So if it it's like a turnkey, you know, here's here's the store, here's keys to your new store and your new refrigeration equipment. So we can come out and do the install, do the commissioning, get everything tuned. You're right. Retailers, their job is to sell food. They don't need or want to be refrigeration experts. And we're well very cognizant of that fact. So this is what this AMS group does. It will go out and work with the installing contractor and make sure there's a good startup, a good commissioning, and the equipment is set up to run for years.

SPEAKER_01 27:15

The transition's gonna create a patchwork of change for a variety of your customers. They're not going to be able to say, well, let's just take all this out and put CO2 in. So it it sounds like you've got some propane options, you have some self-contained options. Um the big guys are kind of baked in. They're gonna do what they're gonna do because they're gonna have the capital. And I my guess is whether it's 32, 22, or 42, uh, they're not gonna change what they're doing. They just they they've got other reasons in play to get to the space they're getting. They may have uh energy, they may have um, you know, they may have their own kind of uh goodwill that they want to superimpose across the markets. But I I I kind of want to stay away from those guys because those guys kind of have it figured out. I want to get into this, these kind of middle 75, that below the top 25, who don't know where this is going, don't have a chance to maybe have the options. How do you talk to a customer like that?

SPEAKER_02 28:25

Well, first, and this is another myth that was perpetuated by some people that you know we're gonna put all those people out of business. But the EPA in the AIMAC was very careful when they wrote the AIM Act to make sure that existing stores, existing equipment didn't have to be touched. This rule was only for new construction, new stores, new installations. So they didn't have to worry about their existing fleet. But, you know, back to the patchwork of state regulations, that is not true in some states. States are gonna make retailers go in and retrofit. So we don't have a national standard. The state standards are gonna force people like you're talking about to go retrofit these stores that are very expensive. And that's one of the reasons why we're advocating for a national standard, and that'll like make the states back off. Well, we got a a national US EPA standard.

SPEAKER_01 29:33

So that was that was the plan. You got compliance in your title, and you now have compliance in your title. Um what I'm trying to dig out in my mind is the compliance rules could force rather odd bedfellows of partial change. Oh, that line of cases has been leaking like crazy for the last uh we don't want to pay the fines, therefore we want to step in and talk to Hill Phoenix about self-contained door line up there and just abandon that. Do you see people talking about those kinds of things?

SPEAKER_02 30:06

Not yet, but it could. And it all depends on where the rule shakes out, how much refrigerant is going to be available in the marketplace. Because one thing that we didn't talk about was the Kyle did in the beginning, production and consumption. In 2029, there's a 30% step down coming. So they won't be allowed to produce, they'll be allowed to produce 30% less than they do today. So if if everybody stays with high GWP refrigerants and they can produce 30% less, then there's gonna be a shortage. And the law of supply and demand, the supply is gonna uh decrease and the demand's increasing. Guess what's gonna happen to the price of refrigerant?

SPEAKER_01 30:57

The big guys are gonna become brokers of this stuff. They're gonna stockpile it and sell it in the secondary market. That's my guess. That's my guess. Okay. We gotta we gotta talk about the dirty gas a little bit. Um we'll talk a little bit about A2Ls, and um, I think there was there was this kind of hope that the chemical companies would come out with a magic bullet. I I'm not suggesting A2L is that magic bullet. I think it's some somewhat off that magic bullet, but uh is it an option? Is it really an option for some of these mid-guys to try to retrofit into that? And maybe, maybe instead of directing that question to you first, I'll let you breathe. I don't direct that question to you. I mean, is that is how does that look as an option?

SPEAKER_00 31:41

It will be. It still comes with a challenges, so it's not a true retrofit, meaning your existing system staying, you're gonna just drop it in and a walk away. There's a flammability with it. Um, so all the equipment, so your cases, your rack system, your condenser, that all has to be uh changed out. Some piping could have stayed, but if you're changing everything else, probably change out the uh the uh piping too. So to your point, it's not a magic bullet. Um, where I honestly think it may find a nice niche in the industry is actually combining the two leaders right now. So you have CO2 and you got an A2L or an HSCHFO blend. Um, what if you have that on the high side and on the low side, either a pump system or again, like a cascade, use CO2 or glycol on the low end to your cases, and then on your high end, you're using an A2L.

SPEAKER_02 32:34

What do you think about that? Yeah, it's a great system. There's a lot of them out there that with old traditional HFC, traditional refrigerants, not HFOs yet. Um, but you know, you're talking about complexity to the to the contractor, to the technician. Those systems are difficult to understand. Because now you got an intermediate heat exchanger with an expansion valve on it and another step of heat transfer that you're cooling with an HFO, you're cooling CO2 or glycol or condensing CO2 in the case of low temp. And so it can be more and more complex as you start at there's cool things we can design as engineers and build them, but getting people to understand them, you know, you you gotta build stores today, and what are you gonna do? And we you know, you go back to Europe again, you know, there's over a hundred thousand stores installed in Europe, across Europe, and not just the cold climates uh of northern Europe. Uh so CO2's kind of become the mainstay there and and now in Australia and New Zealand a lot of a lot of global applications of CO2. We've seen this hockey stick, a slow increase in in CO2 production orders, and now the last couple of years it's really taken off.

SPEAKER_00 34:12

So Hill made quite a big in a investment from what I hear. Can you tell me a bit about it?

SPEAKER_02 34:17

So we invested many years ago millions and millions of dollars in high-speed production line for platform CO2 products. The kind of cool thing about CO2 is nobody really knows the nuances enough about how it works under the hood to specify that. So we could build what we knew was the best of the best and standardize that to the market. And so we have these platform, pre-engineered, pre-designed platforms. Think it like this: you need 200,000 BTUs, you might buy model A. You need 300,000 BTUs, you buy model B. You know, it's like tiered, like a catalog product based on the amount of BTUs required in your store. So we've got several platforms, most namely called the Flex. The Flex is kind of the middle. We have a Flex Mini and a Max, and now coming out with a big ultra unit for industrial refrigeration, where these are pre-engineered, pre-designed platforms that allows us to really shorten our cycle time and get a lot of throughput down that high-speed production line. So that that was the investment made to get ready for the technology transition rule.

SPEAKER_00 35:45

So if regulation changes at all, does that change anything from Hill's standpoint?

SPEAKER_02 35:50

No, obviously we've already made that investment, but what it does is you know, we were planning on winding down the HFC production and and not building that for, you know, till 2032, which may be the the new date for the phase out. But that makes us maintain these two production lines, two completely separate technologies, and and that costs money to maintain all of that.

SPEAKER_01 36:22

So tell me, is there a possibility that once the rule is set and the big players uh step in hard? And we know some of those large-scale guys are in pretty hard now, does the industry get such a shock from those people investing money that it forces you guys to back out of other product types because there's just not capacity to do all that needs to be done? Or is it or do you think there's always gonna be build capacity uh just because just because the market dynamics of making it?

SPEAKER_02 36:58

Yeah, I mean we're gonna have to do what we have to do to meet market demand. And and to, you know, we're we're in business to make a profit. That's our goal in life, right? It's to be a viable company for our shareholders, our stockholders, our our owner. And so we're gonna do what we have to do to to do that. And it but it does add cost and complexity to maintain that inventory for non-CO2 compression and you know, lower pressure receivers and the valves and all the many, many things that are different between an HFC and CO2 solution.

SPEAKER_00 37:44

You can always build a bigger factory, right?

SPEAKER_02 37:49

Luckily, we have uh I have some good space in the factory that we're in.

SPEAKER_01 37:54

I let you talk about fancy case controllers a minute ago, and I just let it pass by. The techie and me wanted to jump in, talk digital twin, talk, you know, being able to model. Uh one of our largest clients is uh really trying to understand operational data in in a very profound way. It sounds like CO2 uh may give, may have a decided advantage with some of the electronics. Uh I'm interested to hear your take on that that kind of future of modeling and interpreting when something might fail or uh just recognizing that it's doing what it's supposed to do.

SPEAKER_02 38:36

Yeah, it's pretty exciting to to see all of the submissions of projects and proposals for the FMI Energy Conference that we're dealing with AI. So there's all kinds of companies who are developing AI predictive analytics, you know, predicting mean time to failure and all. And when something's going wrong with the system and it's not performing like a digital twin. So you you set up this digital twin, and with this ambient and these stores shopping conditions, you know, this should be how my system's performing, and I can compare it to what actual performance is, and they're not the same. Well, then you can go start diagnosing what's going on there. But that that's what electronics gives us that we never had before uh without case controls, for example.

SPEAKER_01 39:39

I think the the shark jump is probably performing the failure analysis. I think that's I think that's a much more difficult, you know, actually trying to model when something's gonna break, uh, anticipating it's gonna break, discernment about breakage, hey, it's running a few degrees warmer than it should. You know, I think that I think the AI can get there a lot faster. What do you think?

SPEAKER_00 40:03

I I I totally agree. I mean, case controllers, that's the future of the industry. And I I I truly believe transcritical CO2 is is uh gonna be uh commonplace. So between that, case control controllers, digital twins are definitely going to be more readily available for a lot of of not not just a larger clients, but also mid-sized clients.

SPEAKER_01 40:27

And you guys on the forefront of that, you think? You feel like you're pushing that, or do you feel like that tech stack has to be in the city?

SPEAKER_02 40:34

No, we definitely are, yeah. Partnering a lot with a lot of the controls companies out there to bring this technology to the market. We've got a really good controls team. Um, that we had this fledgling group in the past, and now they're fully staffed, and really it's a good digital engineering group that we have that is pushing the envelope there.

SPEAKER_01 41:02

It's really some cool stuff because on the design side, not necessarily refrigeration design, but on the pure modeling side, uh, we had Nick Childs on the pod uh two weeks ago, and a lot of what he was talking about was being able to get to that frontier space as a firm to be able to take a 3D model and actually have those asset classes perform within it and then have that operating data beyond it in the autodesk stack. And uh obviously there's a lot of control handoffs that you have to do because the controllers have to talk to the building management system that has to talk to this, that has to talk to that. But the ability for there to be a rendering surface where a customer, user, technician, maintenance guy at corporate can can actually see and visually understand what's going on with a case in a certain and query that case directly. I think that really raises the bar on how, you know, it's the interaction. If it's not a wall of data, it's hey, and I think that's maybe where AI helps is I think when AI starts to to become a helper on your back and it's going, hey, I'm looking at all this data, and you tell me this is how it's supposed to happen, and it's not happening that way. It's no longer meeting your standard, but the authoritative answer still rests with the human. It says, What should we do about it? And I think that's the real promise, the absolute promise of how AI can interact deterministically inside industry. And so uh I'm an altruistic architect, I'm not an engineer. But what I've seen AI do is if you can constrain it, if you can harness it, and you can turn it from a probabilistic, hey, what's the capital Nebraska, to hey, I need you, I need to contain you to be able to tell me when any of these things go out of spec, and you're gonna watch it for me across 4,000 stores and you know, 50,000 cases. I can't watch that.

SPEAKER_02 43:21

Yeah, but that computer can.

SPEAKER_01 43:24

The controller can call home.

SPEAKER_02 43:26

I think we're really on the cusp of really kind of like dynamic changes in our industry. And it's being driven, you know, as happen chance because we're going to this electronic control platform.

SPEAKER_01 43:43

It's a big deal. It's a big deal. It kind of it's kind of ushering in the future just like AI's coming at us like a ton of bricks. So last place we gotta go here today is you know, let's get into the crystal ball a little bit. What what do you think? You know, CO2's only You've been doing it for 20 years. You can't bring me CO2 and tell me that's cool.

SPEAKER_02 44:04

No, we still got a lot of progress to make on new CO2 technologies. And and there's some cool stuff that we're not ready to talk about yet, but you know, some of it I can share some glimpses of it using the air conditioning system to to uh remove heat from the refrigeration system. The EER of a air conditioning system is much higher than the EER of refrigeration. So if we can trade off some of that, then that's a pretty exciting thing to let the air conditioning because a lot of people don't know this.

SPEAKER_01 44:46

Well, I clearly don't know this, so keep talking.

SPEAKER_02 44:49

In the spring and the fall, the air conditioning equipment is running, not because the store is cool or warm, but the store is wet and it needs to be dehumidified. Well, then you gotta reheat that air because you can't blow that really cold, dry air on the shoppers or they'll freeze to death. So they reheat that air. Well, what if we reheated that air with the refrigeration system and take that heat out of the refrigeration system and give it to the air conditioning system that needs it? And in turn, so we've built a couple of stores like that so far, phenomenal energy savings. And that that's one of the cool, exciting things that that we're doing research on now.

SPEAKER_00 45:41

And that's nothing new, right? I mean, there's racks out there today that are using 404, 407A that are using heat re claim. So whether it's for air or water, maybe how it's being done is it is different.

SPEAKER_02 45:54

That's the thing, that's the cool thing, is how it's being done. And before our, you know, the like you're right, heat reclaim for many, many years, we've been doing that. But what if we did it after the condenser, like using it to sub-cool? And there's stores that I worked on way long time ago when I was really a young engineer that was doing this really where we kind of got these ideas from. We did this with R22. Why can't we do it with CO2? So, and then using the same set of pipes running between the refrigeration equipment and the air conditioning equipment, so that you don't have to run new lines. That's kind of the the novelty. How to control all that is uh kind of the secret sauce.

SPEAKER_01 46:46

Well, controlling it and and managing any of that additional cap cost on the front side, and maybe it doesn't have it, but it's since it it sense uh control's complexity probably does. Look, being able to see your entire store uh has a value, but that value is offset by a cost. Yes. And so at what point is the the twinning and the operational information and the stuff they're gleaming, you know, the the value they're gleaming off the information really offset the cost of the cap. And and and I think at the top level, you know, the Walmarts targets, um, you know, Wagmans, uh the guys that are are big and have huge capex, I I think these things are going to show up, and I think you've got a real opportunity there. I I still think I'm somewhat concerned that for the marginal performer, if something happens inside the business, the grocery business where the AMAC comes in, I I mean we could lose some grocery stores in places that could ill afford to lose them.

SPEAKER_02 47:53

Yeah, but you're going back to that same scenario that is about the existing you got mom and pop, they got four stores. They don't have to do anything. Um I mean, they will with subsection H about monitoring their leaks, but they don't have to do anything with CO2 or propane or A2Ls in those existing stores.

SPEAKER_01 48:19

Well, that's true, provided they're not in New York, right? Or California or Washington or the Climate Alliance doesn't step in even after AIM and say, uh, not so fast, my friend. You know, it's not good enough. And so I think that's why it's incumbent upon people like you in industry to uh to be on these boards and committees and and and to invest that time. It it matters because there needs to be some sensibility uh to how we do things. There needs to be consum some consistency. And uh I certainly appreciate that you go out there and you invest your time to do it. Because I'm I'm not sure there's a value prop that says if I go do this, my company makes more money. I I I don't think there's line of sight to additional revenue for the kind of energy you know that you're putting into this. And I I think uh that shows that shows a lot of maturity on your part and a lot of respect for your organization. And so kudos to you uh thank you for that. And uh also kudos to you for joining us today because it's been a really fun opportunity with you in Orlando for the FMI's uh design and energy conference committee meeting. That's a mouthful, it's kind of like your title. And you didn't even have to look at your paper to do the notes. Yeah, it's just a bunch of wild scribbles at this point. Uh, thank you so much for being with us uh on the pod today and looking forward to uh catching up with you in the fall. When you come back to Orlando, maybe we will talk again. Maybe so. Thank you so much for joining us today. You keep me out of the ditch with refrigeration. I'm so happy. And thank you for joining us right here on the Built to Suit podcast, the pod that always is easy to find wherever you get your podcast. We'll see you soon.