Supermarket Efficiency Measures a ‘Slam-Dunk’ Opportunity
Refrigeration contractors can help supermarkets decrease consumption, increase profitability
Refrigeration contractors don’t get many opportunities to “slam dunk,” but when it comes to energy savings opportunities for their supermarket clients, they can soar like NBA all-stars.
Speaking at a recent meeting of the Food Marketing Institute (FMI), Jonathan Tan, director, business development, Hillphoenix, cited statistics from FMI and the U.S. Energy Information Administration (EIA) showing that although supermarkets in the U.S. bring in close to $700 billion in annual revenue, they do so at an average net profit of only 1.7 percent. In addition, although supermarkets make up about 2 percent of total U.S. commercial building space, they account for about 6 percent of total U.S. commercial building energy consumption.
It therefore becomes clear that supermarket owners and operators are going to eagerly lend their ears to contractors who can help them reduce their energy costs. The good news is that there are numerous opportunities to help them do so, especially on the refrigeration side.
“If you’re a supermarket owner or operator and you’re going to invest money somewhere, what better place to put it than into energy efficiency?” Tan asked. “Usually in financial dealings, a high rate of return requires a high risk, but that’s not the case with energy-efficiency investments — they’re low risk and very high return.”
Tan noted the bulk of a typical supermarket’s energy costs are driven by refrigeration. Efficiency variations among stores in a chain can show where the greatest opportunities exist for contractors (see Figure 1). In addition, he presented an energy comparison to illustrate some steps refrigeration contractors can take to help their supermarket customers reduce their energy consumption, save money, and increase their profitability (see Figure 2).
“Sometimes we make it difficult for ourselves and our customers because we can’t nail down the exact worth and value of our energy-efficiency initiatives,” he said.
AN ENERGY COMPARISON
Tan’s energy comparison showed the value of five simple refrigeration-related energy-efficiency projects at a typical 50,000-square-foot supermarket: placing doors on open refrigeration display cases; retrofitting cases with LED lighting; changing doors with traditionally high door heat to either no-heat or low-heat doors on low-temperature cases; retrofitting fans with electronically commutated motors (ECMs); and installing sweat misers on cases. Prior to any of these actions, the store’s annual electricity consumption for the refrigeration system was $157,000.
“Just by adding doors, I immediately take 80 percent of the Btu out of the medium-temperature cases,” Tan said. “That’s about a 24 percent reduction in power on the refrigeration side right off the top.”
He added that doors also make the refrigerated aisles more comfortable for shoppers and reduce the burden on a store’s HVAC system.
Retrofitting freezer cases with LED lighting saves another 5 percent, and converting fan motors from shaded pole or split capacitor motors to ECMs saves another 4 percent.
There’s also an opportunity for savings by installing low-heat or no-heat doors. According to Tan, many stores today have heat on the door and heat in the frame — in some cases 250 W or more per door.
However, today’s better technology in insulation and glass can allow many stores to switch to no-heat doors and save 250-plus W per door. In areas with high humidity, low-heat doors typically save about 200-212 W per door.
“Taking a refrigerated case and adding heat to it doesn’t make a lot of sense,” Tan said. “By using no-heat or low-heat doors, you’re going to use one-fifth of the energy you were using just to keep sweat off the doors. That’s a big opportunity — about a 10 percent reduction in refrigeration system energy usage — and I’m surprised as I travel around the country to see that more people are not taking advantage of this.”
Another option would be to offer supermarket clients anti-sweat heater controls, which allow the door heaters to be cycled based on the conditions in the store.
In the final analysis, the store that started out with $157,000 in refrigeration-related energy costs can see that number reduced by 43 percent, to $89,000, just by taking those simple steps.
“That provides about $67,000 in savings just on the refrigeration side,” he said. “We’re not talking about the controls, HVAC, or lighting, where there are incrementally more opportunities. When you look at all systems as a whole and make them all work together, your opportunities are even greater than this 43 percent savings.”
If a 43 percent savings doesn’t grab your supermarket clients’ attention, Tan cited U.S. Department of Energy (DOE) statistics that show for every $1 in energy savings that goes to a supermarket’s bottom line, the store would need to sell an additional $18 to add that same dollar.
“That would be more than $1 million in sales or nearly 400 additional single-family shoppers coming through a store per week,” Tan said. “And because demographics are very hard to change around any given store, adding 400 additional single-family shoppers would be a huge challenge.”
WHERE THE MONEY IS
Tan also explained there are a number of tools for funding energy-efficiency projects. Contractors can use these tools to leverage projects with their customers. These include utility incentives, on-bill financing, traditional financing, and Property Assessed Clean Energy (PACE) financing.
Utility incentives — These are available from most utilities. They can dramatically reduce the capital required for projects and often cover a multitude of energy efficiency measures. A potential downside is that the projects(s) may need pre-approval to qualify, so it’s important to involve the utility from the beginning.
On-bill financing — This is a powerful tool in which the loan for the energy-efficiency project is paid back by the energy savings on the supermarket’s utility bill. These loans are typically very inexpensive or can be obtained at even 0 percent interest and can provide positive or net-even cash flow. On the downside, they are typically limited to energy-efficiency projects only, have limited availability, and may require capital funding for the initial cash outlay.
Traditional financing — Traditional financing is flexible, readily available, and may improve return on invested capital. Yet, Tan said it has become somewhat of a “bugaboo” in the HVACR industry, stating, “We’ve had some difficulties with how we explain traditional financing. Customers may think, ‘I’m paying 5 percent on this loan, so it’s costing me money,’ but when you factor in the money being saved in energy usage, it’s quite common for a customer to be paying 5 percent on a loan and still saving thousands of dollars each month.”
PACE financing — This is available in 29 states and Washington, District of Columbia. The program offers low interest rates on loans that are repaid through property taxes. According to Tan, these loans are good for heavy capital investment projects that have a long return-on-investment schedule, such as building envelope upgrades or renewable energy. They have a minimum term of five years, so they are less suitable for projects that require little capital or those in which the simple returns on investment are quick.
KEEP IT SIMPLE
In summary, contractors have a variety of ways to help their supermarket customers save money through energy-efficiency projects, particularly on the refrigeration side. The key is to explain everything in terms customers can understand.
“Make sure your supermarket clients know the money is available, and the money is cheap, so they should go out and get it while at the same time improving their operations and increasing their profitability. And, when it comes to your upgrades, make it easy for customers to understand. It really is as simple as a Btu is a Btu, and a watt is a watt.”
Publication date: 5/1/2017