Store owners and utilities both benefit from an energy consumption reduction in the electricity-intensive food retail industry. Store owners want to lower their energy bills and operating costs, and utilities know that containing consumption is far more cost-effective than expanding the electric grid.

Despite the long-term energy savings and environmental benefits natural refrigerant systems offer, their higher upfront costs remain a primary barrier to retailers’ widespread adoption of these technologies. Utilities have begun to introduce incentive programs to defray these costs, but the programs differ widely across utilities with no uniformity in application processes, approval procedures, or incentive types and amounts. And although refrigeration routinely offers food retail stores some of the greatest potential for electricity savings, the fact that energy-efficient refrigeration technologies are considered custom incentives diminishes the potential for both supermarkets and utilities to realize these gains.

Almost every utility in the nation offers some type of custom incentive program. These programs allow applicants to present new energy-saving projects, such as natural refrigeration systems, to utilities but they also increase the procedural burden for retailers. The dollar amount of a custom incentive is based on projected energy savings, so a store owner needs to calculate expected savings for all proposed equipment and prepare supporting documentation. To model energy savings for a store that doesn’t yet exist requires store owners to model two different scenarios — one for the projected energy use of a fictional “before” store on non-natural refrigerant and another for the projected energy use of the natural refrigerant store as designed on paper.

For any single store — let alone a chain served by multiple utility companies — the work involved in hunting down available incentives, complying with procedural requirements, and managing paperwork can be overwhelming. As a result, many stores don’t capture all the incentive funds they’re entitled to or end up not going after any at all. Some may forgo making energy improvements because they are unable to make the return on investment (ROI) calculations work without incentives, which would have resulted in the shorter payback period required for project approval.

Partnering with a manufacturer, supplier, or project engineer who has experience with natural refrigerant installations and can work with utilities to explain why a new construction or remodel is worthy of incentive dollars is one smart strategy that can help a company maximize the capture of incentives in the current landscape.

Groups, such as the North American Sustainable Refrigeration Council (NASRC), are working to bridge the gap between stores and utilities, which helps retailers communicate their interest in natural refrigerant technologies and helps utility companies understand what types of incentives work best for customers and are, therefore, most successful and effective for the utility.


Of course, for utilities to appropriately reward energy-efficiency improvements, they need a baseline against which to measure them. Therein lies one of the many challenges facing refrigeration end users seeking incentives for upgrades and new installations. Even as utilities, manufacturers, and end users work together to make energy-efficient equipment more affordable through incentives, the lack of standard industry benchmarks makes the process complicated, lengthy, and inconsistent.

Within the refrigeration manufacturing industry, there is no uniform energy-performance baseline for any type of system. Each manufacturer has its own set of tools for calculating energy consumption, and most of them account only for compressor energy consumption, ignoring other system components, such as condenser fans and variable frequency drives.

Even among utilities, there is no agreed-upon calculation methodology. When a utility wants to provide end-user incentives for new energy-saving equipment, they often use a set of measures unique to that utility alone.

Further complicating matters is the fact that natural refrigerant systems are so new to the U.S. market that many utilities lack experience with the technology and therefore must make assumptions about how natural systems compare to traditional direct expansion (DX) systems, and those assumptions can be inaccurate. Many utilities also fail to acknowledge the environmental effects of refrigerant leaks — or give credit for systems that leak less — even though a system that is low on refrigerant uses more energy to get the job done. Convincing utilities to recognize the dollar value of safeguarding energy efficiency through leak-avoidance is a tough sell, so it’s rarely accounted for in energy calculations.

Establishing a baseline gets even more complicated when you consider the different scenarios in which new energy-efficient equipment might be installed, such as a full upgrade, a partial upgrade, or a new store. The absence of an agreed-upon set of energy benchmarks results in wildly varying incentives from one region to another. And it means end users must reinvent the wheel every time they approach a new utility with a request for incentives.


For store owners seeking utility incentives for natural refrigeration, modeling new system performance is key to calculating anticipated savings. Modeling entails determining the energy consumption of a particular technology, taking into account different variables and applying mathematical formulas to predict energy savings and expected ROI. Modeling traditional commercial refrigeration systems is already a difficult task. Natural refrigeration, with its mechanical eccentricities and lack of exposure among utilities, poses even bigger challenges. Very few, if any, of the many modeling programs available industrywide are designed to accommodate the nuances of natural refrigeration.

Utilities need a tried-and-true modeling program that definitively proves whether claimed energy savings will be realized. An independent third party should verify these calculations to ensure accuracy, although the question of who should bear the cost of verification — the utility, the end user, or the manufacturer — remains unanswered.

Interest in natural refrigerants is growing exponentially. To speed the pace of adoption and reduce electricity consumption in the food retail industry, customers and utilities need standard industry benchmarks; a robust, industry-accepted modeling solution; and comprehensive, straightforward incentive programs that benefit utilities and food retailers alike.

Publication date: 10/10/2016

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