Rising Costs

As most already know, the transition away from HFC refrigerants officially began in December 2020 with the passage of the AIM Act, which mandates an 85% reduction in the production and consumption of high-GWP HFCs by 2036. As such, HFC production was reduced by 10% in January 2022, and a much larger stepdown occurs in January 2024, when production of HFCs will be cut an additional 30%.

Under the AIM Act, the Environmental Protection Agency (EPA) also released a proposed rule in December 2022, banning the use of high-GWP HFCs such as R-410A in new HVAC equipment, starting in January 2025. The transition date for most commercial refrigeration applications is January 1, 2025 — larger equipment has a proposed GWP limit of 150 and 300 GWP if less than 200 pounds.

As a result of these measures, most expect the cost of high-GWP HFC refrigerants to increase significantly. Glenn Barrett, senior associate partner at DC Engineering in Coeur d'Alene, Idaho, noted that refrigerants have historically cost between $7 and $10 a pound, but since the 10% cut in HFC production last year, prices have risen quickly.

“We're now seeing some of the higher-GWP refrigerants such as R-404A and R-507 going for $30 to $40 a pound,” he said. “I expect that after the next 30% reduction in the allowance, we’ll see another significant price increase. Based on the models I use, I think the price of refrigerants could easily go up by two to five times what they currently are.”

These are costs that could substantially impact a grocery store’s already thin profit margin. In analyzing 100 medium-sized supermarkets with leak rates between 20% and 25%, Barrett predicts that store owners could spend about $2 million in 2023 to replace leaking refrigerants. With the increasing cost of HFCs, he noted that by 2028, that annual cost could rise to $8.6 million, which is why it is so important to repair refrigerant leaks.

To demonstrate the impact that refrigerant leaks have on grocery stores, Barrett looked at a supermarket leaking out 100 pounds of refrigerant.

“What is that going to mean to my operation in terms of how am I going to make that up?” asked Barrett. “Well, one way is to sell more stuff. For every 100 pounds of leaked refrigerant, a supermarket would need to sell an additional 130,000 gallons of milk, 56,000 six packs of beer, 188,000 loaves of bread, and 994,000 pounds of bananas. You can see that it's important to the operation of the store to mitigate leaks.”

Strategic Planning

To reduce leaks, as well as ensure compliance with the AIM Act and other regulatory measures, store owners should create a plan to manage their current refrigerant use, said Barrett.

“Food retailers should establish their goals and vision and then communicate that plan throughout the organization, including suppliers, and partners,” he said. “Part of that plan involves administrative duties such as reporting and information gathering, as well as tapping contractors and others who know how refrigeration systems work, what works best for your company, and how to calculate and figure out the benefits for the different options that are available.”

The next part of the strategic plan should focus on how store owners intend to stay in compliance, said Barrett. This involves evaluating the low- and ultra-low GWP refrigerants that are available; evaluating facilities and equipment to identify opportunities; and developing a plan to remove ODP and high-GWP refrigerants from the operation.

“If the store still has R 22 or an ODP refrigerant of any kind, then focus on getting that out of the store,” said Barrett. “R-22 costs about $115 a pound, so that’s a lot of money if there’s a leak. After that, evaluate the natural and low-GWP refrigerant options that are going to work best for the organization.”

But the cornerstone of any strategic planning has to be developing a comprehensive leak mitigation strategy and identifying and actively addressing leaking equipment, said Barrett.

“The value of that refrigerant is going up, and the compliance constraints are all going to be focused on how much charge you have, how much you're leaking out, and leak rates, which will all be very important factors to your recording, tracking, and fixing leaks,” said Barrett. “The less you leak, the fewer compliance issues you have and the less you're spending on refrigerant. So it just makes sense to really ramp up what you're doing from a strategy perspective on leak mitigation.”

In creating a leak reduction plan, store owners will need a way to measure leaks and track their repairs, said Leia Waln, associate partner at DC Engineering.

“You can't manage what you can't measure. It's going to be very hard to determine an appropriate strategy if you don't have the data or visibility to the data.”

To that end, Waln recommends creating a database to gather and maintain information about the facility, appliances, and installation/service/end-of-life.

“It's important to make sure you have a manageable level of visibility and that you are seeing information that is important to you,” she said. “All of the information that you're gathering is also important for managing leaks, knowing which systems are leaking where, and how much refrigerant they have leaked. And it's also a necessity to ensure compliance with recordkeeping and reporting requirements.”

As for retrofitting an existing store with equipment containing new refrigerants such as CO₂ and A2Ls, it may seem overwhelming, but the trick is to take small, manageable steps, said Barrett.

“Eat the elephant in smaller bites,” he said. “Take a modular approach to existing stores, meaning instead of taking out that whole HFC rack all at once, put in multiple smaller refrigeration systems that use low- or no-GWP refrigerants. Prioritize cases that are old and leaking and replace those first. Stage in a system over multiple years or transition to new refrigerant by department. Taking a more modular step-by-step approach works effectively with new stores as well, but it really might become the only option in an existing store remodel — especially if the owner wants to keep that store operational while doing the remodel.”