By Jonathan Tan, VP Energy Services
The AMS Group, Hillphoenix
Supermarkets are the most electricity-intensive commercial buildings, using an average of 51.5 kilowatt-hours per square foot per year at a cost of about $3.70 per square foot per year. In terms of operating budget, energy is the second largest expense for food retailers after labor. In fact, given the industry’s thin profit margin, it’s estimated that it takes $18 in sales to pay off $1 of the electric bill.*
The good news is there are several system retrofits and other energy upgrades that significantly improve electricity efficiency – and profitability. Because refrigeration and lighting account for 78 percent of end use across the industry, these systems are generally prime candidates for energy upgrades. In other words, they often offer the greatest opportunities for cost-effective improvements. Retrofit projects, however, are not one-size-fits-all, and understanding where to start is often a major challenge for food retailers.
A simple, no-cost benchmark gives retailers of any size an information-rich snapshot of their stores’ electricity profile and insight into where the best opportunities for improvement lie.
One food retailer’s goal to be below average
A supermarket chain set the goal of improving its electricity efficiency so that its portfolio of stores was performing below the national average of 51.5 kilowatt-hours per square foot per year. Benchmarking against this figure was the first, important step in understanding how to go about implementing their energy upgrade efforts to cost-effectively achieve their goal.
At a glance, a simple bar chart plotting each of the 55 stores’ average annual electricity use revealed which of the stores were performing above the national average and thus warrant facility energy audits. Across the chain, time and money is better spent conducting audits on stores performing 35 percent above goal, for example, than on those performing only 5 percent above. Comparing similarly formatted stores with each other also reveals audit and improvement opportunities. The higher the electricity intensity of the store, the greater the expected return on the retrofit projects, and the retailer is implementing their audits and projects accordingly.
Information from the chart guides the energy-improvement efforts in other ways as well. As helpful as it is to know which stores are overly energy-intensive, it’s also useful to look at what’s going on in the stores that perform well. Successful practices and setups in those facilities can inform positive changes in the others.
Energy upgrades are continuing to be done strategically across the chain, and include such solutions as retrofitting open cases with doors, installing anti-sweat heater controls, retrofitting freezers with low-heat doors, upgrades for lighting and fan motors, and system recommissioning. As the project progresses, the retailer continues to benchmark against the national average to track results.
To learn more about how energy upgrades can improve profitability in your stores, see Are Energy Upgrades Worth It to Grocers.
*It’s often cited that saving $1 in energy has the same impact on the bottom line as increasing sales by $59. While the DOE has reported that equivalency in the past (see the ENERGY STAR Building Manual), the value has recently been revised to an $18 increase in sales.