Proven Strategies: For Saving Energy and Reducing Costs in A Retail Environment
Proven Strategies: For Saving Energy and Reducing Costs in A Retail Environment
Proven Strategies: For Saving Energy and Reducing Costs in A Retail Environment
2 2
I. Executive Summary
According to the U.S. Environmental Protection Agency (EPA), retail companies spend nearly
$20 billion on energy each year. Those costs generally account for 25 percent to 40 percent of
ongoing building expenses.1 Energy costs rose 31 percent from 2003 to 2005, according to U.S.
federal figures, and there is no indication that these costs will fall in the future. In fact, the U.S.
Department of Energy projects a 30 percent sustained increases in the cost of electricity.2
The impact of high energy prices is felt in every corner office and boardroom. A recent Duke University
study ranked high energy costs as the number one concern of executives, ahead of even healthcare
costs and rising interest rates for U.S. corporations. Yet, remarkably, the same study revealed that
only a minority of companies have made any attempt to improve the efficiency of their facilities.3
Better energy management can, however, carry a sizable payoff. For example, the EPA estimates
that a 10 percent reduction in energy costs at an average supermarket can boost profit margins
by as much as six percent.4 While some may hesitate to invest in increased up-front costs, energy
efficiency investments can translate into long-term savings of 10 to 30 percent.5
A 2003 report to the Sustainable Building Task Force, which studied the results of green building
in California, concluded that the use of green design and building techniques added no more than
two percent to project costs. According to the report, the small increase in construction costs
resulted in a payback of more than 10 times the initial investment. For example, the report stated,
an “initial upfront investment of up to $100,000 to incorporate green building features into a $5
million project would result in savings of at least $1 million over the life of the building, assumed
conservatively to be 20 years.” 6
The most successful energy efficient projects are those that adopt an integrated, whole-building
approach. This concept of using a combination of building technologies, including lighting, HVAC,
motors and drives, controls, and automation systems, has proven to be the most effective approach
to an energy upgrade. Companies that adopt an integrated approach see a cumulative effect on 1 U.S. Environmental
energy efficiency and save more in the long run compared to those that upgrade a single, isolated Protection Agency,
ENERGY STAR for Retail,
building technology. www.energystar.gov/index.
cfm?c=retail.bus_retail
According to an Energy Cost Savings Council report, “The whole-building approach may well justify 2 TheOpenPress.com,
— in bottom-line terms — energy-saving measures that might not otherwise win approval. With this “Energy Survey and Waste
Analysis Bring Big Savings
approach, the whole can be substantially greater than the sum of its parts. That is, a whole building through Energy Efficiency
for Companies,” Dec. 7,
upgrade can deliver energy cost savings that are greater than the total gains that could be achieved 2005.
by all of the components installed individually.” 7 3 Duke University/CFO
Magazine Business Outlook
To successfully control their energy destiny, retailers must understand the vital role energy plays in their survey, December 2005.
operations and include energy planning and power management in their strategic and business plans. 4 U.S. EPA, ENERGY STAR
for Retail, www.energystar.
gov/index.cfm?c=retail.
Many of retail’s most recognized names — Wal-Mart, Walgreens, McDonald’s and Lowe’s among bus_retail
them — are embracing energy management techniques and green building practices. Integrated 5 Schneider Electric, “Energy
into new builds or existing locations, changes involve high-efficiency fluorescent fixtures, lighting Management Can Fuel
Long-Term Profitability,
controls, high-efficiency HVAC systems, and integrated power and building management systems, November 2007.
to name a few. 6 “The Costs and Financial
Benefits of Green Buildings:
A Report to California’s
Green measures are no longer “feel good” options. Today’s energy management techniques are Sustainable Building Task
allowing retailers to grow smarter and greener. Force,” October 2003.
7 Energy Cost Savings
Council: www.energystar.
gov/ia/business/industry/
bom.pdf.
2
Top 10 Energy
Saving Strategies
1. Understand your needs before taking action
2. Automate and centralize
3. Leverage recent advancements in lighting
4. Expand lighting controls beyond on/off capabilities
5. Increase control and efficiency through VFDs
6. Track and mitigate poor power quality
7. Monitor to set benchmarks and measure improvements
8. Adopt a holistic approach
9. Manage energy as an asset
10. Establish a clear energy policy
4 4
II. Building Blocks for Developing a Proven Energy Optimization Strategy
Even with rising energy prices, 58 percent of U.S. facility managers say their budgets have remained
constant or even decreased from year to year.8 The thinking has been that as long as the heating
and air conditioning operates and buildings are secure, companies prefer to spend available dollars
elsewhere. Retailers are stretched to keep up with repairs and maintenance.
To create an energy optimization strategy, retailers must view energy efficiency efforts as
investments, not costs. The good news is that these investments will ultimately not only increase
energy efficiency, but improve the bottom line. Following are 10 proven strategies to reduce
electrical consumption within a retail environment. Because the retail market is an expansive and
diverse group, not all solutions will apply to every retailer. They are, however, the building blocks for
developing a successful and proactive energy efficiency strategy within the retail market.
For existing buildings, a companywide assessment of all energy usage is the first step
toward building a well-designed and fully integrated power management system. During a
comprehensive energy audit, energy experts examine usage patterns and peaks, the usage
patterns and costs of similar facilities in the region, utility contracts, potential maintenance
issues, equipment efficiency levels, power quality levels and more.
By monitoring and analyzing usage, companies improve internal awareness of how much and
for what purposes energy is being consumed. That provides an opportunity to track needs and
allocate resources in the most efficient way possible.
From a financial and procurement viewpoint, it is important to analyze price trends and market
influences against actual energy usage patterns. That insight can be used to negotiate price
with energy suppliers. Since unexpected price hikes will occur, businesses must understand
their own risk tolerance to pursue hedging opportunities or strategies.
For retailers with plans for expansion, it’s critical to have hard data to show whether the existing
electrical infrastructure can support growth. Careful analysis of existing usage patterns can be
invaluable for companies looking to better track costs and forecast how much additional power
is needed to prepare for growth.
The end result of a comprehensive energy audit is a blueprint for a more efficient operation with
the potential for lower consumption, better power quality and improved reliability. In most cases,
suggested steps for implementation come with an expected return on investment. Potential
opportunities are typically prioritized according to their cost and rate of return.
The energy audit process is an effective and structured approach to identify opportunities for 8 Survey conducted in 2004
savings and determine the order in which they should be undertaken. by the International Facility
Management Association,
MFLink, the Association
for Facilities Engineering
(AFE), The Association
2. Automate and centralize of Higher Educational
Facilities Officers (APPA),
The Building Owners &
In an ideal retail environment, all building systems are monitored and controlled through one Managers Association
(BOMA) and Building
integrated, centralized solution. Systems that support the heating, cooling, refrigeration, lighting, Operating Management
sump pumps, balers, fire, security and other building operations are integrated into one program. magazine.
4
For retail chains, centralizing building and energy management through an enterprise-wide system
allows operations to be streamlined and standardized. A centralized system allows benchmarking
for best practices and forecasting costs across the enterprise. The system gives chain store owners
greater control over budget planning and provides the foundation for more informed decision-
making. Centralized management also enables the aggregation of data and tracking of trends,
promoting better operational decisions targeted at achieving the desired cost savings.
By remotely monitoring and controlling building operations from a central office, facility
managers can see a simultaneous reduction in energy consumption and on-site man-hours
required for facility upkeep and maintenance. The system relieves site-specific management of
many non-core business functions, which leads to improved business results as more time is
made available to focus on customer needs. What’s more, time management efficiencies can
be improved further through faster and more accurate diagnostics, less planned and unplanned
maintenance, and by leveraging best practices borne out across the enterprise.
Energy management systems alert staff when problems are identified and require manual
intervention. If a freezer door is left open, for example, the system will trigger an alarm to notify
the appropriate contact person in the store, at the headquarters or, if necessary, at the contact
person’s home to rectify the problem before perishable product is lost.
Web-based building management systems give facility managers the added benefit of accessing
the system from anywhere at any time. Being able to access and control the system from home
in the event of a late-night alarm can be a convenient and timesaving option for retailers.
In retail facilities lighting is nearly always the single greatest electrical expense, accounting for
up to 50 percent of electricity charges — 60 percent in specialty apparel retailers. By installing
reduction high-intensity T5, T8 and compact fluorescent lamps, facilities can cut their lighting electrical
loads up to 50 percent when compared with conventional HID lighting.
in electrical
lighting load What’s even more encouraging is retailers can take this step toward greater efficiency while
improving the lighting quality with whiter and brighter illumination capabilities. High-output
possible fluorescent lighting has lower lumen depreciation rates, better dimming options, virtually instant
with the start-up, better color rendition and lower glare than conventional HID fixtures.9
installation Properly lit stores are critical to maximizing sales. Today’s energy efficient lighting technology
of compact allows retailers to have superior lighting while still reducing operating costs. A popular
florescent merchandising trend is to use task-focused or track lighting to create more dramatic displays.
By replacing 100-watt incandescent (halogen) lights in those displays with 39-watt Ceramic
lightbulb Metal Halide (CMH) lights, retailers can save energy while achieving the same output and color
rendering. The lower wattage also generates less heat, which translates into HVAC savings. In
addition, there are maintenance efficiencies with CMH lights since they have a 10,000 to 15,000
hour lamp life compared to halogens that average about 2,000 to 3,000 hours.
9 Energy Design Resources,
“Design Brief – Options and
Opportunities,” 2001. According to the Energy Cost Savings Council, energy efficient lighting generates an average
project payback period of 2.2 years and a 45 percent return on investment, a better payback
than other energy-saving building system technologies.
When illuminating food cases, many retailers have replaced fluorescents with LEDs, which
use even less energy, have a much longer burn time and give off virtually no additional heat —
reducing refrigeration costs.
5
4. Expand lighting controls beyond on/off capabilities
Today, schedule-based lighting control systems are common among most retailers. However,
new advancements, such as schedule-based dimming and automated demand management
programs, have introduced a new level of control and automated efficiency.
For example, for large, 24-hour retailers, there are multiple options to reduce consumption.
Simple schedule-based controllers can turn off lights in unused areas of the store, such as back
rooms, unused sections of the grocery store or other areas that are not used during late-night
hours. Additionally, many retailers are taking steps to automatically dim their general lighting by
as much as 30 percent as it gets later in the evening. By gradually reducing the light levels over
a period of five to 10 minutes, the change is virtually undetectable to shoppers.
Reduced light levels also are commonly used when faced with brownout conditions by the
utility. Rather than turning off or down air conditioning, which can have a dramatic impact on
customer comfort, many retailers first initiate a pre-programmed option to reduce light levels.
A helpful side effect of doing so is less heat is generated by the lights, which translates to less
cooling needing to be done by the HVAC system.
In some cases, retailers that are working within demand management programs can have
their lighting control systems communicate directly with utilities. When the utility prepares to
reduce its supply, it sends an electronic signal to the retailer. Upon receiving the notification, the
retailer’s lighting control system automatically dims light levels down to a pre-determined level.
The energy-saving process can occur without any assistance from the facility manager.
Other lighting control technologies, such as motion detectors, also can play an important role
in reducing consumption in smaller areas with less traffic, such as changing rooms, restrooms
and back-office work areas. Motion detectors will override a schedule-based system and only
initiate lighting when customers or staff are present.
Daylighting is one option that has proven to provide extra benefits at the register. The
combination of natural skylights and sensor-driven artificial lighting can increase average daily increase
sales by 40 percent, according to a 1999 study by the Pacific Gas and Electric Company
(PG & E). According to the study, shoppers reported finding the sky lit stores to be cleaner,
in average
more spacious, and more open than stores without skylights. Researchers postulated that the daily sales
skylights relaxed customers, improved product visibility, made products appear more attractive attributed to
and boosted employee morale. Correlated profit increases even outperformed the intended
energy savings.10
daylighting
Exterior lighting fixtures can include ambient light-level sensors to help initiate parking lot lights
during inclement weather conditions and turn them off at sunrise, maximizing safety and energy
efficiency whenever appropriate.
6
The key to identifying the
energy savings opportunity
of VFDs in HVAC systems is
to understand the operating
cycle of the system versus
the heating and cooling
needs actually required.
8
5. Increase control and efficiency through VFDs
Retailers routinely struggle to balance customer comfort while reducing their heating and
cooling bills. Favoring one side may result in an unpleasant experience for customers, while
favoring the other will increase costs. The variable frequency drive (VFD) has become a proven
tool for striking a balance between comfort and efficiency.
The key to identifying the energy savings opportunity of VFDs in HVAC systems is to understand the
operating cycle of the system versus the heating and cooling needs actually required. Most HVAC
systems are designed to keep the building cool on the hottest days and warm on the coldest days.
Therefore, the HVAC system only needs to work at full capacity on the 10 or so hottest days
and the 10 or so coldest days of the year. On the other 345 days, the HVAC system typically
operates at a reduced capacity. This is where a variable air volume system with VFDs can be
used to automatically match air flow to actual heating and cooling demands.
VFD’s reduce the motor speed when full flow is not required, thereby reducing the power
required and the electrical energy used by fans and pumps. It’s a general rule of thumb that a
centrifugal pump or fan delivering 80 percent of its rated flow only requires 50 percent of the
rated power.
If a building had a constant-volume air handling system with no variable speed drives, the system
would run at full speed all the time. The boiler and chiller would continue to create hot or cold air,
respectively, regardless of the amount needed. If a room didn’t need hot or cold air, the air from
the ductwork either would be dumped outside or in the mechanical room, effectively wasting it
and the energy required to heat or cool it. Using dampers to mechanically adjust the airflow output
into the appropriate rooms does not control the speed of the motor and does not save energy.
VFDs are also an ideal solution for refrigeration systems. Rather than running compressors
continuously at 100 percent, VFDs can be programmed to automatically increase speed as the
suction temperature increases. When the temperature is safely within a specified zone, VFDs
reduce the compressor speed and dramatically reduce the energy consumed.
vfd cooling
boiler tower
vfd
vfd pump
chiller
fan
return air
vfd
vfd
Example of VFD application in air handling and water systems for a retail building
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6. Track and mitigate poor power quality
Power quality is also an important consideration for many large retail facilities. Poor power
quality can be generated by multiple sources, including the electrical utility, nearby businesses
or equipment within the facility. For example, drives used with HVAC or refrigeration systems
commonly produce harmonics. Harmonics are reflections coming back from a drive or other
on-line equipment that show upon the power line at frequencies other than 60 hertz and reduce
the available energy on the power line. As a result, more current is drawn to compensate for the
harmonics on the system. Harmonics damage sensitive electrical equipment on the power line
and contribute to poor power factor. As a result the retailer is hit with unnecessary charges and,
in some cases, costly penalties from the utility.
An effective power design includes solutions, such as 18-pulse VFDs or power factor
capacitors, which will mitigate those issues.
Sudden power surges caused by lightning strikes or other anomalies on the power line
can damage or temporarily shut down sensitive point-of-sale electrical equipment. Surge
suppressors and uninterruptible power systems (UPSs) protect that equipment and help ensure
that only clean energy reaches the electrical load. Some UPSs also filter out harmonic distortion
and increase or decrease power levels when sags or swells occur on the line.
Many state and local building codes are based on ASHRAE 90.1, as are many facets
of the U.S. Green Building Council’s (USGBC) Leadership in Energy and Environmental
Design (LEED®) program.
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7. Monitor and measure improvements
Accurate front-end energy usage data is critical to understanding where the greatest saving
opportunities lie and what progress has been made since system or process changes have been
implemented. To capture the energy usage data, facilities rely on power monitoring systems.
Today’s electrical manufacturers offer a wide variety of option-rich and customizable power
monitoring solutions. Circuit monitors measure electricity and other utilities, including gas,
compressed air, water and steam. Furthermore, they can track kilowatts and kilowatt hours and
report other diagnostic information, such as power factor, volts, amps and kVAR. To protect
valuable equipment, they may have built-in alarm registers for events such as over/under
voltage, current or phase loss. This is a valuable resource for retail chains that maintain multiple
facilities in different geographical locations. Most advanced power monitoring systems compile
aggregate data and make the information available over a simple Web browser, allowing for
remote monitoring and control.
Once the proper power monitoring systems are in place to measure and record energy usage,
it’s important for retail owners and managers to analyze the data that’s collected and gain
a better understanding of their energy bill. Through its customizable reporting capabilities,
advanced systems allow the user to drive maximum efficiencies by measuring energy usage
against virtually any variable that’s important to them. Retailers may track the total kilowatt
hours used against outside or inside temperature, time of day, number of customers, level of
sales, square footage or any other quantifiable value.
In retail settings where multiple panelboards are fed from the same transformer, it’s especially
important to also have the proper submetering set up to enable better energy decisions.
Effectively designed submetering will allow a building’s individual tenants to capture and analyze
their own energy usage, and investigate new ways to reduce energy costs, improve reliability
and minimize power quality issues.
While power meters on their own don’t reduce electrical consumption, their payback has
been well-documented. A study by the Energy Cost Savings Council revealed that meters and
monitors have an average payback period of less than six months and an average return on
investment of 200 percent.11
10
“In a sense, it works like
compound interest. Each
technology that is upgraded
provides energy savings on
its own. But it also provides a
base on which other energy
savings can grow.”
12
12
8. Adopt a holistic approach
Creating an energy efficient environment requires a holistic approach. An Energy Cost Savings
Council study found that the greatest cost savings are achieved when a range of technologies
and applications are used. The report states:
“In a sense, it works like compound interest. Each technology that is upgraded provides energy
savings on its own. But it also provides a base on which other energy savings can grow.” 12
The reverse also is true. Projects that are undertaken as one-off upgrades may look good on
paper, but don’t deliver expected returns. For example, a simple retrofit of lighting can appear to
save 50 kilowatts per hour on paper. In the real world, the loss of heat once provided by inefficient
lighting must be made up by the heating system reducing the expected energy savings.
Connecting all building systems through one integrated application demonstrates how changes
to one building system impact the others.
Energy “problems” offer a golden opportunity for companies willing to take the initiative. Managing
facilities and energy as assets that can be invested in — with a predictable return — is the solution.
According to the Energy Cost Saving Council, this opportunity is great because so many building
systems are aging and out-of-date. With advances in energy efficiency over the last 10 to 20 years, Modified
there is dramatic room for savings in almost every area, “from ballasts and lamps to chillers,
motors and drives.” Internal Rate
“When compared with other options,” Bloom concluded, “energy upgrades should be viewed by
of Return
CFOs and other operational executives as investment opportunities to stand up and cheer about.” (MIRR)
12 Ibid
13 Building Operating
Management, “Explaining
energy savings to the CFO,”
February 1999.
12
10. Establish a clear energy policy
Starting with a commitment from the top, retailers need to take a proactive approach to power
usage. Energy affects every area of a business, from operations to finance, so it needs to be a
factor in any business or strategic plan — just as are customer service and quality control.
Identify energy leaders in all facilities. Create an energy management policy with quantifiable
reduction goals. Encouraging ownership and accountability will help change behavior and drive
results. Create a corporate culture that demands energy efficient thinking from everyone on the
staff and rewards those who consider new solutions that promote continual improvement.
Companies that adopt a philosophy to control, manage and optimize power will turn costly
expenses into a competitive advantage.
Scott readily admitted, “These goals are both ambitious and aspirational, and I’m not
sure how to achieve them…at least not yet.” 14
But his vision of transforming the giant retailer into one of the most environmentally-
conscious companies has paved the way for multiple initiatives. Major facility
improvements, experimental building designs, as well as a push to demand
environmentally responsible actions from their 60,000-plus product suppliers have
created a mindset to reduce energy, waste and Wal-Mart’s carbon footprint.
14 Wal-Mart: According to the company’s 2007-08 sustainability progress update, building systems
walmartstores.
com/Files/21st%20
have been a major focus area for working toward its energy reduction goals.
Century%20
Leadership.pdf (used The company’s environmental Web site states: “We have already tested and identified
with permission)
innovations that, when implement, are expected to deliver a 15 percent decrease in
15 Wal-Mart:
walmartfacts.com/ energy use and greenhouse gas emissions. These innovations are primarily the result
reports/2006/ of efficiency gains in improved lighting, HVAC and refrigeration units, and help move us
sustainability/
environment toward our global goal of making existing stores 20 percent more efficient by 2012.” 15
FootprintBuildings.
html. (used with
permission)
13
III. Conclusion
While there may be upfront costs, sustainable practices can deliver long-term operational savings.
When building systems run as efficiently as possible, they use less energy, last longer, need fewer
repairs, and ultimately, lower the lifecycle costs for equipment.
However, there are other ways retailers can benefit from more efficient energy usage. In the United
States, the Energy Policy Act of 2005 provides new tax deductions and credits for energy efficient
and renewable energy investments. According to an article in Energy & Power Management,
“Pursuing energy efficiency that exceeds code increases eligibility for these tax benefits while
lowering lifecycle costs.” 16
There is also a growing interest in programs such as the USGBC’s LEED, which encourages
environmentally responsible practices in design and energy efficient products. The green design
movement has done a good job of showing return on investment. USGBC studies say that green
building improvements pay for themselves within three years and can deliver up to a 30 percent
increase in energy savings.17
Another benefit is employee well-being. By improving indoor air quality through cleaner and
more efficient ventilation, or reducing lighting by providing more access to daylight, studies show
increased employee productivity and decreased absenteeism. Those benefits can translate into
improved employee retention and morale, which lead to better customer service.
The icing on the cake for energy-conscious retailers is that consumers appear to prefer to do
business with companies who demonstrate a commitment to sustainability and reducing their
carbon footprint. In a 2006 greening of its stores, Giant Eagle found that its LEED-certified store
in Brunswick, Ohio, exceeded projections in customer satisfaction and was the highest-volume
store in its division. Many other stores throughout the country are finding, as Giant Eagle did, that
customers do feel that green is important.
In the end, it may come down to a one simple fact offered by the U.S. government program Energy
Star: Organizations with strong energy management often outperform their competitors by as much
as 10 percent.18
In today’s highly competitive retail market, it’s difficult to imagine energy optimization not being an
integral component of any organization’s overarching strategic plan.
14
Energy Efficiency
Solutions
The Schneider Electric team leverages the power of its companies and brands to create valuable
energy efficiency solutions. From new builds to site remodels, Schneider Electric retail solutions
significantly improve long-term profitability by reducing costs and increasing efficiency.
The world’s leading manufacturer of electrical distribution, power and control solutions, with operations
in 130 countries worldwide.
www.us.schneider-electric.com
Square D® brand products are recognized for their power distribution capabilities. As the best known
name in NEMA-type electrical distribution and control products, systems and services, Square D offers
more than 100 years of experience in providing solutions to electrical challenges. Square D energy
management products help retailers find smart energy solutions that impact the bottom line.
www.us.squared.com
Your single source for managing your building systems, reducing energy costs, ending service
headaches and financing facility improvements.
www.tac.com
Juno Lighting Group leads the industry in bringing innovation to lighting, and is committed to
advancements in sustainability and energy conservation. Juno Lighting Group offers an ever-
increasing selection of state-of-the-art fixtures designed to drastically reduce energy consumption
without compromising lighting performance.
www.junolightinggroup.com
Respected as a major product innovator, Pelco is a world leader in the design, development and
manufacture of video security systems and equipment ideal for any industry.
www.pelco.com
APC, a leader in critical power and cooling, together with MGE, offer the industry’s most
comprehensive product and solution range for critical IT and process applications in industrial,
enterprise, small and medium business and home environments. Solutions include uninterruptible
power supplies (UPS), precision cooling units, racks, and design and management software,
including the industry’s only integrated power, cooling, and management solution.
www.apc.com
lh
© 2009 Schneider Electric All Rights Reserved.
Xantrex is a world leader in the development, manufacturing and marketing of advanced power
electronic products and systems for the renewable and mobile power markets.
www.xantrex.com
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