In the grocery industry, razor-thin margins are the norm for many stores. Since raising prices isn’t usually an option, grocers must look to save money on operating costs to increase profits. With energy bills being one of the larger variable costs, many stores look to energy-efficiency as a way to reduce expenses moving forward. Not only is energy-efficiency a great way to put more money back in your hands, but it also has many additional benefits like improving the health and well-being of your employees, improving the shopping experience for your customers, being seen as a leader of change in your community, and many others. Read on to learn about a success story for a small, locally-owned grocery store, as well as common ways all stores can look to improve their operations.
- McNally’s Foods Case Study
- Refrigeration Improvements
- Lighting Improvements
- Space and Water Heating
Mcnally’s Foods Case Study
A grocery store in a small rural town is a blessing to the community. No need to travel to the nearest larger town to buy groceries. The community generally understands this value and shops locally whenever possible. McNally’s Foods started as a cart in 1902 delivering groceries up and down main street. This family-owned grocer has occupied various buildings on main street; a needed improvement from the cart service. However, existing buildings along main street presented challenges and financial hurdles.
With profit margins in the grocery business being horribly thin, often on the order of one percent, McNally’s was facing a dilemma. Energy costs for electricity and natural gas were their second-highest expense, second only to employee wages. When their landlord doubled the rent to their building, something had to be done to remain in business. The building was drafty and cold during the winter causing some employees to not show up for work. Employees often worked in their winter coats and used space heaters at their feet. There was little wall and roof insulation. Doors and windows needed weather stripping. The HVAC systems were working but of standard efficiency. Lighting was marginal and did not do an adequate job of displaying products. All in all the building was very inefficient. McNally’s looked to evaluate operational costs as a means to compensate for the increased rent, hoping not to have to uproot the business because they still wanted to serve the community.
About this same time a furniture store across the street was moving and was looking to sell its building which had 1,700+ more square footage and appeared to be in better condition. With energy being such a large operating cost, McNally’s wanted to examine what could be done to save energy in both buildings before a purchasing decision was to be made, and they turned to The Energy Group for help. The Energy Group visited the existing building and uncovered nearly $9,000 in annual energy savings with implementation costs of approximately $42,000, which was about an entire year’s energy cost. Some examples include upgrading lighting and adding controls that could save nearly $1,600. HVAC system upgrades could save nearly $3,400, primarily with new high-efficiency furnaces, setback controls, and demand-controlled ventilation. Building shell measures such as replacing weather stripping, sidewall, and roof insulation were estimated to save nearly $3,300 per year. Vending machine controllers could save an additional $200 per year.
The Energy Group also performed an assessment on the furniture store building across the street. The HVAC system in this building was much more efficient and simply moving locations could save the grocer approximately $1,900 per year, despite the added square footage. New high-efficiency windows had been installed five years prior, a vast improvement from the single-pane windows at their present location. Recommendations on lighting and insulation presented similar results to the current site. Upgrades would need to be made in these areas to reduce energy costs. The water heater was of standard efficiency and would need to be replaced with a high-efficiency unit, especially if the grocer wanted to add an in-house restaurant and deli, another perk that made this location more appealing.
With many factors to consider, McNally’s decided to make the move across the street into the furniture building. The Energy Group connected the grocer with the USDA Rural Energy for America Program (REAP), for a grant opportunity to help them fund part of the energy efficiency improvements along with an in-depth analysis, a feasibility study, to help plan the most energy-efficient operations for the new site. What wasn’t covered by the REAP grant, McNally’s elected to finance with a five-year loan. The grocer was able to repurpose efficient light fixtures taken out of a library. Once the upgrades were completed, it was time for the big move. Professors from the local college, the town mayor, and many other community members moved the grocery store across the street cart by cart. Deja Vu from the grocer’s cart used in its humble beginning in 1902.
As is shown in this example, a grocer’s energy costs are significant and greatly affect the bottom line. The US EPA estimates $1 in energy savings is equivalent to $59 of sales. The average annual energy cost is more than $4 per square foot, or 50 kilowatt-hours (kWh) of electricity and 50 cubic feet of natural gas per square foot per year. It is estimated a 10% reduction in energy costs can increase net profit by as much as 16%. For a major grocery chain, cutting energy costs by 10% could result in millions of dollars of increased profits. Efficient systems have many other benefits beyond electric and gas savings. Upgrades to lighting and HVAC create a more pleasing shopping experience, can attract and retain customers and increase sales. Many shoppers are concerned about environmental issues and with such energy efficiency improvements, the grocer demonstrates they are responsible environmental stewards.
Since refrigeration makes up about 40% of a typical grocery store’s electricity use, it makes good sense to explore efficient opportunities in this area. Best practices in grocery refrigeration include:
- Refrigeration controls such as floating suction pressure control (FSPC) and floating head pressure control (FHPC) can save an average of 30,000 – 60,000 kWh annually
- Replacing shaded-pole evaporator fan motors with electrically commutated motors (ECM) on refrigerated cases offer significant savings. This measure can have less than a one-year payback
- Sliding covers on reach-in refrigerated cases reduce refrigeration load
- Proper control of anti-sweat heaters on refrigerated case doors not only reduces energy but adequately displays products
- Display cases with inadequate ventilation increase compressor cycling
- An incorrect refrigerant charge can increase compressor cycling and lead to premature failure
- Lack of maintenance such as cleaning evaporator coils leads to excessive cycling. Clean frost from coils if it accumulates
- Improper temperature settings can over or under cool refrigerated cases. Over cooling wastes energy where undercooling can lead to product degradation
- Use night covers on both vertical and horizontal display cases. Add strip curtains to walk-in doors
Since lighting is often the second largest energy cost for grocery stores, it makes sense to look here next. Not only are the dollar savings huge when upgrading to more efficient lighting, but there are significant non-energy benefits to consider when looking to make improvements. Best practices in lighting include:
- Light-emitting diode (LED) lighting offers not only over 80% in energy savings over traditional lighting but offers a much-improved light quality in both lamp color temperature and lumen output
- Many LED lamps are dimmable offering just the right amount of light for the task
- Traditional linear fluorescent lighting such as T-12 and T-8 can be easily retrofitted with linear LED lamps. Some T-8 systems do not require a ballast retrofit whereas T-12 systems do require a new ballast
- LEDs produce very little heat and operate best in cold environments. Traditional lighting systems add to the cooling load in the facility
- Motion sensors on refrigerated cases turn on LED lighting when a shopper approaches and shut off during times of inactivity
- Properly designed LED systems offer uniform light levels without under or overly lighted areas
- LED lighting comes in many shapes and forms so the product can be displayed in an eye-appealing fashion
- LED pricing has fallen dramatically whereas lamp quality and longevity have increased significantly
- LED parking lot lighting not only saves energy but ensures shopper safety
- Review the use of daylighting. Take advantage of sunlight by using light pipes, especially when replacing the roofing system
Retro-commissioning is an excellent way to save energy by making adjustments or to validate systems are operating per the manufacturer’s specifications. Often times retro-commissioning with very little capital improvement dollars yields significant savings. Retro-commissioning strategies may include:
- Validate set points on refrigerated cases and freezers. The most common temperature settings for refrigerators is between 35 deg. F and 38 deg. F and freezers between -14 deg. F and -8 deg. F
- Review HVAC set points so that you are not overheating or overcooling while maintaining comfortable shopping and work environments
- Validate water heater temperature settings. Too cool and bacteria can develop; too hot brings safety issues
- Ensure humidity sensors are working properly reduces frost buildup and condensation on display case doors
- Review of lighting controls to match up with the store’s operating hours
- Review of added refrigerant indicating a leak in the refrigeration system
- Examine refrigerated case door seals and gaskets for deterioration and replace as needed
- Review if equipment can be shut off when not needed. Idle rates on some cooking, bakery and meat department equipment can be significant
Space and Water Heating
As space and water heating is responsible for 87% of the natural gas usage in a typical grocery store, this is a good area to review for energy savings. Best practices are as follows:
- Make sure maintenance items are taken care of such as filter changes, cleaning condenser coils, bearings lubricated, belts adjusted properly, etc.
- Install programmable thermostats for stores operating less than 24-hours a day
- Commercial packaged rooftop units are the most common cooling systems used in grocery. Verify the efficiency and replace with high-efficient units as needed
- Consider right-sizing of equipment at the time of replacement. Avoid rules of thumb on sizing; rely on an engineering design or manufacturer’s sizing formulas
- Economizers can be added for free cooling during the spring and fall. Ensure dampers are functioning properly, letting too much or too little air into the facility
- Central energy management systems can provide saving by optimizing rooftop units and tracking energy use
- Heat recovery from refrigeration equipment can be used for space and water heating
So where can you begin to make improvements to your grocery business? A good place to start is an energy assessment from The Energy Group. The Energy Group is an independently-owned, local business with more than 30-years of experience resolving energy issues, delivering savings and improving spaces. The Energy Group provides unbiased, tailored energy solutions so our clients can lower operating costs and improve their quality of life. Our clients learn that improving buildings is not only good for the bottom line, but good for the economy, our health, and the planet.
Contact us today for a quote for an investment-grade energy assessment.