The Economics of Energy Efficiency

Convenience stores and many other retail segments have been able to slash operating costs with LED lighting and other equipment upgrades.

By Erin Rigik, Associate Editor.

Convenience store chains big and small are finding ways to save money while improving the store experience for customers with energy efficient technologies.

When Wawa Inc. was searching for visually-appealing, simple-to-install vertical refrigerated display lighting, it discovered an all-inclusive solution in Immersion RV30 LED technology from GE Lighting.

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“In 2006 we saw our utility budget increasing between 12% and 15% over each of the previous five years,” said Scott Boorse, energy and petroleum operations manager for Wawa, which operates 600 stores in Pennsylvania, New Jersey, Delaware, Maryland, Virginia and Florida. “In response we created an energy group to determine where the money was going. It turned out lighting accounted for 30% of our electric usage.”

But Wawa didn’t rush its decision. Like most experts suggest, Wawa tested three competitive LED solutions in refrigerated coolers in several of its stores beginning in 2008, before finalizing its LED plans.

The results of its careful decision have been successful both on the P&L and in overall store operations.

“What’s most important is that when customers walk in there are no bulbs burnt out in the refrigerated cases,” Boorse said. “That consistent well-lit image is giving us better brand quality throughout our chain.”

Wawa expects to see an ROI in 26-28 months with annual savings at $1.2 million across its 600 stores.

Cool Savings
Food City, a 105-store grocery chain in southeast Kentucky, southwest Virginia and northeast Tennessee that offers fuel at several locations, also turned to energy efficiency as a way to reduce costs in its refrigerated and frozen cases.

The chain recently upgraded from florescent fixtures to GE Lighting’s Immersion RV40 LED lighting system across 89 stores and expects to see a sharp drop of more than $300,000 in annual case lighting costs based on an electricity rate of $.11 per kWh, with case lights running 18 hours per day.

Like Wawa, Food City did its homework, evaluating a range of options to determine the combination that would have the maximum impact. It found converting to long-life LED lighting could greatly reduce its lighting and refrigeration costs—its largest overhead expense—and result in fewer maintenance calls and expenses.

The new lighting also diminishes glare while helping enhance the appearance of food packaging colors.

“The biggest expense was not replacement lamps and ballasts, but sending contractors to the stores to begin with,” said Keith Norton, director of engineering for Food City. “Preventative maintenance measures were costing Food City more than $5 per door per year, or $37,000 annually.”

When added to maintenance savings, lighting and refrigeration costs will have decreased an estimated $337,000 a year, all because of a switch from fluorescent lighting to LED fixtures.

But it’s not just the 100-plus store chains that benefit from a lighting overhaul. Smaller chains can also save big when converting even just one store of their stores to a more efficient model.

Beaverton, Ore.-based Highland Chevron gas station and ExtraMile food market, for example, recently underwent extensive eco-renovations that included the installation of energy-efficient interior and exterior LED lighting by Cree Inc.

The newly rebuilt store features Cree LED luminaires under the exterior canopy and inside the convenience store, giving the store a brighter, safer appearance and providing an energy savings estimated at 70% compared to the previous non-LED fixtures, with an ROI expected in two and a half years.

The indoor and outdoor LED lighting helps the station consume one-third less energy than typical 24-hour c-stores and gas stations, and the LEDs should run virtually maintenance-free for more than 10 years.

No stranger to the benefits of energy efficiency, Highland Chevron also features 180 solar panels on its fueling canopy and store rooftop, which can provide nearly one-third of a typical gas station’s electricity needs.

The store also added a geothermal well that exchanges heat through groundwater to naturally cool water for the store’s refrigeration cases, and the water pipes store heat from cooling units underground for hot water use.

“The payoff is more than what is saved in energy consumption and cost,” said Bob Barman, owner of the Highland Chevron. “The payoff is also intangible—it’s what your customers think of you as a leader in sustainability and how you think of yourself. Plus, it’s just the right thing to do.”

More Brightness for Your Buck
When shopping for LEDs, remember a wide range of product qualities exist.

“Manufacturers are appearing and disappearing at a rapid pace,” said Jacob Hannan, senior program associate for the Midwest Energy Efficiency Alliance (MEEA). “There are some products that are still going strong after 15,000 hours and they’re at 98% of the initial light output, while other products that may have claimed a significant amount of time are down to 10% of their original brightness within 1,000 hours, which is how long a standard incandescent bulb lasts.”

As a buyer, seek out products that are tested according to standards. “Utilities are only interested in giving incentives to products that are high quality, so they will have lists of products they approve for use,” Hannan said. “Using products on of those lists and working with a qualified designer can help in making a smart choice.”

Furthermore, if your utility isn’t offering LED incentives, retailers can check with the Designlights Consortium. “They act as an Energy Star for commercial lighting, so if your local utility is not providing any help, that could be a place to look,” Hannan said. “If a product is on that list you know it has undergone tests and performed well in accordance with a high standard of performance.”

Hannan noted that the price of LEDs has dropped by half over the course of the last year. “It’s like with a personal computer— if you just wait another 12 months, there will be a better model, but you have to buy at some point,” he said. “So when you evaluate it for yourself, if it doesn’t work now, and you see the cost of waiting isn’t too high, hold off for six months. Chances are the cost benefit could be right by then.”

Energy Reduction Strategies

Did you know there are steps you might be able to take within your current energy control system to save costs?
Emerson Climate Technologies Retail Solutions’ John Wallace, director of product management retail solutions, said simply checking energy management settings regularly can prevent energy leakage and the unnecessary expenses that go with it.

“A lot of times when optimizations are in place they’re in place for a while and then (energy) leakage occurs, and the reason leakage occurs is because Band-Aids are applied by technicians trying to fix a problem, who don’t realize the impact of the changes to the system settings,” Wallace said.

He offered the following strategies to reduce energy consumption.
• Fixture settings: Check case temp set points to ensure proper settings.
• Sensor offsets: Ensure temperature sensors are not offset masking a problem.
• Check proper operation of liquid level sensors: Low refrigerant levels increase energy usage.
• Humidity sensors affect HVAC &
ASW algorithms: Check to ensure correct operation.
• Lighting schedules and overrides: Ensure lighting schedules are set properly and that there are no overrides present.
• Ensure light level sensors are operational. Failed sensors could “fail over” to schedules.
• Make sure there are no overlapping defrost schedules: Having units run simultaneously increases the demand for power and runs up costs.