23 July 2012 – Nowhere is the argument for energy savings more obvious than in the grocery trade where stores and supermarkets run freezers and airconditioning units continuously and lights are seldom switched off.

Dave Walsh, national business development manager for energy management firm SEDAC, says between 70 and 80 per cent of these retailers say they will do a store retrofit to become more energy efficient if it is easy and saves them money.

“But retailers face the same problems as any other building occupier when it comes to working out how to evaluate real savings in energy,” he says

“Grocery is a high user of power per square centimetre but until recently these retailers didn’t know where they could get the best bang for their bucks.

“They also cite reasons for resisting change such as lack of capital, an inability to get financing, not being able to grasp the technology or not having time to manage an energy efficient program.”

Walsh says technology has always been a sensitive element to correctly implement and co-ordinate, and it has been difficult to get management to commit to a realistic solution.

But new technology is now so sophisticated it can measure and control power usage remotely by the second. Energy audits of stores and supermarkets also show clearly where savings are to be made while store retrofits can be done in about nine hours overnight so disruption is minimal.

SEDAC has built its business primarily around the grocery trade, installing appropriate technology, management and financing to reduce power waste and make cost savings.

Walsh says there is now a mound of data available showing big energy and cost savings for grocery and department stores using smart systems for lighting, refrigeration, airconditioning and appliances.

Australia’s companies such as Stockland and GPT provide good examples of utilising world-leading energy efficiency systems, with Australian technology that delivers results, he says.

“The industry has had its share of snake-oil salesmen and ‘pop-up’ energy management companies that approach retailers with ‘rainbows’ that have many pots of gold such as half price deals. But they don’t stay and those promised savings evaporate,” he says.

So how does a retailer deliver energy efficiency and overcome the internal barriers to achieving savings across a portfolio?

Walsh says the accountants are starting to see the value in energy management.

“The trick is to get in the ear of the chief financial officer and explain how savings of 10-22 per cent can be made, then you need to get some quick wins on the board for them.

“The key is to put a box around everything from the technology to monitoring energy usage so savings can be guaranteed for years.

“To maintain the savings you have to treat electricity use like a credit card.

“When your card use spikes you are contacted to check out if there is a problem so it can be fixed.

“You set key performance indicators around energy usage and help the manager or owner to reduce costs.

“Once they crunch the numbers and can see savings of 20 to 30 per cent on their electricity bills, investment in technology and plant and a guarantee of savings for years to come this far outweighs other considerations.

“The payback is critical. We guarantee savings with our systems.

“With large grocery retailers the key is to get scaling with large projects to save costs.”

He says banks and non-bank finance sources such as private equity investors and high net worth individuals, are lining up to back these sustainability projects so funding is not an issue.

According to The National Association of Retail Grocery of Australia there are 6183 grocery stores and supermarkets in Australia. Of those, 1500 are more than 3000 square metres), 2000 are medium-sized (700-3000 sq m) and the remainder are categorised as small stores of less than 700 sq m.

Last year sustainability think tank Climateworks and National Australia Bank studied the most recent financial statements and analyst forecasts of 40 per cent of the ASX 200 retail consumer sector to model the financial impact of an energy efficiency investment program on their operations. It found that Australia’s grocery and department store retailers had the potential to make annual savings of $75 million, excluding upfront costs. On a net basis this translated to $56 million in annual savings.

refrigeration and lighting accounted for more than 50 per
cent of total energy use in the average
American supermarket.

Walsh says the United States government-backed Energy Star program highlighted how refrigeration and lighting accounted for more than 50 per cent of total energy use in the average American supermarket. It found that that one dollar in energy savings was equivalent to increasing sales by $US59. Walsh says similar savings can be made in Australia.

The US has a variety of schemes and rebates in different states to incentivise grocery retailers to become energy efficient, such as LED light use.

Australia has also had incentives for reducing energy consumption in buildings such as the federal government’s AusIndustry’s clean technology grants.

Last November The Australian Food and Grocery Council and global consulting firm AT Kearney concluded in its report on energy efficiency in the retail trade, “2020 Industry at a Crossroad”, that the government should provide tax incentives to encourage grocery retailers to invest in plant and equipment as well as incentives to encourage innovation.

Dave Walsh

Walsh says grocery retailers that have retrofitted their stores are sensitive about revealing to competitors how much savings they make per square metre of store space so it is hard to quantify savings in dollar terms.

But he cites as an example, one of SEDAC’s big customers with 314 sites across Australia with a combined utility bill of $27 million.

“When you are looking at 10-22 per cent in net savings you are looking at a minimum $5.94 million,” he says.

Walsh says the introduction of carbon tax and hefty power price increases has spiked recent interest in energy efficiency in stores and supermarkets.

But he says there are still a good number of grocery retailers waiting until after next year’s elections to see if there is a change in government as this will change sustainability policies.

“The reality is that this only defers opportunities to cut costs, especially with big power increases.”

Walsh points to the AFCG report forecasting that electricity costs will increase by 42 per cent between 2012 and 2013 – in part due to the introduction of a carbon tax. From 2014 the forecast is for modest increases of 1 per cent a year through to 2020.

He says there are horror stories about energy wastage in commercial properties. Refrigeration leakage is a story on its own.

His firm worked with one small supermarket after it lost all of its refrigerated stock when a compressor blew in its freezers over Easter.

“We would have been able to see that with our remote technology and have gone in and remedied it immediately.

“A lot of product coming in from overseas is illegal. We’ve seen light tubes in the market here from China that are live at one end and would kill you if you installed them.

“We know the pitfalls but the solution to energy efficiency is not simply to upgrade the building management system or install expensive lighting controls.

“It lies in understanding how an asset consumes electricity and the development of not just a client specific but site specific solutions.

“Grocery is different to other retailing in that you put refrigeration, airconditioning and lighting into the mix.

“A simple audit over a number of properties in a portfolio can show that lighting is not a uniform problem for instance, so upgrades can be targeted to maximum effect.

“Refrigeration can account for as much as 60 per cent of the energy costs of a grocery store but it depends on location.

“Supermarkets in Brisbane, for instance, might spend more on airconditioning than refrigeration.

“If you lift airconditioning from 21C to 23C it can drive the refrigeration crazy and the two systems can actually end up fighting each other.

“There will be peaks and troughs so the trick to sustainable and protected savings is to balance the systems.”