Retail Energy Management: The $3 Billion Opportunity

June 12, 2014

Meriah JamiesonMeriah Jamieson 

Schneider Electric’s new white paper describes the enormous opportunity for retailers to reduce costs through energy management.  A few key points from the paper are summarized below, and for more information, read the Greenbiz article about the $3 Billion opportunity by RILA (Retail Industry Leaders Association) and Schneider Electric.

The $3 Billion Opportunity

The retail industry consumes about $20 billion of energy per year in the US.  A study by the US Department of Energy’s PNNL estimates the energy savings potential in existing commercial buildings is between 10 and 20%. At an average of 15% potential energy savings, the potential savings through energy management in the US is $3 Billion.

Weather and energy price volatility: Mitigate the risk 

According to ASHRAE, energy is the second highest retailer operating expense. Recent extreme weather has significantly increased energy costs for retailers, and that trend is expected to continue.  A study by the EPA has estimated that if the climate warms by 1.8°F, the demand for energy will increase from 5-20%.  If you factor in potential electricity price increases in the near future, energy cost increases could be significant. Increasing the energy efficiency of retail stores mitigates the risk of energy cost increases.

$3 Billion is a big number, how does that translate to a single retailer?

A retailer’s energy costs could represent 5.5% of its store’s operating costs.  If the store operates at a 4% profit margin, then by driving a 15% reduction in energy costs, the retailer’s profit margin could increase from 4 to 4.75% — an 18.7% increase in store profit!

Energy conservation measures for retailers: from behaviour to investment

Energy conservation measures results vary. For example, a non-food retailer can upgrade their lighting system to save up to 28%, or reduce consumption by 5% through behavioural changes such as changing set point temperature daily according to external temperature and turning lights off. A food retailer can reduce their consumption by 7% by installing doors on positive refrigeration cabinets and switching to LED lighting. To determine which energy efficiency initiatives should be prioritized, seek out experts to look at the enterprise building portfolio, what has already been implemented and the corporate business and sustainability goals.

3 new resources to help start an energy management program

  1. Schneider Electric collaborated with the Retail Industry Leaders Association (RILA) to produce the white paper, “A $3 Billion Opportunity: Energy Management in Retail Operations”. This paper examines energy management best practices for retailers, and shares brief examples of retailers who have achieved their energy management goals.“Schneider’s new white paper does a great job of characterizing the massive energy savings potential in the retail industry. And for RILA, it reinforces the value of our retailer-focused energy program.,” said Adam Siegel, vice president of sustainability & compliance at RILA. “While every retailer is racing to pursue the cost savings potential available to their business, it is important to know the savings potential across the industry.”
  2. RILA’s Retail Energy Management Program helps retailers reduce energy consumption, energy costs and greenhouse gasses through a benchmarking program and pilot projects to demonstrate new technologies, systems and collaborations
  3. RILA’s Energy Maturity Matrix is a great starting point to baseline the maturity of an energy management program and identify the highest leverage opportunities for improvement.

Mitigated risk of increasing energy costs,  profit increase, and increased brand loyalty- energy management for retailers is a win win.

View the original article on the Schneider Electric blog.

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