|Darren Cooper | President
At the E360 Forum in Houston last fall, Nik Rasskazovskiy, director of business development for ClearFlow Energy Finance, and I discussed the role of energy services companies (ESCOs) in helping grocery operators achieve and sustain long-term energy savings with end-to-end solutions. We shared our insights and experiences, as well as best practices and real-world case studies. Read more below, then view the full E360 Forum presentation.
According to Progressive Grocer Magazine, food retail is an almost $700 billion industry. Operating on razor-thin margins (generally a little more than 1 percent and only seeming to get slimmer every year), the industry is always on the lookout for new ways to cut costs and boost profitability.
Already making a considerable positive impact on the bottom line in other industries, ESCOs can offer grocery operators a new opportunity to reduce their energy spend — and increase profits.
Reducing energy spend is already a key objective for supermarket operators. ESCOs offer a systematic way to implement sustainable, long-term efficiency plans across their fleet with minimal risk or initial out-of-pocket expense.
How does it work?
ESCOs are in the business of developing, designing, funding and ultimately building turnkey solutions that save energy, reduce energy costs, and decrease operations and maintenance costs at their customers’ facilities.
ESCOs actually guarantee their clients a specific level of energy cost savings from the proposed project. They are subsequently compensated via the actual performance of the project, earning a percentage of the overall energy savings dollars for an agreed upon length of time. At the end of the term, the client keeps the savings for perpetuity.
In the presentation, I said, “The opportunities are real and the savings are real. We’re not doing anything that is really groundbreaking. This is not new technology. This is proven technology that you can actually utilize and implement in your systems. The ESCO part means that there’s no upfront cash necessary. We’re now in a position to provide this as a turnkey solution. We can work with your preferred equipment supplier and your preferred contractor, without needing any money, so you’re cash flow positive from day one.” And I meant every word of it.
The first step in your journey to energy efficiency: establishing a baseline
To identify savings opportunities, you must first fully understand your current energy consumption. Fortunately, today’s device-level power monitoring technologies offer real-time insights into your control systems and can help create “power profiles” by tracking usage across a wide range of temperatures and conditions.
Beginning from that baseline, the ESCO team works with food retailers to conduct comprehensive building and systems audits to identify opportunities for sustainable, long-term energy efficiency upgrades. This can take the form of refrigeration upgrades, variable frequency drives (VFDs), new cases or case controls, HVAC and demand control ventilation, and even renewable technologies if they make sense.
A proven process that’s yielded positive results, the ESCO methodology is sound and straightforward:
- Building system audit completed — opportunities identified, target savings established
- Client and ESCO enter into guaranteed, performance-based energy savings performance contract
- ESCO secures financing
- Project is built and commissioned
- Ongoing monitoring and verification ensure that target efficiency savings are being met
- Lender is repaid from savings
- At the end of the term, the client keeps all savings
“It’s really a win-win situation,” noted Rasskazovskiy, who’s successfully navigated the financial end of projects across multiple industries. “Once the ESCO organizes everything, implements the project and the savings start trickling in, there’s a management process that verifies that the actual savings have been achieved. Those savings are shared between the end customer and the ESCO to pay out all the services costs, including financing. After the term of the contract is done, the customer is left with the same equipment and gets to enjoy 100 percent of the savings going forward.”
To learn more about ESCOs and the retail food industry, including real-world savings examples, watch the video here.