Grocers planning capital expenditures on refrigeration can capture savings as they spend

It’s the time of year when grocers focus on upgrading or repairing equipment to improve operations, aiming to make the most of allocated capital expenditure budgets.

One of their go-to options is a refrigeration system upgrade — a capital expenditure project that can be accomplished in a relatively short time, and without major construction. Plus, it sets up a store for more modernization down the road.

But as grocers plan to spend capex on refrigeration upgrades, they also should take time to consider savings, advised Leigha Joyal, an energy analyst for Hillphoenix. “It’s important to maximize the dollars you’re spending now by leveraging rebates and incentives that can offset the cost of a refrigeration upgrade by as much as 40%. It’s also important to understand how much you’re likely to save on energy and water bills in the future.

“The total potential savings boosts the business rationale for spending current-year capex dollars on refrigeration system upgrades,” said Joyal, an expert on rebates and incentives available through utilities nationwide.

Joyal is part of a team of engineers and technicians who work with supermarkets planning refrigeration upgrade projects. The team scopes out each project, which can vary in length from a few weeks to a few months, depending on the size of the store and the state of existing equipment.

The most cost-effective projects, ones most likely to meet return-on-investment (ROI) and other internal standards, involve changing out old single-condensing refrigeration units, Joyal said. But there’s plenty of savings to be had from any refrigeration modernization. She offered two recent real-world examples that highlight the potential:

Massachusetts supermarket replaced more than 40 single-condensing units with three modern, parallel refrigeration racks.

Store size: 40,000 square feet

Length of project: completed in phases over 9 months

Project cost: $234,800

Electric utility incentive/cost offset: $90,000

Annual energy savings: $107,996 (consumption dropped by 799,967 kilowatt hours, kWh, per year at a cost of 13.5 cents per kWh)

ROI: 1.34 years

Southern California supermarket replaced a water-intensive evaporative-cooling refrigeration rack with a new air-cooled rack.

Store size: 25,000 square feet

Length of project: about 4 months

Project cost: $265,000

Electric utility rebate: $40,000

Annual energy savings: $69,469 (consumption dropped by 463,126 kWh per year at a cost of 15 cents per kWh)

Water utility rebate: $8,000 

Annual water conservation: 2 million gallons, saving $18,372 per year

ROI: 2.47 years

Modernizing a supermarket refrigeration system offers a range of long-term benefits, Joyal said. “New systems require less maintenance and offer flexibility. They also can be easily adapted to accommodate future store redesigns or expansions.

“Upgrades also move grocers to lower global-warming potential refrigerants that cost much less,” she said. “What’s more, an upgrade that converts a supermarket to a sustainable CO2 refrigeration system protects that store against refrigerant phase outs, fines and future regulatory requirements and penalties associated with synthetic refrigerants.”

As grocers look for ways to spend their remaining 2016 capex dollars on new refrigeration systems, it’s “essential for them to work with a supplier who can guide them toward well-planned upgrades and help them capture all potential savings and benefits,” Joyal said. “And they need a supplier who can help them accomplish all of this before their budget cycle ends.”

Source: Supermarketnews