Club Saves Power

15 May 2005

Retailers are coming under growing pressure from all sides to use less power while at the same time improving the customer experience and service standards in their stores. Some have joined with their competitors in REEC to share knowledge and save £millions

UTILITIES BILLS for the largest retail chains cantop £100m per company per year putting them in the same league as power-hungry process industries. From one perspective that’s a lot of money and represents a great deal of environmental pollution. But viewed from the boardroom of a £10bn-plus retail giant, it may be dismissed as less than 1 per cent of turnover. So why bother to do anything about it? The short answer is that big retailers are also liable for environmental taxes, including the Climate Change Levy and Renewables Obligation charges, which are almost certain to increase exponentially in the years ahead. And many have binding agreements with government in the form of undertakings to become more energy efficient and reduce consumption.

Amazingly for such an aggressively competitive industry, many of the biggest retailers have spent the last seven years working happily together as members of an organisation called the Retail Energy Environment Club (REEC) which itself is responsible for around 4 per cent of all UK electricity consumption. Its aim is to minimise both the costs and environmental impact of retailing by maximising energy efficiency. The results have already been significant: reductions in annual operating costs, plus many fewer thousands of tonnes of carbon dioxide released into the atmosphere. For example, one of more than 100 projects undertaken by the REEC has enabled Tesco alone to reduce energy consumption by up to 5 per cent in 350 of its largest stores.

The REEC membership includes Tesco, Sainsbury, Asda, Waitrose, The Big Food Group, John Lewis, Boots, WH Smith, Halifax and Alliance & Leicester. Large as the members are, they have joined the club because they realise they can achieve more collaboratively than they ever could separately. As Sainsbury’s group energy manager Julius Brinkworth explains, “One of the reasons we are members is that people like me are completely bombarded by companies claiming to have miracle technologies which will save us £millions. Some of their claims may be valid, but we need to find out which work and which don’t, without wasting time and duplicating effort.”

Co-operation
The REEC is structured as a co-operative club, with each member paying the same fee of £4,500 per year and each having one vote, regardless of size. Membership fees are put in a central pot and the group meets quarterly to review emerging energy and environmental technologies and decide which power issues it wants to pursue – from lighting and heating, to air conditioning and refrigeration. In 2004 the REEC managed to double its budget by winning matched funding from the Carbon Trust.

The technical input for the REEC is supplied by EA Technology, which started life in the 1960s as the in-house research and development facility for the whole UK electricity industry and has been an independent power engineering specialist since 1997. It plays the role of facilitator and organiser for the group, as well as providing the combined knowledge of 100 personnel, laboratories and testing facilities. It also filters all the technologies that appear on the market by providing an initial evaluation to establish which of them show promise. Members can also direct us to carry out detailed trials, research and development on any type of power technology which affects energy usage in stores.

One of the earliest and most far reaching achievements of the REEC has been in the area of optimising voltage supplied to stores, which resulted in Tesco winning the ScottishPower Envirenergy Award in 2001 as well as cutting more than £1m from its annual electricity bills. The savings were achieved because, although the UK electricity supply is nominally 230V, it often fluctuates as high as 255V. Most modern electrical equipment is actually designed to run at an optimum voltage of 220V and anything higher simply wastes power.

Undertaking voltage optimisation of equipment costs a few thousand pounds per building and has been shown to cut overall consumption by up to 15 per cent on some types of machinery, such as motors. Typical whole-building savings are 5 per cent per year, with the added benefit that electrical equipment such as lights last longer because they are not overloaded. Payback on investment is normally a few weeks and the benefits are permanent.

Most REEC members have adopted voltage optimisation as standard, but the technique involves far more than ‘turning down the power’. As part of a recent revision of its lighting systems, Sainsbury’s asked the REEC to look at how different energy saving lighting equipment would work with voltages set at 220V.

“It’s not just about saving energy. We have to consider how technologies will affect the whole customer environment, including factors such as lighting levels and colours,” said Brinkworth. “It is very difficult to bench test equipment like this in store and deliver a straight comparison, so the independence and service which the REEC provides is absolutely vital.”

For many members, the most valuable part of the REEC’s work is the quarterly technology review, which has proved a very effective way of saving time spent on deciding which of the latest products on offer provide any real benefits. The organisation works as a forum in which members share practical experience of what works and what doesn’t, as well as being able to commission further investigation into promising ideas. EA Technology filters out a lot of products because we know immediately that they will not work in principle or in practice. If they pass that test, we can go to the laboratory stage, where we test manufacturers’ claims. Finally, we can carry out field trial in store to show how well things work in real life conditions.

A full report on a product or energy-saving idea typically costs between £2,000 and £8,000, which is paid from the membership fund and can include an evaluation of its economic value to members as well as its technical merits. Members can also decide to provide additional funds to pursue any topic of shared interest.

Improving the energy efficiency or reducing waste in existing equipment can be just as important as pursuing new technologies. This is especially the case in power-hungry operations,such as refrigeration, which can account for 40 per cent of electricity usage in stores selling food. Recent research commissioned by theREEC showed that neglecting to check refrigerant charge levels in heating and cooling systems can cause a massive increase in energy consumption, without anyone noticing. If refrigerant levels fall by 50 per cent, units will appear to work normally, but their efficiency will fall by up to 40 per cent. The first managers know about it will be a hefty increase in electricity costs. The solution is simply a matter of fitting level monitors and alarms.

Reliability and safety issues are also on the REEC agenda, because failure of electrical equipment in any retail environment spells trouble. For food retailers relying on refrigeration, a failure lasting a few hours means 100 per cent stock loss, so part of the evaluation process for any new equipment or technology is not only if it will work, but whether it is likely to break down.

With 150 reports and initiatives under its belt since 1998, the REEC has already made a significant and sustainable contribution to the bottom lines of its member companies, through cost savings. Sainsbury’s Brinkworth is in no doubt that it has also helped his company meet its corporate environmental target of cutting energy use by 10 per cent between 2001 and 2005. But there are more challenging times ahead.

New technologies
Before the REEC was formed, the retail industry’s focus was on achieving the lowest energy prices it could from the newly privatised and competitive power supply sector. Now the focus is on getting the most out of existing energy technologies, implementing lots of relatively small technical improvements to reduce consumption and environmental impact. The next phase will be for be for retailers to embrace a whole raft of new technologies, which promise to make deep cuts into reliance on traditional fossil-based fuels. But how does a retailer make the right choice between different wind turbines, photovoltaic cells, combined heat and power (CHP) generating sets, fuel cells – or a combination of several of them? What are the cost, operational and management implications? What are the upsides and downsides? What are the best investment strategies? These are weighty questions for even the largest retailers to address as individuals, given their present levels of energy management resources inhouse. As the REEC has proven over the last seven years, one of the most effective ways to find the right answers is to join the club.

....Robert Davis is managing director of EA Technology Limited