Energy Initiative Blogs

Retail and the Utility

by User Not Found | Feb 25, 2016
Retail and the Utility_1

Retail spaces are energy hogs - more specifically electricity hogs. These spaces, on average, consume approximately 65% more electricity than a typical office building and thus have a significant demand on the electrical grid. For example, the Walmart® Supercenter, located near the Humbolt Park neighborhood, is open 18 hours, 7 days per week – a total of 126 hours per week. A commercial office building located in the Chicago loop operates on average 65 hours per week (see Figure 1 below).


Comparison Chart

Figure 1: Comparison Between a Walmart® Supercenter and an Average Chicago Office Building.



A retail space, as defined by the Environmental Protection Agency’s ENERGY STAR®, is a facility used to conduct the retail sale of consumer goods
1. According to ENERGY STAR®, the median energy usage for a strip mall is 94.2 kBtu/ft2 1. This median energy usage is based on 55,131 properties located in the United States of America (U.S.) ranging from ranging from 7,106 ft2 to 127,455 ft2 1. Below (see Figure 2) is the median energy consumption of major energy users. As seen, strip malls have a significant energy demand alongside hospitals, grocery stores, and universities.Retail and the Utility_2

Figure 2: Median Energy Usage of Buildings

To curb the ever-growing demand of retail spaces, utility companies are providing financial incentives to increase the energy efficiency of these spaces. These financial incentives are rebates for lighting upgrades, mechanical retrofits, operational/controls adjustment, and others. The largest challenge for retail spaces is that they must compete with commercial office buildings for the designated incentive funding pool, and the paper work required to apply for these financial incentives can be daunting, especially to small retail store owners or tenants.

Large customers, such as Walmart®, Khols®, Target®, seem to have an advantage. In an attempt to improve electricity market performance, utility companies provide incentives for demand response program implementation through Price-Base programs (the other demand response program are Incentive-Base programs)1. Even in a regulated market, where choice and competition is limited, large retails have the ability to manage consumption through Price-Base programs or dynamic-pricing1. A small reduction in demand can result in significant reduction in generation cost allowing for an overall reduction in the cost of electricity.


References:

  1. Albadi, M. H. and E. F. El-Saadany (2008). "A summary of demand response in electricity markets." Electric Power Systems Research 78(11): 1989-1996.
  2. ENERGY STAR® Portfolio Manager Technical Reference U.S. Energy Use Intensity by Property Type. 
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