The Warehouse Case Study

Energy monitoring and targeting – “money back, guaranteed”

The Warehouse cut $2 million from energy bills by monitoring and targeting energy use.

The Company

The Warehouse has become a New Zealand shopping icon since the opening of its first store in Takapuna in 1982. The retail chain now has over 100 stores in New Zealand and another 117 stores in Australia. It’s been story driven by a vision and an innovative approach to business.

 

The Warehouse became interested in electricity usage because:

1. The company has a commitment to energy efficiency and conservation issues.

2. Any savings in energy costs have a direct impact on the bottom line. This is particularly important in the competitive retail sector where savings made in any part of the business can help the company maintain its competitive edge.

 

The opportunity

Wayne Inger, National Energy Services Manager had a problem approving energy invoices for payment. Electricity invoices often need to be approved for payment within a week to ensure the bills are paid on time. This is not usually a problem if there are only 1 or 2 bills to approve for payment, but the Warehouse has more than 100 sites throughout New Zealand.

Wayne saw this as an opportunity to aid the management of the Warehouse stores energy costs by implementing an energy monitoring and targeting (M&T) system. M&T is a disciplined process that allows management to monitor and control energy consumption and costs. Documented case studies on the effectiveness of M&T systems have found 5–15% can be cut from annual energy bills.

 

What they did:

System Selection

When Wayne first considered the problem he realised a basic spreadsheet was not going to be suitable. It became obvious investment in the right equipment and technology was the right step to take.

The Warehouse needed a system that not only could monitor energy use at each store, but also provide feedback to store managers and be able to compare the energy use of different stores. This information would allow his team to focus their efforts on stores with high energy use first and then transfer the knowledge, systems and technology gained to other stores in the group.

Selecting a propriety system was the best option (compared to developing his own) and this saved time and money. EnergyPro, a small local company, was chosen to provide the system because back up support would be available and cost effective.

 

Setting-up the System

Hitesh Patel of EnergyPro set-up the new M&T system for The Warehouse. EnergyPro also arranged for the electricity supplier to provide invoices electronically, allowing a seamless and efficient transfer of data.

Electricity and gas tariffs were entered into the system and the costs for each store are calculated from the local tariffs. Invoices are checked to ensure the account is valid and no double billing has occurred.

The invoice is then crosschecked with a calculated value based on the appropriate tariff. ‘Flags’ are generated if there is any variance between the invoice and the calculated value i.e. if appears to be a calculation error or if the charges are not inline with what is expected, based on historical usage patterns and tariffs.

In addition, the floor area of each store was entered into the system. This allows energy use to be normalised based on floor area. Energy Use Indices are calculated for each store allowing easy and meaningful comparisons between stores. This identifies any store’s energy use that is higher than usual. Alerting management and staff quickly that an opportunity exists to lower energy consumption and make savings.

 

Energy Use Reports

Reports are generated from the system for each store and are then distributed to the store managers. Energy consumption is compared with other stores, so that performance can be improved where necessary.

It has been determined from these reports that restocking selves in the morning is more energy economical than night restocks. Wayne reports his findings to store managers and encourages them to minimise energy use and costs. Of course energy use is only one factor in operational decisions but under this system, store managers have full information on which to improve profitability of their stores.

At one store EnergyPro highlighted that line charges had doubled when compared with the previous month. Wayne investigated this and found that the lines company had overestimated the maximum demand charge. The energy company reversed the charges.

In another store where the energy use was high, the electricity meter was checked and found to be over reading by approximately 6%.

Another feature of the system is that it can compare actual costs with budgets and against predetermined energy use targets. If energy use is higher than expected this is flagged and corrective action can be taken immediately. This reduces energy waste and contributes to the cost savings.

 

The Warehouse

Wayne Inger manages energy use in over 100 Warehouse stores throughout New Zealand and is responsible for an energy budget in excess of $3 million per year. Wayne says the main benefit of the M&T system, is that it allows him to approval of over 100 electricity invoices for payment within a week. Having problems flagged allows him to remedy them quickly and gives him confidence that energy use is in order.

The M&T system and associated management programme gives Wayne time to monitor energy use and implement projects to reduce consumption where necessary.

Based on historical energy use information, if the M&T programme and the associated energy management programme had not been introduced, The Warehouse could be spending $5.5 million per year on energy. The EnergyPro M&T system has helped reduce energy costs to $3 million per year – equivalent to the annual profits of one of the larger stores.

Most energy efficiency projects that are implemented by the Warehouse have payback periods of less than 6 months.

 

Key findings

Wayne says the most important factor in achieving savings is setting time aside to monitor energy use. This reinforces EECA’s experience that someone needs to take action based on the information provided by the system in order for it to have an impact.

The M&T system reduces the time required to check energy invoices.

The M&T system also provides energy use reports and graphs, which compare energy use with set targets and the previous year’s usage. This comparison is made on both kWh and dollar basis.

The EnergyPro M&T system has also provided useful data for tariff analysis purposes. However, in changing energy suppliers there have been some problems in setting-up the automatic data entry. It is important to be aware of this potential problem and perhaps request that new energy suppliers provide invoice information in a standard format.

 

Results

The M&T system is a successful technical and management tool for The Warehouse and forms the hub of their energy management program. Wayne is aware that acting on the information provided by the EnergyPro M&T system will achieve significant cost savings.

When the program started back in 1995, Warehouse stores on average used approximately 200 kWh/m2/year of energy. In 2001, an average Warehouse store uses approximately 105 kWh/m2/year – close to a 50% reduction.

Wayne has also developed a comprehensive SCADA system using modems and PLCs to control air conditioning plant in stores throughout the country. Allowing for realtime monitoring of a major energy use.