Ian Wood, co-founder and Managing Director of refrigeration innovator, Adande, examines the impact of rising energy costs, post Brexit implications and the options for food retailers seeking to improve their energy efficiency.
Retail Electricity Demands
The UK food retailing sector is made up of some 6,578 supermarkets or superstores and a further 50,000 convenience stores. It is estimated that these outlets account for 3% (10.75 TWh) of the UK’s total electricity demand in 2015, which was approximately 358 TWh. Total national electricity consumption has continued to reduce in recent years, with the final consumption of electricity down by 0.3 per cent to 83.0 TWh in 2016 Q1, compared with 83.3 TWh in the same period for 2015.
In the medium term, the UK’s decision to exit the EU has created further uncertainty over the import of electricity and the mineral resources required for power generation. It seems inevitable that we will need to negotiate new trade deals with the EU and its member states, which could have implications on the availability and cost of future imports.
One newspaper report (Daily Telegraph - 16 July 2016) claimed that Brexit had created doubts over the future operation of the UK energy market and increased financing costs, which will lead energy companies to demand greater subsidies to build and operate power plants, adding £350 million to energy bills.
The recent announcement that the development of the new plant at Hinkley C will go ahead will increase the UK’s capacity for nuclear energy to meet 7% of Britain’s energy requirements. Currently, nuclear represents just 21% of total electricity generated in the UK. However, it appears likely that power generated at Hinkley C will come at a cost premium. The Institute for Economic Affairs has claimed that Government subsidies mean that EDF will be paid £92.50 per MWh for electricity generated at the new plant, compared with a current wholesale price of approximately half that.
Retail Refrigeration Costs
Therefore, it is clear that increasing the efficiency of refrigerated display equipment provides a significant opportunity to reduce energy consumption and associated costs.
Are doors the solution for retailers?
There is also evidence to suggest that glass doors act as a barrier to shopping and particularly impulse purchases. In today’s competitive grocery retailing environment, it is impractical to introduce barriers, which may negatively impact on sales. In addition, there is the capital cost of ﬁtting glass doors, together with ongoing maintenance and cleaning costs, which bring into further doubt the viability of the glass door option.
An airflow alternative
The greater integrity of the air curtains and the fact that Aircell requires no back panel flow also ensure more accurate and stable operating temperatures, prolonging the quality and appearance of food.
The system provides a degree of shelving versatility with the two ducted shelves, for the supply and return of cold air, having three height adjustments and the three intermediate shelves are fully adjustable.
There have also been a number of other initiatives, which have claimed to offer energy saving characteristics, but the majority of these have achieved limited success.
Energy Efficiency Options for Retailers
I have no doubt that refrigeration equipment manufacturers will continue to develop new and more energy efficient cabinets. It remains to be seen, which products and technologies will be adopted by retailers, but one thing is for certain: the need to address energy consumption is now more important than ever.