Supermarkets Can Obtain New Revenue with Utility Demand Response Programs

utility demand response

Demand Response and Smart-grid Technologies in Supermarkets

ACHR News, March 13, 2017

Supermarkets typically operate with razor-thin margins, which means fresh ideas that improve profits, such as participating in utility demand response or peak-shaving programs or selling thermal energy to local district heating and cooling grids to produce a revenue stream, are always welcome. Today, the technology that enables supermarkets to implement these ideas is available in the form of intelligent refrigeration system managers that can turn energy-using equipment into revenue-producing assets and, in turn, create greener stores that customers value.


Over the years, many utilities have incentivized commercial, industrial, and even residential customers to participate in demand response or load-shedding programs designed to cut electric consumption during peak times of the day when electricity is in high demand.

There is no one-size-fits-all program. The particular design of each program is shaped by each utility’s demand-side management strategy. These strategies are influenced by many factors, which include the transmission system and operator, the state regulatory body, the individual utilities and their generation dispatch protocol, the demography of the customer base (residential, commercial, or industrial), and the technology used to trigger a response.

Depending on the program, customers are encouraged to shift electric usage from high-priced on-peak hours to lower-priced off-peak hours or simply reduce usage during peak periods.

Rewarding customers who can cut electricity consumption immediately when there are balancing problems in the grid is smart business for utilities. When electricity demand is at its peak, utilities either have to buy power from other utilities or fire up their least-efficient energy-generating equipment. By avoiding these costly alternatives, the utility and customer saves money.

As the name implies, in an industrial demand response program, the utility sends a signal to a central control unit that utilizes the flexibility of the application to reduce the power consumption of motors, compressors, and other electrical equipment. The signal triggers a reduction in electric consumption for brief periods ranging from less than one minute to long periods within a 24-hour interval, depending on the application.

Not every utility offers a demand response program. Those who do see it as an answer to the question: “Is the demand response program economically advantageous versus the alternative of dispatching the next level of generation of technology or building new generation capacity?”

The analysis and variables used to answer this question are far from simple and, again, vary based on utility and jurisdiction. Nevertheless, demand response, along with effective energy-efficiency programs, are essential keys in planning long-term generation and transmission needs.

Ultimately, the utilities engaged in these programs pass on the prospective savings through a demand response program. These programs provide incentives to customers who agree to respond to a load-shedding event by reducing their electricity consumption when requested by the utility, typically during peak periods. The programs are typically structured to provide economic benefits in return for a commitment to respond from customers. Benefits can be realized even if a demand response event does not happen.

Demand response programs are mainly utilized by industrial, residential, and large commercial customers. While a proven solution, demand response programs are not frequently utilized by supermarkets in the U.S.

Nevertheless, the high usage of electricity by supermarkets can make it very advantageous to participate in these programs. According to the U.S. Department of Energy’s (DOE’s) Energy Star program, the average supermarket uses 50 kilowatt-hours (kWh) of electricity and 50 cubic feet of natural gas per square foot per year. That translates to an average energy cost of $4 per square foot with up to 60 percent spent on refrigeration.

A carefully considered demand response program with the appropriate control systems can achieve substantial energy savings while protecting food integrity by optimizing refrigeration system management.

Several supermarkets in the U.S. have participated in demand response programs. And, in Europe, demand response pilot programs are being conducted and closely studied.

Participating in demand response programs requires that the store has the flexibility to either curtail its power demand or shift the time of electric consumption (see Figure 1 on Page 22).


Thermal storage is a way to optimize thermal potential by shifting electricity use from expensive peak rates during the day to lower-rate periods during the night.

With a typical thermal storage system, a liquid medium is chilled at night when electricity prices are low. The chilled medium — usually glycol or ice — is stored in tanks. During the day, the medium absorbs heat from the display cases, reducing the need to run mechanical equipment and improving its efficiency.

In a supermarket application, the display cases can provide a form of thermal storage. This is done by drawing down temperatures during off-peak hours, which enables the compressors to run less frequently during peak hours. This tactic cuts the amount of electricity used at peak rates, which can cost as much as five-times more than off-peak rates.

Furthermore, thermal storage capacity can be used to produce a revenue stream when it’s connected to other stores through a district heating and cooling (DHC) system.

Employed for decades in large-scale urban centers and campuses, DHC systems utilize a central plant to produce steam, hot water, and/or chilled water that is piped underground to individual buildings within a specific district. As a result, individual buildings don’t need their own sources of thermal energy.

The “district” doesn’t have to be a large, downtown area. It can also be a “local” area within a mall or shopping center.

Applying the DHC concept to supermarkets, thermal capacity for cooling — and for heating — can be used by other stores in the shopping center or mall.

For cooling, excess thermal storage capacity can be supplied to adjoining stores through DHC piping. This reduces the mechanical cooling load for those stores, which pass on a portion of their electricity savings to a supermarket as a revenue stream.


Heat recovery can also be utilized by a DHC system.

With heat recovery technology, the heat that would otherwise be rejected by the refrigeration system’s condensers is used by the facility.

With typical refrigeration compressors operating at normal conditions, the condensing temperature is about 95ºF (35ºC), which is too low to make 130ºF (55ºC) hot water. To make hot water, the discharge needs to be at least 130ºF (55ºC), which requires the system pressure to be pushed upwards.

When CO2 is used as the refrigerant, compressors can operate at very high pressures in the transcritical area of the thermodynamic cycle. Depending on the application, the exit temperature of CO2 gas can be as high as 175ºF (89ºC), which is hot enough to be an alternative to an oil or gas boiler.

While CO2 usage is prevalent in Europe, it is gradually being adopted by supermarkets in the U.S. and the rest of the world as a green alternative to hydrofluorocarbon (HFC) refrigerants.

For stores using CO2 with a heat reclaim system, the size of the separate heat source can be greatly reduced or even eliminated.

In a study of a mid-sized European supermarket, surplus heat supplied to a local DHC system generated an annual revenue stream ranging from $6,500-$9,000. Moreover, in summer conditions, using hot water supplied by the compressors can eliminate the conventional central heat supply, can be used in reheat systems or in media regeneration of humidity control systems, or can simply reduce the on-off cycles of the central boiler in summertime, when there is little demand for heat.


If supermarkets in the U.S. can be connected to utilities through demand response programs and, potentially, to DHC systems, the possibility of connecting to a smart energy grid is easy to imagine.

A smart electric grid incorporates high-tech digital devices in transmission, distribution, and customer equipment to optimize electric usage by metering electricity consumption so customers can make informed energy decisions.

The next generation of digitally equipped technology will allow for more precise and equipment-specific responsiveness. The widespread adoption of this technology will be utility-specific based on their needs to expand or increase the effectiveness of their existing programs.

The smart grid concept is starting to be implemented in several European localities. Utilities in the U.S. have road maps for developing and implementing a smarter grid.

A smart thermal grid is a broader concept that integrates all sources of heating and cooling coming from thermal storage, cogeneration, heat reclaim, load-shedding capability, and unused compressor capacity.

Used in smart city concepts designed by European urban planners, a smart thermal grid can accommodate any changes in the supply and demand of thermal energy and, consequently, facilitates the highest system efficiencies.

When viewed all together, demand response, DHC, and smart grid concepts give supermarkets fresh alternatives on how their thermal potentials can be used profitably in the not-so-distant future.


Given that utility and smart grid connectivity is becoming a reality for supermarkets in Europe, what is possible in the U.S.?

To succeed, a supermarket’s HVACR and energy requirements need to become highly flexible (see Figure 1). Supermarkets can employ basic tactics to reduce or shift energy consumption without compromising food safety. Such tactics include:

  • Modulating compressor runtime — Variable-speed compressors can adjust system capacity to respond to peak-load power reductions. With the appropriate control strategy and planning, food safety can be assured.
  • Adjusting thermostats for comfort conditioning — During peak periods, increasing the thermostat set point by 2°F can reduce electricity use as much as 5 percent with minimal discomfort to customers.
  • Controlling antisweat heater operation — Antisweat heaters are used to prevent condensation on glass display doors and refrigerated cases glass. With antisweat heater controls that can sense humidity, antisweat heaters can be turned off for short periods in low-humidity conditions to save about 5-10 kW.
  • Shifting power-consuming tasks to off-peak hours — Rescheduling tasks, such as food preparation, forklift battery charging, and bulk ice making, can shift electric consumption away from the noon to 6 p.m. period to avoid peak-demand charges.
  • Shifting defrost events — Using demand defrost technologies that initiate and terminate defrost cycles based on actual frost on the coil will prevent excessive heat buildup and reduce energy consumption better than schedule-based defrost controls.

To implement these tactics, the good news is the technology exists now in the form of intelligent central refrigeration system managers.

Many supermarket owners use a central management controller to connect multiple cooling cases, compressors, lighting, etc., but they may not be aware that system managers are currently available in the U.S. with the intelligence to utilize demand response, DHC, and smart grid opportunities.

For example, the Danfoss ADAP-KOOL® System Manager AK-SM 800 Series features a full web interface for remote monitoring and data management and incorporates built-in demand response capabilities that can take advantage of utility incentive programs. It also supports heat reclaim technology and a variety of refrigerants, including CO2.

In one European case study, a supermarket using an intelligent system manager for a CO2 system was able to reclaim 40 percent of its heat loss and utilize it within a DHC network. It produced a revenue stream of up to $9,000 per year based on a heat value in that location of $28 per MWh above 150°F (65°C), resulting in a payback of just 1.5 years.

Most of the above examples are best practices that many in the grocery industry would find worthwhile. Location often dictates the ranking of the specific measures worth implementing. A grocer in Minnesota and a grocer in Florida, for example, will have vastly different outcomes based on climate differences.


Supermarkets can obtain new revenue from the thermal energy potential locked inside their stores by connecting with utility demand response programs that offer rebates and with DHC customers who will pay for district heating and cooling. Today, the capabilities of advanced system managers offer opportunities to utilize DHC and smart-grid strategies in the future while operating HVACR equipment and lighting more efficiently now.

Supermarkets will also benefit as CO2 systems become more prevalent due to advances that make them more efficient than HFC refrigerant systems — extending even into warmer southern climates. CO2 also enhances HVACR system efficiency and creates a greener facility with a significantly smaller carbon footprint.

Regulators can encourage all these trends by allowing utilities to offer incentives that reward supermarkets for using energy-conserving technologies that benefit themselves, the public, and the planet.

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