Retailer Energy Alliance Supplier Summit Webinar—Overview (Text Version)
Below is the text version of the overview of the Retailer Energy Alliance (REA) Supplier Summit Webinar, presented on June 5, 2008. Drury Crawley from the U.S. Department of Energy was the presenter. You can also view the slides for this presentation (PDF 620 KB). Download Adobe Reader.
Let me introduce Dru Crawley. And Dru Crawley is the team lead for commercial buildings — inside building technologies at the Department of Energy.
Thanks, Doug. One thing I do want to say, we are having a reception afterwards, so if you want to talk about specific products to people, that's the time to do it. But today, during the formal part of the presentation, we do want to keep it noncommercial if we can.
So I want to give you an overview of where we are with the alliance, how it came to be, what we're trying to do with it, etc. Okay. I want to extend to you a welcome to be here. I'm excited to see that we've got this large number of people interested in what we're trying to do.
The Retailer Alliance was put together — we started almost a year ago here, actually, in Golden with a meeting of a few retailers to look at what we might do to try to come together as a group. It's an independent consortium. There's no formal legality to it, but it's a group of people trying to work together, retailers. But part of that is tapping the expertise of the Department of Energy and its national laboratories. We know how to do low-energy buildings, but we aren't well connected with the industry, and haven't been. This is our way to start getting into that.
We want to see this as an information network for sharing ideas, best practices, information about what can help the retailers get to the lowest energy for their business case, and that's where we're working. It also can serve as a single voice for the industry. One of the things that we hear from the retailers is it's difficult for them to get together to individually effect a change in the market for a product, and they really want to come together and say, "Together we want to look at a number of products." For example, and I'll talk about this later, we're doing a technology procurement solicitation for LED parking lot lighting, coming out later this year. A number of people grouping together to say, "We want to buy this particular product." It also will affect the research the department does for building R&D, to address specifically what the retailers in some of our other alliances say they need rather than what DOE has normally done, so we're trying to listen to the end users.
And then, finally, it's an example. Best practices, buildings that are exemplars in energy efficiency will be promoted through this program. We established it last year. We had a meeting actually here, not too far down the road, on NREL's site, to talk about what such an alliance might look like. And we had a launch event where we had retailer senior executives from — I think it was 15 retailers come together in Washington, D.C., and talked with the senior executives in the department, tell what the needs were and why they were doing it, so we've been going.
This is the website, buildings.energy.gov/retailer, that will continue to expand and be brought forward as we go on.
The mission of the alliance at this point is to investigate, evaluate, and deploy technologies and systems that significantly improve energy efficiency of retail buildings within the retailer's business case. We're always keeping that in mind. We're not trying to push something that's not cost-effective; it's got to work for the retailers. That's the really important part. So we're looking to provide the tools for the retailers to tackle the challenges that they are seeing, so we're trying to listen to what's going — what the issues are. Reduce energy consumption in retail buildings. It's a $25 billion annual energy bill today. It's one of the bigger elements of the commercial sector, so it's a big piece out there.
We want to also speed market introductions, new technologies, technologies that are very energy efficient or are having trouble getting to market. How can we help change that? Matching end users with the retailers, the building groups.
We want to also minimize the impact of volatile prices. We're seeing it. I was looking at something the other day. The spot price for natural gas has gone up almost 50% recently, and that's going to continue. We've seen the oil prices changing quite radically. Energy-efficient buildings are less affected by that. You don't see the volatility in what's going on. You're not going to be as affected.
And, finally, we want to help safeguard the reliability of the systems within the buildings, either through energy efficiency, on-site renewables, on-site generation, and really help shape the future. We can change the retail sector here. But I want to emphasize, it's by retailers, for retailers, so we have a steering committee of retailers that are directing what is going on in here, what projects we're trying to do, for their needs, not the Department of Energy saying, "Here's where this needs to go." We are listening and working together.
But I want to step back and just remind you why building energy use is important today. It's the combined largest sector in our economy. It's 40% of the primary energy consumption, compared to industry at 32% and transportation at 28. It's growing. It'll continue to grow. We're building buildings right and left — well, we were before the recession started in. But further, it's 72% of the electricity, and a lot of the carbon issues — and we are going to probably have some sort of carbon bill, and it may be trading, it may be cap-and-trade. Who knows what Congress is going to do? But electricity is a lot of that issue, because that's where a lot of the coal-fired plants are — 55% of the natural gas and growing, because a lot of that is going into the new power plants. And we're just seeing the energy consumption continuing to grow.
It's also the fastest-growing sector. Industrial sector has kind of started reducing a little bit, partially because of efficiency changes, but also partially because we're not doing as much heavy industry as we used to do in the U.S. Transportation's growing but not as fast.
It's also a large part of the environmental issue. As far as that's concerned, buildings are 39% of the carbon dioxide emissions, the largest sector of that; 52% of the sulfur dioxide that's mostly due to the electricity; only 19% of the nitrous oxides.
But something that people forget, we talk about water use. Buildings together, if you include the electric generation, are responsible for 45% of the water use in the U.S. Typically, we use about 100 gallons a person for domestic use, but if you include the water use from generating electricity, it's a lot more. So we use 140 billion gallons of water a day to generate electricity, and it's something we forget in what's doing. If you look at the pie chart, buildings in the public uses — watering, whatever we're doing related to building — is about 11%. But electricity is half of the water use in the U.S., so it's something we need to be cognizant of.
The other thing — this is a carbon reduction strategy that came out of McKinsey last year, and they're working on an update to this now. But all I want to highlight is, below the line are things that don't cost anything, the things that are already cost-effective today, and these are some of the things we're talking about here. There's building insulation, there's HVAC, there's lighting improvements, etc. They're the red bars. But what this doesn't take into account — and this is the thing we point out to McKinsey when they talk to us about it — it doesn't take into account the interactions. This is just if you do insulation, just if you do lighting. But if you do it well and do it together, you can get buildings to 50% energy or less.
The retail sector — and this is the reason we started here — has one of the most immediate opportunities. It's about 20% of the total commercial building energy use. It has major building types that are pretty distinct, restaurants being — if you look at the right side — the most energy-intensive building that we've got to deal with. Very specialized problems: cooking, dealing with refrigeration, freezing, all sorts of things that are very important. We've got to deal with that separately.
The grocery store is very energy-intensive as well. They've got to deal with keeping that product healthy and for people — keep it from spoiling. Other building types as well, not as much energy use. Other building types we're already looking at, and we're looking at alliances — offices is about another 17%. Hospitality or the lodging industry is about 9%, and then institutional facilities, 32%, so those are some of the things we're going to be targeting. I'll talk about that.
But I think this is kind of an interesting statistic here. This is where we are today. From the 20-odd members that have signed on for the REA, we're already looking at almost 2 billion square feet that are represented. No, they haven't agreed to do everything in retrofitting that within a certain time frame, but they've already got a big commitment. They know they have an energy issue. But they've got sales of $780 billion a year, and 43,000 stores we're dealing with today.
So why is DOE here? Well, as the department, we don't have any particular product to sell. We're generally seen in the market as unbiased, so we want to act as a convener to help bring together the critical stakeholders, such as yourselves, to help develop the best practices, technical tools, training, and to maintain that openness, that we are going to judge things as they are, rather than trying to sell a product. We're going to provide information about that. We want to collaborate with the retailers, as we've already started, and as we're starting today with the manufacturers and other stakeholders to really get energy-efficiency products, technologies, into the marketplace, and pilot those to see how they're working today. We want to verify what's going on in those technologies, looking at them from actual measurements and seeing how they're operating in situ, in the field, not just from some standard tests that may not tell the whole benefit of a particular technology.
We're also working with the retailers to do the business case. That's really the critical piece. Unless they have a business case for how that works, for how that particular technology works in their building, they're not going to be able to use it if they can't figure out how it fits within their business model, so that's really the key here. And then, finally, we want to work together to facilitate projects such as the solicitation we're doing for the parking lot lighting, to introduce these new technologies, things that are near market but need maybe a little push, and we had some successes with that. One of our labs has worked with us for years on trying to get these in. We worked with the small compact fluorescent lamps a few years ago, and those used to be incredibly expensive. You couldn't get them, they were the wrong size, couldn't fit in, but through a technology introduction procurement activity, we were able to get the price down. We got enough volume for the manufacturers that they were able to bring it. So you can get them at any Walgreens or Wal-Mart or any of the stores today and have that product there.
So you're here today to help discuss the challenges that the retailers tell us they're facing when they're trying to really pursue energy efficiency in the market, in their real buildings. Now, remember, the retailers — and that's kind of a structure for the Retail Energy Alliance — this is a group of people whose main business is not operating buildings, but it's a critical part of what they do. The buildings have to maintain temperature, have to maintain produce, they have to be able to keep the product frozen, or the TVs lit if you are a electronics seller. But their focus is on marketing the other products, so we want to talk about the challenges they have there. We really want to start this is as a dialogue to get people talking more as a group.
It's been interesting. At the retailer roundtable we had in February, several people said this is the first time we've had retailers talking to each other about similar problems. We're not competing on who's got the best product. That's a separate issue. We're talking about how can we make the business of operating the buildings more efficient, and really identify some specific products or technology areas that we need to improve, and we've already got a list of that started today.
We also want to use this as a way to understand how we can work together with the retailers, with the OEMs to get new products, either products that are in the market that are underutilized or new products that may be coming out in the near future, or even maybe things that there needs to be research on that we can help with.
So let me talk about where the REA fits within our concept of national energy alliances. The energy bill last year actually authorized and instructed us to create something called a Commercial Buildings Initiative. Net-zero energy buildings, cost-effective buildings by 2030, bringing it into the marketplace 2050 so that we've got most of the commercial energy use reduced to near zero by 2050. They didn't provide any money, but they told us to go ahead and do it.
We'd already been working that way, though. We've been thinking. We need to restructure, broaden our perspective on this, and we've been seeing a big consolidation in the industry, large national chains. That's true in the retailers. That's also true in the commercial real estate section, a few, a handful, 20 or 30 groups now owning millions of square feet of buildings, operating them, looking at the bottom line of that, and it's a critical part of what they do. So we just started this last week exploring, doing a commercial real estate energy alliance. The lines between these are a little fuzzy because this one is going to include developers, owners, managers, and they may also be managing and operating some of the buildings of the retailers, so it's kind of a very fluid edge to it.
We're also looking at doing an institutional energy alliance, kind of a completely different model. With the retailers, they're selling a product, and the building is helping support that. For the commercial real estate, the buildings is the business: operating them efficiently, making the most bang for the buck that they're getting, get the best rent for what they're doing. That's what their piece is. The institutional, these are often the state and local governments. The different model, where they're having to keep the costs down, but it's a completely different business model, so we're trying to do that, or hopefully form that next year. We already have some work in that area. We're starting an EnergySmart Hospitals activity this summer. There's also an EnergySmart Schools program, which has been ongoing in the department, and those will take care of parts of that.
One of the things you will probably be interested in — we realize that we've been talking to the end users, the owners, of the buildings, and that's what the first three do. A fourth alliance we want to do is the industry. We want the manufacturers, the design teams, the financiers, the utilities, the ESCOs, etc, to come together so they can tell us what issues they're facing in delivering an energy-efficient product. How can we help them train, how can we help them with research? So we'll be looking at forming that probably next year. More information. So if you're interested in one of the alliances, you can go to our website.
So thanks. I first want to thank a number of people for helping put this together. The steering committee for the REA has been instrumental in helping us form this and get this together. It's been a great group of people to work with. They really are interested in doing — changing what's going on in their buildings. I also want to think the National Renewable Energy Lab. They helped organize the location here, get us going. I particularly want to thank Claire Ramspeck, and ASHRAE. They're the ones who put together the invitations and were managing all the registrations and everything for this. It's made our life a lot easier.
And I also, last, want to thank the team that's been helping the department put this together back at headquarters, some of our contractors, including the National Renewable Energy Lab and Pacific Northwest Lab, Akoya, and Booz Allen Hamilton. Been critical to have their expertise for us to bring this together, so I just want to make sure I cover that.
Last, if you need us, buildings.energy.gov/retailer. Should be on the folder. If you want to contact me, feel free. There's my email address. If you leave a message on the Retailer website, that gets to me too, so that's not a problem. So welcome, and let's see what the retailers have to say.
Any questions for Dru Crawley, you can address them when you have the panel discussion.
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