After years of uncertainty about the transition to lower global warming potential (GWP) refrigerant alternatives, it’s crunch time for many supermarket retailers. The refrigerant transition is gaining momentum in the U.S. supermarket sector and many food retailers face critical decisions about their future refrigeration strategies.
The phasedown of legacy hydrofluorocarbon (HFC) refrigerants is progressing as expected. With a 40% reduction in HFC production and consumption set to take place in 2024, the law of supply and demand will drive up prices for the existing equipment install base. As a result, efforts to phase in the next generation of lower-GWP alternatives is accelerating and driving fundamental changes to refrigeration equipment technologies and system architectures.
If a recent proposal from the Environmental Protection Agency (EPA) — known as the Technology Transitions rule — is approved, it would enforce sector-based GWP limits of 150 and 300 across the full spectrum of new commercial refrigeration equipment beginning in 2025. It would also prohibit the sale, distribution and export of products containing HFCs starting in 2026.
But regulations aren’t the only technological driver in the refrigerant transition. Many retailers are in various stages of a sustainability journey, implementing initiatives, taking steps to lower their carbon footprints, and working toward Net Zero targets. Meeting these goals within an accelerated regulatory timeline will require considerations for commercial refrigeration equipment investments of both new store installations and retrofitting current refrigeration systems.
Unlike previous generations, today’s retailers have an expanding variety of lower-GWP refrigerant and equipment options from which to choose. Equipment and refrigerant decisions must be based on aligning these choices with an organization’s operational preferences — not on a formulaic, one-size-fits-all scenario.
In many instances, the refrigerant transition is driving a shift from large centralized systems toward distributed systems with lower refrigerant charges — from smaller CO2 transcritical booster systems and distributed scroll packs to remote A2L condensing units and R-290 micro-distributed strategies. The applicability of these distributed approaches is twofold:
1/enabling retailers to phase out aging portions of their legacy systems with lower-GWP retrofits; and
2) providing a variety of flexible options for new store installations.
Estimating the TCO when selecting refrigeration equipment and emerging architectures is essential for keeping costs under control, maintaining profitability, and planning for the future. Regardless of the selected refrigerant, commercial refrigeration equipment or architectural choices, retailers need to evaluate all the factors that may contribute to the TCO in their future refrigeration investments.
Balancing first and ongoing TCO considerations
To help retailers make the most informed decisions about their futures, Copeland recently completed a comparative TCO study of leading and emerging system architectures for both new and retrofit scenarios. It evaluated the primary considerations of equipment selection and explored how they factor into the TCO equation.
Understanding TCO starts with differentiating between first and ongoing costs:
Capital expenditures (CapEx) — aka first costs — include new commercial refrigeration equipment investments and the costs of installation. Costs will vary, depending on the type of equipment and relative complexity of the installation, but they will occur generally only once.
Operating expenses (OpEx) — include the costs to operate and maintain the equipment throughout the system lifecycle. Since retailers typically utilize commercial refrigeration equipment for up to 15–20 years, it’s essential to take a long-term view of OpEx.
Because CapEx and OpEx often are impacted by a variety of regional factors, retailers should evaluate the TCO and operational potential based on the equipment selection, sustainability impacts and installation location of each individual store. This requires taking many relevant factors into consideration:
- Local energy rates and peak demand charges. Some utilities offer demand response programs and/or grid interactivity, which can provide incentives to offset first costs and install energy-efficient equipment.
Typically, this requires deploying a measurement and verification (M&V) system to track energy consumption and enable grid interactive building (GIB) capabilities, which can help retailers to avoid incurring peak energy charges.
Many retailers are leveraging enterprise energy optimization software to monitor and reduce energy consumption in individual assets and across their network of stores. This software leverages machine-learning algorithms and advanced data analytics to provide early detection of changes in energy consumption.
- Carbon intensity profile. It’s important to understand how selected equipment could potentially impact long-term Net Zero goals. This means considering the total equivalent warming impact (TEWI) of the system’s energy consumption and refrigerant GWP.
To lower their carbon footprints, many retailers are leveraging heat reclaim for other store resource needs (water and/or air heating, etc.). Others are looking for opportunities to offset energy costs or manage sustainability goals by selling or purchasing carbon credits (see carbon credits section).
3) Natural resource availability and costs. Water is an essential resource for water-assisted (adiabatic) systems, such as a CO2 transcritical booster with an adiabatic gas cooler, or an R-290 micro-distributed system with a chilled water loop. If water is essential to supporting a particular equipment strategy, retailers will need to evaluate this need per the store installation location — where costs and/or availability will vary.
4) Trained service technicians. Technicians are on the front lines of the refrigerant transition and essential for the successful implementation of emerging lower-GWP architectures, which can require new training or education. The availability and skill levels of regional service technicians are essential TCO considerations when devising next-generation refrigeration strategies.
Although many technicians are being trained and prepped for this transition, their skill level with a particular refrigerant (e.g., CO2) may differ from region to region. Accessing these skills may impact the costs to secure their services.
Exploring the carbon credit market
To offset operational costs and lower carbon footprints, retailers are exploring opportunities to store, buy or sell carbon credits on the voluntary carbon credit market. This decarbonization strategy is designed to support the reduction, removal or avoidance of greenhouse gas (GHG) emissions.
Retailers earn carbon credits for taking environmental actions, which can then either be held to lower their own carbon footprints or sold to others to compensate for emissions occurring elsewhere.
Along the journey to environmentally friendly alternatives, retailers have potentially significant opportunities to earn carbon credits via:
•Destruction of refrigerants that cause ozone depletion;
•Proper reclamation of HFCs;
•Transitioning from HFCs to natural refrigerants;
•Using new construction materials; and
• Deploying leak detection systems.
The estimated value of carbon credits from these actions can be significant — representing the potential for earning tens of thousands of dollars across the next decade. As many of these actions are a natural part of retailers’ ongoing refrigerant transitions, they may provide new opportunities to reduce their carbon footprints, meet Net Zero targets, and lower their TCO.