Why Energy Efficiency Matters in the Cold Storage Sector

October 13, 2023

Navigating the challenges of energy efficiency might feel like a slippery slope, but for cold storage facilities, solar may be the solution.

As the backbone of supply chains in sectors ranging from food to pharmaceuticals, cold storage facilities guzzle electricity, racking up massive costs. Solar energy can ease operational complexities and offer a path to sustainability and cost-efficiency.

How Much Do Cold Storage Facilities Spend on Energy?

The cold storage industry has grown steadily at a Compound Annual Growth Rate (CAGR) of 2.3% over the past five years, reaching a total of $8.4 billion.

In 2023, the industry experienced a more significant increase of 2.5% in revenue, driven by the ease of restrictions and a renewed increase in restaurant demands.

Although cold storage services are predominantly used by industries in the food sector, cold storage companies also offer a range of services to pharmaceutical firms, hospitals, and other businesses in need of temperature-controlled storage facilities.

Cold storage facilities demand large, energy-intensive equipment, leading to significant operational costs within the industry.

To put this into perspective, a standard refrigerator warehouse alone can consume up to 25 kWh of energy per square foot annually. Given their energy intensity, the cold storage industry, as a whole, can rack up to well over $30 billion each year in energy costs. Energy costs associated with cold storage rank second only to labor costs and can account for up to 18% of a company’s total revenue. As a result, cold storage facilities are always looking for new ways to reduce these significant costs.

Understanding Cold Storage Energy Consumption

Cold storage facilities are substantial consumers of power and energy, primarily because they have to maintain consistent temperatures around the clock, every day, without any breaks.

The primary energy source for refrigeration technology is electricity, and it’s utilized to remove warmer air from inside the unit, ensuring a cool temperature is maintained within. The process of converting heat into lower temperatures demands a significant amount of power, especially to ensure that the internal temperature remains cooler than the environment around. The refrigeration alone accounts for up to 80% of the facility’s total energy consumption.

In a standard refrigerator warehouse, approximately 15% of the total energy usage is directed toward powering various components, including lighting fixtures, pumps, motors, conveyors, and fans. All these different components consume increasing amounts of energy, causing the overall energy costs of operating these units to rise.

As a result, the combined impact of these components using more and more energy leads to a consistent upward trend in the total operational expenses of these facilities. This continuous rise in energy expenses presents a significant challenge to the economic sustainability of refrigeration warehouses, highlighting the need to find ways to save energy and reduce these costs.

Technologies Used To Improve Energy Efficiency In The Cold Storage Industry

LED Lights

LED lighting is a fantastic choice for cold storage facilities due to its efficiency, especially when compared to traditional lighting. Traditional lights generate heat that can interfere with the cooling system’s efforts to maintain the right temperature.

LED lighting can significantly cut energy consumption by 75% avoiding this heat issue while still offering excellent illumination for the facility. With LED lights, the cold storage industry can enjoy peace of mind, as they can last up to 75,000 hours or around 15 years and operate effectively in freezing temperatures. The durability and efficiency of LED lighting contribute to the overall cost savings and sustainability of cold storage operations. It’s also the most frequently adopted initiative by companies aiming to enhance their energy efficiency.

LED lights In Cold Temperature

These specialized lights are specifically engineered to perform optimally in the cold and freezing conditions found in cold storage facilities. Unlike traditional lighting solutions that may struggle in extreme cold, LED lights remain reliable and efficient. They can withstand low temperatures without compromising on brightness or performance, making them the ideal choice for maintaining consistent lighting quality in cold storage settings. This enhances the overall operational efficiency and cost-effectiveness of cold storage facilities, establishing LED lighting as a valuable resource in this industry.

Solar Energy

Solar-powered cold storage facilities play a crucial role in environmental preservation by reducing carbon emissions, contributing to the cold storage industry’s sustainable goals for the future.

When it comes to cold storage, solar energy offers numerous advantages.

Energy Savings

When combined with battery storage, solar can generate energy savings and enhance resilience during power outages. Solar also offers reliable energy, which gives cold storage facilities the ability to offset their peak demand, which is energy costs, allowing them to save more.

Financial Benefits

For cold storage facilities, the Inflation Reduction Act (IRA) represents a transformative opportunity to cut operational costs, decrease reliance on the grid, and support the renewable energy movement. This act offers a substantial $369 billion in federal incentives – the largest-ever government investment in addressing climate concerns. Its primary objective is to achieve a 40% reduction in carbon emissions by the year 2030.

Cold storage facilities can receive tax credit incentives that cover up to 70% of the investment, along with additional adders when they qualify for grants, further reducing the cost of the system.

When cold storage facilities invest in solar energy, they often experience a significant 35% reduction in energy costs. With an average payback period of 5 years, investing in solar power cuts expenses and plays a crucial role in reducing the carbon footprint of their operations, supporting their commitment to sustainability.

A Key Point To Consider

A substantial solar panel array is necessary to support the energy demands of a cold storage facility. If the facility has plenty of rooftop space, that would be the ideal spot for solar panels. However, if the rooftop is already crowded with equipment, a practical solution is to consider setting up a ground-mount solar system on an open area located on the property. This way, cold storage facilities can effectively capture solar energy and use their space wisely.

Automation and Its Benefits in the Cold Storage Sector

Automation is experiencing a surge within the cold storage space.

Besides the immediate cost-saving aspect of labor reduction, automation offers several compelling benefits. With automation technology, it offers a faster return on investment, making it an attractive choice for addressing labor challenges and improving energy efficiency in the cold storage industry.

Those embracing the implementation of automated storage systems are seeing the following benefits.

Faster Fulfillment

Cold storage automation results in fewer fulfillment errors, more accurate product selection, and streamlined operations, leading to faster and more reliable order processing and shipping.

Reduced Waste

Cold storage often faces challenges such as spoilage, contamination, and equipment failures, which can be costly. Automation enables closer temperature monitoring and stock rotation, allowing for quick responses to prevent damage and waste.

Energy Efficiency

Automation helps reduce the overall use of lighting in your facility, resulting in lower upfront energy costs. It also eliminates the need to manage excess heat generated by bulbs. These minor adjustments can lead to substantial annual operational cost savings.

Conclusion

Energy efficiency has become a top priority in the cold storage facility industry. With advancements in technology and a growing focus on environmental sustainability, the sector is undergoing a significant transformation. Cold storage facilities are adopting measures to reduce energy consumption and integrate renewable energy sources like solar panels. They’re also implementing smart control systems for precise energy management and exploring energy-efficient lighting and automation. These efforts not only make economic sense but also align with global sustainability goals, reducing the carbon footprint of the industry.

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