By Keilly Witman
KW Refrigerant Management Strategy LLC
The fundamental difficulty with the opportunity to reduce greenhouse gas emissions is that, for most utilities in the country, greenhouse gas emissions in and of themselves are irrelevant. Most of the world’s population thinks that energy use and greenhouse gas emissions are one and the same, but utilities are well aware that this is not the case. In the utility world, these two concepts are separate, but related. Energy efficiency equals greenhouse gas reductions, but greenhouse gas reductions don’t always equal energy efficiency. While the vast majority of policy-makers in the world want to reduce greenhouse gas emissions, most utilities and utility regulatory commissions are concerned solely with reducing energy use.
The subject of utilities and supermarkets working together on incentives for natural refrigerants is rife with potential. It is also rife with frustration. The frustration comes from both sides. Supermarkets are frustrated with the amount of time spent jumping through utility hoops, the inflexible nature of utilities, and the feeling that everything is made much harder than it has to be. Utilities are frustrated with the lack of standardization in supermarket refrigeration, the lack of data, and supermarkets’ failure to appreciate the framework of operational restrictions put in place by utilities’ regulatory bodies.
Yet some supermarkets and utilities continue to try to make natural refrigerant projects work. Why? Because both sides recognize the enormous potential benefit if they get these projects right. Supermarkets see a source of funding that can counteract much of the additional costs of natural refrigerant equipment. Utilities see the opportunity to achieve environmental benefits on a scale that is hard to achieve in any other retail project: Natural refrigerants can save energy if employed correctly and intelligently. But even more importantly, natural refrigerants, by definition, eliminate virtually all of the direct greenhouse gas emissions caused by traditional refrigeration systems. A quick, back-of-the-napkin calculation shows that the direct greenhouse gas emissions from our nation’s refrigeration systems is over 100 trillion pounds, or about 50 million metric tons, of CO2 equivalent.*
Even so, most utilities across the nation are just plain disinterested in natural refrigerants. If they even know about the potential environmental benefits of these refrigerants, utilities will tell you that they are prevented from awarding incentives for these benefits by their regulatory bodies, which set the boundaries of what most utilities can and cannot do. According to most utility regulatory bodies, what utilities can incentivize is energy efficiency. What they can’t incentivize is…well…anything that isn’t energy efficiency.
There is an argument to be made that utility incentives should be limited to energy efficiency. Utilities are in business to earn money, which means that any money given away by the utilities has to be motivated by profit, i.e., increased revenue or decreased costs. The justification for the money that utilities give away as incentives is cost savings. Yes, that’s right: Utilities give money to people who use less energy because it is a profitable proposition for them.
It is cheaper for utilities to pay a business to use less energy than it is to pay to expand their power generating capabilities. Utilities make the most money by fully exploiting their existing capacity, and not one iota more, as opposed to most of us who are constantly trying to increase our business to the point that we grow. So the best business model for utilities that have reached their maximum power generating potential is to offer money to people who reduce their consumption, which allows the utility to serve more people in areas that are expanding.
As long as utilities are not charged for their greenhouse gas emissions, utilities cannot promote natural refrigerants under a cost-savings argument. If something doesn’t cost you money, you can’t save anything by reducing its cost. And natural refrigerants do not earn anything for utilities, because they do not generate power that utilities can sell. And what does a business call something that does not cost it money or earn it money? It’s called irrelevant — and rightly so, if a business’s sole purpose is to generate a profit. Thus, most utilities in the country agree that natural refrigerants are completely and utterly irrelevant to their business.
Thankfully, the situation is not as bleak as one might conclude from the current state of affairs. We are making headway, in spite of these challenges. In my next blog, we will examine several successful examples of supermarkets and utilities cooperating on incentive projects for natural refrigerants.