Managing Energy Costs in Retail Buildings


Retail buildings in the US use an average of 18.3 kilowatt-hours (kWh) of electricity per square foot and 34,300 Btu of natural gas per square foot annually. In a typical retail building, lighting, cooling, and heating represent about 60 percent of total use (Figure 1), which makes these systems the best targets for energy savings.

Average energy use data

Figure 1: Energy consumption by end use
For buildings dedicated to retail sales and services, lighting typically consumes more than half of the total electricity used; the vast majority of natural gas used goes to space heating.
Pie chart showing electricity end uses: Lighting 26%; Miscellaneous 21%; Refrigeration 19%; Ventilation 16%; Cooling 14%; Other 4%.
Pie chart showing natural gas by end use: heating 84%; Cooking 8%; water heating 6%; miscellaneous 2%.
Top technology uses

When trying to better manage your building’s energy costs, it helps to understand how you are charged for those costs. Most utilities charge commercial buildings for their natural gas based on the amount of energy delivered. Electricity, on the other hand, can be charged based on two measures: consumption and demand (Figure 2).

Figure 2: Load profile for a typical California retail building
Hourly energy consumption data show that lighting and cooling present the largest opportunities for reducing peak demand charges in retail buildings.

The consumption component of the bill is based on the amount of electricity in kWh that the building consumes during a month. The demand component is the peak demand in kilowatts (kW) occurring within the month, or in some cases, during the previous 12 months. Demand charges can range from a few dollars per kW per month to upwards of $20 per kW per month. Since it can be a considerable percentage of your bill, take care to reduce peak demand whenever possible. As you read the following energy cost management recommendations, keep in mind how each one will impact both consumption and demand.

Almost all of the conservation measures discussed here represent good investments. Most will save you money while also enhancing both the aesthetics of your store and the amount of merchandise it sells.

Quick fixes
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Many stores can benefit from straightforward low-cost/no-cost energy-saving solutions. These include turning things off, turning things down, and keeping up with cleaning and maintenance.

Turning things off

Turning things off seems simple, but remember that for every 1,000 kWh you save by turning things off, you save $120 on your utility bill, assuming an average electricity cost of $0.12/kWh.

Lights. Turn off lights when they are not in use. Occupancy sensors and timers can help, but a less expensive alternative is simply to develop a standard store-closing protocol for shutting off lights during closed hours and to verify that it’s actually followed.

Electronic displays. Many stores have electronic displays that are left on even when the store is closed. Consider shutting off the displays during closed hours, either manually or with simple timers.

Doors. Many retail outlets keep doors open on hot days, with the air conditioner running, as a way of attracting customers. However, this practice can increase air-conditioning costs significantly, and in some jurisdictions, it can even leave retailers subject to fines. Alternatives to an open door include posting a sign that says that it’s cool inside or installing two sets of doors and leaving only the outer one open.

Turning things down

Some equipment cannot be turned off entirely. However, turning equipment down to minimum levels where possible can save energy.

HVAC temperature setbacks. During closed hours, turn temperature settings down during the heating season and up during the cooling season. And turning the HVAC system off an hour before closing should be enough to get through to the end of the day.

Peripheral and back rooms. Make sure that HVAC settings in stockrooms, offices, and other peripheral rooms are at minimum settings.

Cleaning and maintenance

Making sure that your HVAC system is regularly cleaned and serviced can help prevent costly heating and cooling bills.

Schedule RTU maintenance. Create a regular maintenance schedule for your packaged air-conditioner and heat-pump systems, also called rooftop units (RTUs); disrepair in these systems can lead to energy waste and compromised comfort for a building’s occupants. Maintain your RTUs on a regular basis to ensure that they cool buildings and occupants as intended without wasting energy.

Check the economizer. Many air-conditioning systems use a dampered vent, called an economizer, that draws in cool outside air when available to reduce the need for mechanically cooled air. If not regularly checked, the linkage on the damper can seize up or break. An economizer that is stuck in the fully open position can add as much as 50 percent to a building’s annual energy bill by allowing hot air in during the air-conditioning season and cold air in during the heating season. Have a licensed technician check, clean, and lubricate your economizer about once a year, and repair it if necessary. If the economizer is still operating, have the technician clean and lubricate the linkage and calibrate the controls.

Check air-conditioning temperatures. With a thermometer, check the temperature of the return air going to your air conditioner and then check the temperature of the air coming out of the register that is nearest the air-conditioning unit. If the temperature difference is less than 14° Fahrenheit (F) or more than 22°F, have a licensed technician inspect your air-conditioning unit.

Change the filters. Filters should be changed periodically—every one to six months, depending on the pollutant loading from indoor and outdoor air. More-frequent changes may be required during the economizer season because outdoor air is usually dirtier than indoor air.

Check the cabinet panels. On a quarterly basis (or after filters are changed), make sure the panels to your packaged rooftop air-conditioning unit are fully attached, with all screws in place and all gaskets intact, so that no air leaks out of the cabinet. Chilled air leaking out can cost $100 per rooftop unit per year in wasted energy.

Clean the condenser coils. Check the condenser coils quarterly for either man-made or natural debris that can collect in them. At the beginning and end of the cooling season, thoroughly wash the coils.

Check the airflow. Hold your hand up to the registers to ensure that there is adequate airflow. If there is little airflow, or dirt and dust are found in the register, have a technician inspect your unit and ductwork.

Longer-term solutions
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Also consider longer-term solutions. Although these actions require more effort, they can dramatically increase the efficiency of your facility and can even improve the shopping environment at the same time. Ask your utility representative for more information about incentives for such projects.


Commissioning is the process of ensuring that systems are designed, installed, functionally tested, and capable of being operated and maintained according to the owner’s operational needs. Commissioning can cut energy bills by 10 to 15 percent or more and often provides a simple payback of under one year. When this process is applied to an existing building that has not been commissioned before, it is called retrocommissioning. When it is applied to a building that has been commissioned before, it is called recommissioning. Recommissioning is recommended every three to five years to maintain top levels of building performance. In another type of commissioning—monitoring-based commissioning—monitoring equipment is left in place to allow for ongoing diagnostics and may provide additional benefits beyond traditional commissioning.


Insulation can be one of the most important factors in improving energy efficiency in a building. Insulation not only saves money by reducing heating and cooling loads, it’s also a key factor in achieving comfortable living and working spaces. The effectiveness of insulation greatly depends on proper installation. Get a quote from an insulation specialist to make sure insulation is properly installed.

Building automation systems

Building automation systems, sometimes called energy management systems, can save 5 to 15 percent of overall building energy consumption while also improving occupant comfort. Older or poorly maintained buildings can also benefit greatly from a building automation retrofit, sometimes achieving savings of over 30 percent.


Lighting is critical, both in creating an ambiance and in making the merchandise attractive to shoppers. High-quality lighting can reduce energy bills and drive sales.

Display lighting. Proper display lighting, such as track lighting, is critical for driving retail sales and preventing merchandise returns. Quartz halogen lamps are commonly used for accenting merchandise because they provide a bright, focused column of light with excellent color quality. More efficient alternatives include CFL, metal halide, and LED track or spot lights. Have a lighting consultant review your lighting layout to ensure that it provides the appropriate light levels, quality of light, color rendering, color uniformity, and energy efficiency.

LEDs. LEDs are well on their way toward becoming an effective option for a growing variety of applications, including incandescent replacement lamps, parking lots, commercial signage, task lighting, refrigerated cases, recessed downlighting, ambient lighting in offices, and many high-bay applications. Retail accent lighting is a growing area for LEDs because they provide the ability to vary color, create sparkle, and aim the light precisely. Despite the technological advances, successful application of LEDs still requires care in selecting products that will meet specific illumination needs, match manufacturer claims, and be compatible with any controls that are employed.

LEDs boast a life ranging from 25,000 hours to more than 100,000 hours, depending on the application. The competition ranges from 1,000 hours for incandescent lamps to as much as 70,000 hours for induction lighting. For conventional lamps, such as incandescent, fluorescent, or high-intensity discharge (HID) lamps, life is defined as the hours of operation after which half of a representative sample of lamps can be expected to fail. In contrast, LEDs don’t generally fail outright, rather, their output declines over time—so the industry generally defines LED life as the point at which the light output has declined to 70 percent of its original value.

Fluorescent lamps. If your facility uses T12 fluorescent lamps or commodity-grade T8 lamps, relamping with high-performance T8 lamps and electronic ballasts can reduce your lighting energy consumption by 35 percent or more. Adding specular reflectors, new lenses, and occupancy sensors or timers can double the savings. Paybacks of one to three years are common.

Big-box retail stores with high ceilings might consider going to a high-bay lighting system that uses T5 or T8 lamps to boost both lighting quality and efficiency. LED adoption for high-bay systems has been slower than for other applications, but market penetration is growing. These lamps are more energy-efficient, offer better light quality, and are easier to dim or control with occupancy sensors than the HID lights that are typically found in high-ceiling stores.

Smart lighting design in parking lots. Parking lots are often overlit—an average of 1 foot-candle of light or less is usually sufficient. The most common lamps used for outdoor lighting are HID sources (metal halide and high-pressure sodium lamps). In recent years, fluorescent lamps, CFLs, and induction lamps have also become viable sources for outdoor lighting, offering good color quality and better control options than HID sources. LEDs are also rapidly becoming a good choice because they can reduce light pollution while offering high efficiency and long life. LED costs are decreasing, and performance continues to improve. Dimming and occupancy-sensing controls can also save energy in parking lots.

Security lighting. Using occupancy sensors with outdoor security lighting can save energy and improve security.

Daylighting. Daylight from skylights and windows can improve the ambience of a store and reduce the need for electric lighting. According to the American Council for an Energy-Efficient Economy, some evidence even suggests that daylighting can also lead to increased sales (PDF). Dimming ballasts and daylighting controls can be used to reduce the amount of electric light used when daylight is present.

LED signage. LEDs used in exit signs, “open” signs, and other applications can cut energy costs and also reduce maintenance costs compared to incandescent, CFL, neon, and other options.

Demand-controlled ventilation

When only a few people are in a store, you can save energy by decreasing the amount of ventilation supplied by the HVAC system. A demand-controlled ventilation (DCV) system senses the level of carbon dioxide in the return airstream and uses it as an indicator of occupancy. DCV can save energy during peak cooling periods when many shoppers are at work and occupancy is low. In retail sales applications, DCV works best when a dedicated HVAC system serves the sales floor.

RTU controllers

If your building has packaged RTUs, consider installing RTU controllers; this technology allows RTUs that currently run on single speeds in single zones to operate in variable-speed modes. Controllers can save 25 to 50 percent of total RTU energy consumption for single-zone cooling with a capacity of 5 tons or greater. Simple payback periods are typically one to five years, without incentives.

Cool roofs

If the roof of your building needs recoating or painting, consider creating a “cool roof” by using white or another highly reflective color to minimize the amount of heat the building absorbs. This change can often reduce peak cooling demand by 15 to 20 percent. For a list of suitable reflective roof coating products, check out Energy Star Roof Products.

Advanced window glazing

Modern, specularly selective glazing makes it possible to maintain good visibility through windows while limiting the solar gain that can heat a store and fade clothing colors. If your store is in a warm climate, replacing clear glazing with more advanced glazing can be done with short paybacks and can increase comfort for shoppers. Specify new glazing carefully—you may need to seek a different solution for each facade. In some cases, applying specularly selective window films to existing windows may allow you to achieve similar benefits as new glazing, but at a lower cost.

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