Thermal storage, solar power, energy-efficient lighting, better air-conditioning systems and computerized monitoring systems are just a few of the energy- and cost-saving measures being employed by an increasing number of mall owners and operators.
At Central Mall in Lawton, Okla., as the result of some of these measures, energy usage became more efficient at the 544,000-square-foot regional center. Electrical consumption was cut by 6 percent or 483,520 kilowatt hours (kWh) last year compared to 2006, saving its property manager, Jones Lang LaSalle Retail, $33,846 at that property. It saved $33,936 last year at another property, the 570,000-square-foot Santa Fe Place mall in Santa Fe, N.M., where electricity consumption fell 405,894 kWh or 9 percent.
The energy, not to mention the cost, savings are significant for Jones Lang LaSalle, which manages 50 million square feet of retail properties in the United States. For many retail properties, the first line of defense against rising energy costs are computerized systems that monitor consumption weekly or monthly, says Greg Liebelt, vice president and retail operations manager at Jones Lang LaSalle Retail in Minneapolis. He notes that while he has been using energy management systems for 30 years, they have improved a lot in the last five to ten years as computer power, speed and software keep improving. However, it is hard to pinpoint the total savings these computerized systems can produce across the board because some owners still rely on manual controls, Liebelt says.
Overall, electricity accounts for 90 percent of energy expenditures at retail properties powering lights and air-conditioning, notes Rick Sievertsen, vice president of business development with Cadence Network, Inc., a utility expense management company based in Cincinnati.
Interestingly, however, many malls do not employ independent heating systems because the immense lighting systems and crowds of people actually generate enough warmth, Sieversten says.
As energy costs have risen in recent years, many retail chains are employing third-party energy management firms. Such companies remotely monitor HVAC systems, lights and fans at properties across the country through the Internet. Computers on site send data on electricity consumption and systems information. A 200,000-square-foot site may have as many as 25 monitoring points where information is gathered and motors or lights are controlled, according to John McIntosh, who is in charge of business development at iMonitor Energy in Lake Forest, Calif.
The iMonitor Energy electronic command center has generated more than $200,000 in savings in one year alone at the 1.3-million- square-foot Westfield North County in San Diego. Over three years, McIntosh says, the savings grew from $79,000 initially to well over $500,000 today. Additionally, rebates and incentives from utility companies mean the cost of the system could pay for itself in just four months, according to McIntosh.
At home offices, third-party consultants crunch the numbers to identify sites where consumption is higher and attempt to find ways to cut back. The firms also typically monitor weather patterns to try to keep HVAC loads in line with the climate.
And despite the heavy amount of technology, it may not cost a retailer or property owner much to install the systems. Often, local utilities offset the expense for installing the monitoring equipment, says Greg Allen, president and CEO of San Ramon, Calif.-based Advanta Energy Corp.
“It makes a lot of sense to not upgrade HVAC equipment if there are other [ways to achieve] efficiency,” says Justin Doak, retail sector manager at the U.S. Green Building Council in Washington, D.C.
Innovation covers cost
“The next big thing,” according to Allen, in curbing energy consumption is thermal storage. With this method property managers start their air-conditioning early in the morning, about 4:00 a.m., and once the system gets extremely cold, about 10:00 a.m., the compressor is turned off and fans blow over the frozen air-conditioning coils. In principle, it's similar to the old-fashioned method of cooling a room by placing a window fan over a melting block of ice.
However, this method won't work exactly the same everywhere. In humid regions such as Florida, the coils need to be modified slightly for thermal storage. The coils need to be kept dry since excessive condensation could short-circuit the systems.
The growth of energy management is a response to escalating electricity costs, says Allen. Residential customers pay the same rate no matter what time of day they consume electricity. But businesses have up to five different rates, based on seasons and time of day. On hot summer weekday afternoons, for example, electricity is more expensive than at 2:00 a.m. on Sunday. Although the practice of charging different rates for different day-parts is not new, says Allen, over the last four or five years, rates for peak hours have skyrocketed and may be three or four times as high as off-peak rates.
The difference between peak-hour rates and off-peak-hour rates is what makes the use of alternative energy cost effective. At a Whole Foods Market in Ridgewood, N.J., a solar-powered system generates as much as 100 percent of the store's daytime energy needs. On the whole, it provides 15 percent of the store's annual electricity usage. Further, during summer peak hours, the on-site generated solar power is less expensive than power from the grid, says Jigar Shah, founder and chief strategy officer at SunEdison in Beltsville, Md. SunEdison has also installed solar systems at one of the four Wal-Mart stores in Hawaii that are participating in a pilot program and over 60 Kohl's department stores throughout California.
Solar power systems are typically associated with an individual retailer since they have their own heating and cooling systems. Installing them at a multi-tenant mall is more complex. An anchor tenant like Macy's may have its own rooftop heating and cooling system, but smaller in-line stores will not, Allen notes.
Some firms are large enough to handle energy management in house. That's the case for Simon Property Group, the Indianapolis-based REIT that operates nearly 300 malls in the United States.
In March, Simon was named an ENERGY STAR Partner of the Year by the U.S. Environmental Protection Agency. It was one of a handful of recipients given this award for its energy management and reduction of greenhouse gases. The ENERGY STAR program educates business and residential users as well as certifies appliances and buildings as being energy-efficient.
As a result of Simon's conservation efforts, George Caraghiaur, vice president of energy services at Simon Property Group says, in the five-year period encompassing 2003 through 2007, for comparable properties, Simon reduced its carbon footprint by 11.7 percent, which translates into a reduction of more than 93,000 metric tons of carbon annually during that time period.
At Town Center Mall in Boca Raton, Fla., Simon recently increased lighting levels in garages, switching from 250-watt bulbs to fluorescent lighting. This change improved safety at the same time it reduced energy use by half, says Morris.
Lighting changes can have a marked effect on a retail center's bottom line, says energy experts. In addition to fluorescent lighting, LED (light emitting diodes) lighting, used in cell phones and exit signs, are more energy-efficient than most other types of lighting. While the initial cost for these low-voltage light bulbs is higher, they last longer and cost less to use over time, says Sievertsen.
Also, the practice of hedging — buying electricity at a fixed price for future delivery to avoid price shocks — is another way to mitigate escalating energy costs. But it can only be practiced in the 17 deregulated states and Washington, D.C., says Allen.
Energy experts, however, don't see eye-to-eye on whether energy deregulation actually saves money. (Think Enron.) Prior to this year, Allen says, electricity costs in deregulated states was cheaper by 8 percent to 12 percent over the past six years.
However, Rex Hime, president and CEO of California Business Properties Association in Sacramento isn't so sure. “It is hard to say whether or not deregulation will be an economic benefit to businesses, unless all [factors] involved, such as surcharges for leaving a local utility to buy power somewhere else, are established.”
In Texas, which is 85 percent deregulated, and where deregulation started in 2002, Frank Rollow, regional director of property management for Weingarten Realty, based in Houston, says, “we have seen savings in the purchase of electricity for our 126 centers in deregulated areas.”