Energy and Smart Building Industry Blog

Skyrocketing Energy Costs? How Demand Charge Management Can Save Your Retail Business Thousands!

Energy markets

If you're running a retail business, you're no stranger to rising energy costs. But what you may not realize is that the real culprit behind your skyrocketing utility bills isn’t just the amount of electricity you use—it’s your demand charges. These fees are based on the highest energy consumption during peak times, and they’ve been surging across North America, impacting businesses like yours. So, what can you do about it? The answer: Demand Charge Management.

Rising Demand Charges: A Growing Challenge for Retailers

Over the last decade, demand charges have been steadily climbing across North America, driven by the increasing costs of maintaining and upgrading grid infrastructure. This trend is further fueled by the integration of renewable energy sources into the grid.

Historical growth of demand charges

 

Why Demand Charges Are Impacting Your Bottom Line

As utilities modernize their grids and incorporate renewable energy, demand charges are rising faster than ever. For small-box retailers, these spikes can significantly erode profits. Demand charges are calculated based on your peak energy usage during short intervals—often just 15 to 30 minutes. In high-demand areas such as California, Texas, and New York, businesses are facing increases of up to 30% in these charges.

Projected future increases

Potential increase in energy costs

For businesses operating on tight margins, managing energy consumption and minimizing costly peak demand charges has never been more critical. With energy costs increasing by 20-40% depending on the region and utility, retailers are feeling the pressure to take control of their energy usage. In fact, for many businesses, demand charges are now approaching the cost of their actual energy usage, further straining profitability. As a result, retailers must act quickly to mitigate these rising expenses and safeguard their bottom line.

 

CPI electricity

 

Managing Rising Costs with Demand Charge Management

As demand charges and energy costs increase across North America, effectively managing energy consumption during peak periods is becoming more important for businesses. By reducing or shifting energy use during these high-demand windows, you can directly lower the costly fees associated with peak periods.

Demand Charge Management helps businesses optimize energy use and manage rising costs effectively. One of the most powerful tools for this is Automated Demand Response (ADR). ADR automatically adjusts critical energy-consuming systems, like HVAC, lighting, and refrigeration, during peak demand periods. This helps reduce overall energy consumption and ensures businesses don’t face unnecessary charges.

At Phoenix, we provide a Demand Charge Management solution using Demand Manager™ that implements strategies designed to minimize energy demand over time. Here's how it works:

  • Load rolling: Rotating the reduction of power across different areas or systems to avoid overloading the grid.
  • Load shifting: Moving energy consumption from peak times to off-peak periods.

How Does Demand Charge Management with ADR Work?

  1. Lower Your Utility Bills by Reducing Peak Demand: ADR works by automatically adjusting your energy usage during peak times, avoiding the high demand charges that make up a large portion of your utility bills. For example, by managing HVAC systems and lighting, ADR systems can reduce the energy needed during peak demand periods, saving you significant costs each month.
  2. Seamless Integration with Existing Systems: One of the great things about ADR is that it doesn’t require a complete overhaul of your existing infrastructure. ADR solutions easily integrate with your building management systems (BMS) and energy infrastructure, managing energy-intensive operations like HVAC and lighting without disrupting your daily operations.
  3. Real-Time Adjustments for Maximum Efficiency: With ADR, your business doesn’t have to manually monitor energy consumption. The system makes real-time adjustments to ensure that energy usage is optimized during peak demand periods, minimizing costly demand charges without affecting your operations.
  4. Support Your Sustainability Goals: Reducing your peak demand not only saves you money but also helps improve grid stability and reduce your environmental footprint. As businesses aim to meet sustainability goals, ADR contributes to a cleaner, more efficient energy future by lowering reliance on fossil-fuel-based generation.

 

Case Study: A Specialty Pet Retailer’s Success with Demand Charge Management

A major specialty pet retailer with over 1,650 locations across the U.S. and Canada faced rising demand charges and sought a solution to manage its energy use. The retailer implemented Phoenix Energy Technologies' Demand Charge Management solution, which included:

  • Load Rolling Strategy: Adjusting the cooling setpoints of HVAC systems one unit at a time, reducing energy use without impacting customer comfort.
  • Results: Over 547 sites, the retailer saved over 3 million kWh, cutting their energy costs by more than $467,000 annually, and peak demand reduction (kW) of over $486,000 annually.

By effectively managing peak demand, this retailer not only saved significant money but also took a step toward sustainability, helping to reduce their carbon footprint.

 

Why Demand Charge Management with ADR is the Key to Future-Proofing Your Retail Business

As demand charges rise, it’s crucial for retailers to embrace smart, scalable solutions like ADR to manage energy use and curb costs. For small-box retailers, controlling energy consumption during peak periods is vital to maintaining profitability in an increasingly competitive market. Early adoption of ADR positions businesses to better navigate future cost increases and stay ahead of industry trends.

With Demand Charge Management, you can significantly reduce demand charges by preventing energy spikes during critical hours—resulting in lower utility bills and less strain on the grid, all without the need for constant manual adjustments.

Davis Greer, Sr. Energy and Buildings Systems Manager at Dollar General, shares how Demand Charge Management with Phoenix has transformed their approach to energy usage:

"Thanks to Demand Charge Management with Phoenix, we now have real-time insights into our energy usage and can align it with TOU pricing. This has helped us reduce costs during peak times while maintaining a consistent level of comfort in our stores for both customers and staff."

Davis will be speaking at the upcoming EEI event, where he’ll discuss the impact of real-time energy insights on cost savings and operational efficiency.

Take Control of Your Energy Future

If you're looking to protect your bottom line from rising energy costs, managing your demand charges is the first step. Demand Charge Management offers an efficient, cost-effective way to minimize peak demand charges, optimize energy usage, and help your business save money.

Not ready to dive into full Demand Charge Management yet? No problem! You can still benefit from automated demand response—a key tool to start reducing peak energy usage today. Reach out to us for a free consultation to learn how ADR can work for your retail business, helping you reduce costs and improve efficiency without disrupting operations.

By taking control of your energy management strategy, you can ensure that skyrocketing demand charges don’t hurt your profitability or sustainability goals. Let Phoenix Energy Technologies help you get started with smarter, more efficient energy use.

For more information about Demand Charge Management and how these new enhancements can benefit your business, contact us today.

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