Powering Cold Storage: Navigating Energy Costs, Demand, and Reliability

In Episode 2 of Pilot Unplugged: Ask Me Anything, we dive into the cold storage industry and the challenges that come with rising summer energy demand. From managing peak costs to balancing efficiency with reliability and scaling across multiple locations, our experts break down practical strategies to help operators stay in control.

Transcript

Jennifer Ford, Host 0:02

Welcome back to Pilot Unplugged, Ask Me Anything. I'm Jennifer Ford, and I'm really excited for today's episode because we're diving into a topic that doesn't always get the spotlight it deserves, but it plays a huge role in our everyday lives, and that's cold storage. So from food distribution to pharmaceuticals, cold storage facilities are working around the clock 24-7. And when summer hits, energy demand and costs can really spike. So just like last time, we're answering your questions, and today we're focusing specifically on the challenges and opportunities facing cold storage operators across the country. But joining me today are two of our experts in-house who work closely with companies navigating these challenges. Kevin Sanguti, our senior energy advisor here at Pilot Energy. Hey Kevin, thanks for joining us today.

SPEAKER_02 0:56

Thanks, Jennifer. Excited to be here. Cold storage is one of those industries where energy strategy really matters on a day-to-day basis. Swings in the market can have a big impact for operational expenses.

Jennifer Ford, Host 1:09

Thanks, Kevin. And Ricky Hopp, who joined us in episode one, our VP of commercial and industrial sales and marketing. Ricky, thanks for being here.

Ricky Hopp, Pilot Energy Expert 1:19

Yeah, thanks for having me again. Pleasure to be back. Cold storage is a really important topic, especially this time of year. So I'm really glad that we're going to dive into it and see how we can inform the audience and uh hopefully some cold storage operators, how they can prepare for the hot weather and uh managing energy properly.

Jennifer Ford, Host 1:38

Yeah, definitely. So before we dive in, I want to take a quick moment to explain a little bit about who we are here at Pilot Energy, especially for those of you joining us today from outside of the cold storage space or who may not be very familiar with what we do. So here at Pilot Energy, we work with large commercial and industrial organizations, including energy-intensive operations like the cold storage facilities, to help them navigate the complexity of energy markets and make smarter decisions around how they buy and manage energy. So whether that's running competitive procurement event strategies, analyzing utility data, or building strategies to manage peak demand during high impact seasons like summer and it's hot today, our goal here is to help companies stay efficient, resilient, and in control of their energy costs. Anything else you'd like to add, Ricky?

Ricky Hopp, Pilot Energy Expert 2:33

Yeah, no, uh, you said it well. Um, we help a lot of cold storage companies as well as other industrial manufacturers manage their energy RFPs. So we go and do procurement on behalf of the large energy users. Energy is quite variable for a lot of these manufacturers and they have what we call peaky loads, especially in the summer, um, which can have a broad impact on their energy purchasing strategy. So we want to make sure that we're making that as competitive as possible. We're very much focused on helping ensure that cold storage operators have utility invoices that are accurate as well as being optimal.

Jennifer Ford, Host 3:14

Yeah, perfect. Definitely. Okay, so with that, we're gonna jump into question one. And our first question comes from Carlos, Director of Operations in Fresno, California. So Carlos asks as we head into peak summer months, our refrigeration load increases significantly, and we often see spikes, not just in energy usage, but also in demand charges. It's difficult to predict and manage these costs while still maintaining strict temperature requirements. Here's the question: what strategies can cold storage facilities use to better manage peak demand and avoid costly spikes during high temperature periods? Kevin, I really want to call you out on this because back in December, you wrote this awesome blog about cold storage, and it really highlights how much energy these facilities really use that we're just not aware of behind the scenes.

SPEAKER_02 4:10

Yeah, um, that's right, Jennifer. Um Carlos is describing one of the biggest challenges in the cold storage business. Uh, in the summer, it's not just about how much energy you use, but it's also about how when you use it. Utilities often charge based on peak demand. So few hours uh can really drive large portions of your bill. One of the most effective strategies is load shifting. And that means pre-cooling your facility during off-peak hours, typically overnight, so that your refrigeration systems don't have to work as hard during peak daytime hours.

Jennifer Ford, Host 4:44

Okay, so really it's like you're kind of getting ahead of the heat here.

SPEAKER_02 4:48

Exactly. Uh, if you lower your temperature slightly before peak periods, you reduce the need for aggressive cooling later.

Jennifer Ford, Host 4:55

Awesome. Yeah, I totally get that. And Ricky, what else can companies do beyond operational adjustments during this time?

Ricky Hopp, Pilot Energy Expert 5:03

Yeah, Kevin's absolutely right on uh demand shifting or load shifting. But in addition to that, a lot of companies have access to demand management technologies, right? That they're able to monitor in real time and do these micro adjustments that don't impact the actual infrastructure of the facilities because cold storage, it's incredibly important that they're operating and they don't uh have any downtime, right? So things like compressor sequencing or defrost optimizations, these are low-risk ways to be able to improve energy efficiency. Um, and the demands, the real-time demand technologies help them be able to implement that without messing with the overall building infrastructure.

Jennifer Ford, Host 5:48

Also, I know programs like demand response that we have here at Pilot Energy allow companies to temporarily reduce usage during peak times. How can that be an advantage for our cold storage industries when it comes to demand response?

Ricky Hopp, Pilot Energy Expert 6:03

Huge advantage. Demand response is uh one of those programs where most companies looked at it as something to do maybe five years ago. And at the time, it maybe wasn't as compelling for them because if they were able to reduce, they were able to get compensated. But a lot of times they didn't have the technology to be able to make the reductions that were material enough to be able to get paid what they wanted to get paid, and the cost of the peak reduction, if in like PJM markets, if they're in Pennsylvania or Ohio as an example, uh the cost to be able to reduce and what they would get paid wasn't necessarily always worth it. Uh change that to today, capacity costs, which is the main driver of right, uh what you get paid for demand response programs, is 10 times what it used to be. So now companies, if they're able to make even a minor reduction in their peak demand through some of these pro through a demand response program, they're getting paid significantly more.

Jennifer Ford, Host 7:05

So that sounds pretty technical, but it sounds like something everybody should be doing. Is it realistic for most operators?

Ricky Hopp, Pilot Energy Expert 7:13

It's becoming more accessible than it may have been, again, a few years ago, and that's because of the real-time uh technology that companies are able to implement. Um, and again, it's not about making big changes, right, to your systems. It's just very small incremental adjustments that can actually lead to quite material savings. I I mentioned those things like compressor sequencing. Instead of running all your compressors at the exact same time at that fixed max load, you can stage them, you know, have one running full time, then increase and decrease uh your second, your third compressor. That's just one example of ways that you can optimize as opposed to retrofit completely.

Jennifer Ford, Host 7:55

That makes total sense. Anything you'd like to add, Kevin?

SPEAKER_02 7:58

Sure. Um, I would say, you know, understanding your utility rate structure is also really critical. Um, a lot of operators don't realize how much of their bill is driven by demand versus consumption. So that's that's really key. Once you understand that, you know, you can start to figure out which levers to pull.

Jennifer Ford, Host 8:17

Yeah, definitely. Definitely. Good point. So for Carlos, it's really about pre-cooling, load shifting, demand management tools like demand response and understanding rate structures.

SPEAKER_02 8:30

Yeah, that's a that's a great starting point.

Jennifer Ford, Host 8:33

Okay, so we're gonna move on to our next question. This one comes from Emily, VP of facilities in Chicago, Illinois. Emily asks us we're consistently balancing energy efficiency improvements with the need for absolute reliability in our refrigeration systems. Any downtime or temperature deviation can have serious consequences for our products. Her question: How can cold storage operators pursue efficiency and sustainability initiatives without introducing operational risk? So, Ricky, I will start with you on this one.

Ricky Hopp, Pilot Energy Expert 9:07

Yeah, she hit the nail on the head. That is the big challenge, right? You know, cold storage is one of the most critical in industries that essentially create the backbone of our economy, right? From food, refrigeration, making sure things don't spoil, right? And that they have good shelf life. Operationally, that's the most critical thing. And we advise our clients in a very staged methodical approach of energy efficiency and sustainability, and starting with as much low-hanging fruit as possible. Things like how does your insulation look, right? Have you improved uh the insulation around your facility? Things like lighting. Um, some of the cold storage companies we talk with still have traditional lighting that they could improve upon, right? So doing lighting projects, you know, very low risk upgrades first on the efficiency side, and then looking at moving into more of your optimization on your controls and things like that. Next is really, even before going on to the optimization side, is taking a look at your data, right? And understanding how your energy, how it's been progressing, are there any anomalies? From there, it's really understanding the data and taking a look at the data, seeing where is energy being used, where are there opportunities to improve efficiency, are there any outliers, benchmarking the different facilities across each other, right? There's a lot of work that you can do in that space before moving into the bigger, you know, critical infrastructure upgrades or even the demands uh optimization. And that's where I think that we take a realistic approach when working with clients. Um it's a phased approach. We start with again that low-hanging fruit. Um, what are the things that are not going to impact our operations? Because that's the most paramount. And then slowly but surely we start then giving visibility uh to the data through our uh energy management system that we have and our software that shows how they're using energy on a day-to-day basis, finding those outliers, right? And then honing in on what we can do to improve on those outliers that are using too much energy. Um, and then seeing can we adjust this without doing any critical infrastructure upgrades?

Jennifer Ford, Host 11:28

Yeah, definitely. Those are all really good points. Thank you for sharing that. This is really one of my favorite topics because it impacts everybody. Uh, we all go to the grocery store, we don't think about it. It's something we don't think about when we go energy usage. But I feel like behind the scenes, there could be something that could go wrong. Kevin, where do you see these companies sometimes go wrong when it comes to energy and cold storage?

SPEAKER_02 11:56

Yeah, so you know, like Ricky had pointed out, sometimes companies try to jump straight into more complex type products when that may not be what's best for them. In cold storage, it's really about taking a phased approach. I would start with monitoring the data, going back 24 months, 12 to 24 months. So that provides a really good foundation to establish what their trend lines are, what their utility, what their consumption profiles look like. From there, you know, uh basically understand the systems and how those are performing. And then lastly, you know, uh with that foundation in place, we're able to give customers the data and information they need. We're able to also provide data on the energy markets and the signals that sends so that customers can um, you know, make the most informed decision for their facilities.

Jennifer Ford, Host 12:49

Okay, so really I hear data first and then action.

SPEAKER_02 12:54

That's exactly right.

Ricky Hopp, Pilot Energy Expert 12:55

Only thing I'll add around sustainability is that you know a lot of cold storage companies are looking at adjusting their refrigeration, right? Their refrigerants. Um, and that also has impacts on you know reducing ozone layer issues as well as other climate and environmental impacts.

Jennifer Ford, Host 13:16

Yeah, Ricky, that's a really important point. So I think maybe our key takeaways for Emily here would be start with a low-risk efficiency upgrade, build a data-driven understanding of operations, and then take a phased approach, a thoughtful approach. Anything you want to add, Kevin?

SPEAKER_02 13:34

No, I think that covers most of it. You know, it's in this industry, it's not a one size fits all. There are some things that are in common with all of these facilities, understanding your data profile, understanding the trend lines, um, putting the right systems in place. But um I think that pretty much sums it all.

Jennifer Ford, Host 13:50

All right. So our final question for today comes from Jason. He is the senior director of supply chain infrastructure in Atlanta, Georgia. So Jason wrote us and asked, he says, our company operates multiple cold storage facilities across different regions, each with its own utility rates, climate conditions, and operational demands. We're trying to standardize our energy strategy while still accounting for regional differences, especially as we expand. What's the best way to approach energy procurement and efficiency across a distributed cold storage network? This kind of sounds similar to the multi-region when it came to commercial real estate that we talked about in our last episode. So, how does this work with cold storage? Kevin, um, I'll start with you again.

SPEAKER_02 14:42

Great question. We see this a lot with uh companies that have uh scale in this industry. The key thing is balancing centralization versus flexibility. You want centralized visibility, meaning you can see energy usage and costs across your entire portfolio, but you also want uh flexibility to be able to adapt to local local uh market conditions.

Jennifer Ford, Host 15:05

Yeah, so really again, this is not a one-size-fits-all strategy.

SPEAKER_02 15:10

That's exactly right. Yeah, each region uh will have you know different rate structures, weather patterns, uh, along with uh you know different regulatory uh rules and uh an overall different regulatory environment. So procurement strategies need to really be tailored to each customer. What works in one market may not work in another, uh, you know, whether that's uh the pricing structure or you know how utilities charge for demand or what procurement options are available. Uh so it's not about applying one size fits all, like you said. It's about understanding um the nuances in the marketplace and building a strategy that fits each location when put together, constitute a smart uh strategy for your overall portfolio. That's a big part of what I work on uh with clients, helping them navigate these differences, uh, structure procurement in ways that uh that makes sense market by market. When you bring it all together, uh that forms a more uh cohesive portfolio-wide strategy.

Jennifer Ford, Host 16:11

Ricky, I want to touch on efficiency a little bit.

Ricky Hopp, Pilot Energy Expert 16:14

Yeah, efficiency, it's where you can standardize, right? If we talked earlier about that low-hanging fruit and trying to do things that don't impact the operations, at least on the onset. The nice thing is you can find something that works and you start to see incremental improvement, you can scale that across multiple facilities. And that would be my you know way to get to get started here from an efficiency standpoint. Over time, you can always add in more technology and broader changes, but start with one facility. And you know, even though these uh facilities are different, they do share some of the similar mechanics and you can most likely scale across various facilities.

Jennifer Ford, Host 16:51

Awesome. Anything you would like to add, Kevin?

SPEAKER_02 16:55

Um, yeah, I'd add that uh data again is critical here. Uh if you benchmark facilities against each other, um you can identify top performers um and replicate those practices across your um your different facilities, and that's always good.

Jennifer Ford, Host 17:09

So Jason's roadmap here might look like centralized data and visibility, flexibility, region-specific procurement, scalable efficiency initi initiatives. Does that sound about right?

SPEAKER_02 17:21

Yeah, I would say so.

Jennifer Ford, Host 17:22

Okay, well, those are all the questions we had from our viewers today. So this was a really great discussion. Again, one of my favorites, cold storage. And as we're heading into the summer months, these challenges really come into focus. So, Kevin, Ricky, thank y'all both for being here today and for your insights. Really appreciate it.

SPEAKER_02 17:42

Yeah, no, thanks, Jennifer. Always glad to be here and talk about cold storage and anything uh energy related.

Jennifer Ford, Host 17:47

Thank you.

Ricky Hopp, Pilot Energy Expert 17:48

Yeah, this was a fun one. Thank you. And good seeing you, Kevin, and good seeing you again, Jennifer.

Jennifer Ford, Host 17:53

Thanks, guys. And thank you to everyone who joined us today and who submitted questions for this episode of Pilot Unplugged. If you're in the cold storage industry or really any energy intensive industry, we know these challenges are top of mind right now heading into the summer months. So we'll be continuing this series with more industry-specific conversations. And we'll also be featuring some special guests from across different industries. So if you have any questions or you want your industry featured, send them our way. This podcast episode might be ending now, but you can always find us powered online at pilotenergy.com. Until next time, thanks for joining us. I'm Jennifer Ford.