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ENERGY STAR® FOR COMMERCIAL KITCHENS:
HELPING CUSTOMERS MANAGE COSTS
ENERGYSTAR
W\
Buildings with restaurants and other food service operations are very energy intensive, consuming roughly 2.5 times
the energy per square foot as other commercial buildings, or close to 250,000 British thermal units (Btu) of energy
per square foot.1 Energy efficiency program administrators can help these customers rein in operating costs while also
reducing energy use, peak demand, and water use by promoting ENERGY STAR qualified commercial food service (CFS)
equipment and other best practices. Utility cost savings of 10 to 30 percent are achievable without sacrificing service,
quality, style or comfort—all while making significant contributions to a cleaner environment.2 The U.S. Environmental
Protection Agency (EPA) is working with about 50 efficiency program administrators throughout the nation to integrate
ENERGY STAR qualified CFS equipment into their program offerings. EPA is providing this fact sheet to introduce more
program administrators to ENERGY STAR and the savings opportunities in commercial kitchens, as well as to share best
practices for program design, implementation, and evaluation based on the experiences of recent CFS programs.
DELIVERING SOLUTIONS ll\l COMMERCIAL KITCHENS
Promoting the installation of energy-efficient equipment in commercial kitchens is an important part of a comprehensive
CFS program. It saves significant amounts of energy and offers meaningful financial benefits to the establishment.
Utility costs are a major operating expense for the CFS industry, on the level of about one-half to almost parity with
their profit margins—which, for a full service restaurant, is around 5 percent of sales.3 Due to rising energy costs,
CFS customers may be increasingly receptive to program administrator assistance for improving energy efficiency and
reducing related utility bills. And the savings opportunities are significant: as much as 80 percent of the food service
sector's $10 billion annual energy bill is expended on energy that does no useful work and a substantial portion of this
waste is related to equipment inefficiencies.4
ENERGY STAR provides a comprehensive and cost-effective platform for promoting greater equipment efficiency
and related best practices to CFS customers. ENERGY STAR currently identifies efficient products in eight product
categories: hot food holding cabinets, solid door refrigerators and freezers, fryers, steam cookers, ice machines,
commercial ovens, griddles, and dishwashers.
These energy-efficient products offer energy savings of 10 to 65 percent over
standard models, depending upon the product category. Three of the product
categories, commercial dishwashers, ice machines, and steam cookers, also offer
water savings of up to 90 percent over standard models. Three CFS utility programs
have earned ENERGY STAR awards for promoting these energy-saving products and
are showing promising early returns. They include:
Outfitting an entire
commercial kitchen with
a suite of ENERGY STAR
qualified equipment could
save around 300 million Btus
of energy and about $3,600
per year.
California's four investor-owned utilities (lOUs)—Pacific Gas & Electric
Company (PG&E), Southern California Edison (SCE), Southern California Gas
Company (SCG), and San Diego Gas & Electric Company (SDG&E)—offer a
coordinated statewide incentive program with strong early results, achieving annual electric savings of around 20.6
million kilowatt-hours (kWh) and annual natural gas savings of around 526,000 therms.5
The Energy Trust of Oregon's (ETO) CFS program is achieving annual savings of nearly 1.2 million kWh and over
190,000 therms by partnering with dealers that sell CFS equipment directly to restaurants.6
¦ Wisconsin's Focus on Energy offers CFS customers a bonus incentive to encourage the purchase of multiple ENERGY
STAR qualified products and is achieving annual electric savings of nearly 350,000 kWh and annual natural gas
savings of nearly 22,000 therms.7
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PROGRAM DESIGN AND IMPLEMENT ATI OI\l
A key factor in effective program design is understanding the
market barriers to greater adoption of energy-efficient equipment
and developing strategies to overcome these barriers. Common
barriers in the CFS market include:
¦ Hard-to-reach market— The CFS market is highly
fragmented, both in terms of equipment supply channels and end
use sectors.
¦ Lack of readily available supply— CFS equipment
suppliers typically compete on low prices and therefore
stock only a limited supply of energy-efficient products. This
barrier is compounded by customers who make short-term
purchasing decisions due to the need to replace equipment
quickly when it fails.
¦ Incremental costs—ENERGY STAR qualified CFS
equipment is generally more expensive than standard efficiency
equipment and can cost significantly more than refurbished
models sold in the used equipment market.
¦ Lack of knowledge—Equipment suppliers and end users
might not be aware of energy-efficient products, might have
misperceptions about tradeoffs between energy efficiency and
performance, or both.
The following sections describe the CFS equipment market in
further detail and discuss program strategies for addressing the
key barriers listed above.
Understanding and Engaging the CFS Market
Foodservice establishments include commercial and noncommercial
entities, diverse business sectors, and account for approximately
$500 billion in expenditures for food consumed away from the home
(e.g., meals and snacks for on-premise or immediate consumption).
Commercial establishments—including full service restaurants, fast
food outlets, caterers, some cafeterias, lodging facilities, and retail
stores—account for about 85 percent of this total with full-service
restaurants and fast food restaurants representing the two largest
industry segments, accounting for 77 percent of expenditures for
food consumed away from the home. Noncommercial foodservice
operators—those that prepare and serve food as an adjunct service
in institutional settings (e.g., schools, nursing homes, childcare
centers, and hospitals)—account for the remaining 15 percent.8
In addition to the diverse business sectors that comprise the
foodservice industry, the CFS equipment market is complicated by
multiple equipment distribution channels including:
¦ Dealers that primarily sell to individual restaurants.
¦ Distributors that primarily supply bulk quantities to equipment
dealers and sell commodity equipment (e.g., ice machines,
counter-top fryers) directly to end users.
Breakdown of Consumer Expenditures for Food
Consumed Away from Home in 2005
Other Commercial
Establishments
• 8% of market
• $39.7 billion in 2005
• Includes:
- Caterers
- Some cafeterias
- Lodging facilities
- Retail stores
Total $496 Billion
Noncommercial
Establishments
• 15% of market
• $74.4 billion in 2005
• Includes:
- Schools
- Nursing homes
- Childcare centers
- Hospitals
Full-Service and Fast Food
Commercial Establishments
• 77% of market
• $381.9 billion in 2005
Source: Adapted from U.S. Department of Agriculture Economic Research
Service, Briefing Room: Food Marketing System in the United States.
¦ Manufacturers that sell through manufacturer representatives
(reps) but may also sell directly to large end users such as
national restaurant chains.
¦ Consultants that assist in either designing new or renovating
existing commercial kitchens, typically working with restaurant
chains, hotels, hospitals, and universities.
(Additional information on supply channel actors and strategies for
influencing them can be found in the text box on page 3).
Due to the complexity of the CFS market and potential for
widespread variability between service territories, program
administrators should consider conducting a market assessment
to: 1) understand the major sectors and primary distribution
channels influencing the CFS equipment market in their territory,
2) develop estimates of likely program uptake for each sector
ITW Food Equipment Group
2008 and 2009 ENERGY STAR Partner of the Year, ITW
Food Equipment Group (ITW FEG)—the parent organization
of independent companies such as Hobart, Stero, Vulcan,
Traulsen, and Wittco—understands the importance of
supporting customers in their drive to cut costs, use less
water and consume less electricity, and has responded by
offering 381 ENERGY STAR qualified CFS products.
"ENERGY STAR plays an important role in helping
foodservice operators and food retailers design a
sustainable kitchen that's good for the environment and
good for business in terms of efficiency, productivity
and quality...Our partnership with ENERGY STAR
enables us to emphasize the value of selecting
equipment engineered for high efficiency and low water
consumption."
—John McDonough, President of ITW FEG
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An ENERGY STAR qualified commercial refrigerator can save
a restaurant around $200 on energy costs per year. This
may not seem like much until one considers the slim profit
margins in the restaurant industry. If a restaurant operates
with a profit margin of around 5 percent (the industry
average), it will need to make roughly $4,000 in sales to
earn $200 in profit.
taking into account the uniqueness of each sector (e.g., while
restaurants are often the largest segment, they are often the
hardest segment to influence), and 3) establish program baseline
conditions (e.g., what is the current market share for an efficient
product, and what is the best estimate of market share over time
absent a program). See related discussion under Measurement and
Verification, page 7.
Another key best practice is to engage equipment suppliers
and other key stakeholders, such as large and small restaurant
customers and their trade associations, during program design.
Engaging stakeholders early in the planning process can help
program administrators better understand stakeholder business
models and gauge receptivity to potential education, marketing,
and incentive strategies.
Continuing this dialogue during program launch, particularly
with supply-side market actors, is essential to ensuring that
manufacturer reps, distributors, dealers, and businesses are
familiar with program incentives, policies and procedures, and are
able to effectively communicate the key benefits and features
of qualified energy-efficient equipment to their customers.
During these meetings, it is important to communicate both the
mechanics of how the CFS program works and the business
benefits of program participation.
Improving Availability of ENERGY STAR0
Qualified Equipment
In the retrofit market, purchasing often occurs when existing
equipment fails, and the top priority is getting new equipment
online quickly. Decisions on product selection and purchase are
usually driven by product availability, price, and advice from the
equipment supplier. Unfortunately, many suppliers do not stock
or promote efficient equipment due to price premiums that range
from 10 to 85 percent, depending on product category.
The following are important strategies for motivating suppliers to
sell and stock ENERGY STAR qualified equipment:
Make the business case-It is important to educate suppliers on
the value proposition for promoting ENERGY STAR qualified CFS
equipment to their customers. While efficient equipment may have
Supply Channel Actors
Dealers—Dealers primarily sell to individual restaurants, which is often the most difficult market to reach. Smaller dealers may join
buying groups so they can compete more effectively with larger dealers. Many dealers display their products in showrooms and tend
to stock lower-priced, popular models that are usually not energy-efficient. A dealer's main objective is usually to sell the products
they have on hand, and they are generally more interested in attracting customers with low prices rather than emphasizing the overall
value of higher-end products (e.g., lifetime cost savings). Given that many manufacturers offer sales incentives to move lower-end
models, dealer incentives can be an effective strategy to promote stocking and sales of energy-efficient equipment.
Distributors—Distributors primarily supply bulk quantities of equipment to dealers and sell commodity equipment (e.g., ice machines,
fryers) directly to end users. Since distributors usually supply dealers, developing a good working relationship with distributors helps
funnel energy-efficient CFS products into dealer showrooms. In addition, some restaurant food distributors sell CFS equipment and
should also receive program outreach.
Manufacturers and Reps—CFS equipment manufacturers generally sell through product reps, although manufacturers may also
sell directly to large end users such as national restaurant chains. Though all supply channels gravitate toward inexpensive,
fast-moving pieces of equipment, a key value proposition for engaging reps is the up-sell potential of high-value, high-efficiency
equipment. Sales of high-quality products earn reps a higher commission and generate long-term value for the customer, often
leading to repeat business.
Design Consultants—Design consultants assist in the planning and design of new or renovated commercial kitchens, typically working
with large or chain-owned restaurants, hotels, universities, and hospitals. Conducting targeted outreach to design consultants helps
to ensure that energy- and water-efficient CFS equipment is considered in these types of projects. Design consultants are typically
focused on the overall design and aesthetics of the space and controlling project costs, and back-of-the-house equipment is often a
low priority. In addition, they often have established relationships with buying groups and may receive incentives for selling lower-end
equipment. Equipment quality and performance are key selling points for engaging design consultants.
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a higher first cost, it costs less to operate. With today's rising
energy costs, efficient equipment will continue delivering dividends
through lower utility bills for years to come. It is also important to
highlight non-energy benefits of efficient products such as water
savings, reduced noise, reduced waste heat, and other quality
and performance features. Businesses that can effectively up-sell
higher-end equipment can increase their bottom line.
Sales incentives—Upstream incentives, including salesperson
incentives or "spiffs," can be effective at motivating equipment
suppliers to promote the multiple benefits of energy-efficient
products, rather than steering customers to low-cost products,
which is the norm. Puget Sound Energy (PSE) offers a $30
"spiff" for each completed incentive application submitted by an
equipment supplier; San Diego Gas & Electric Company (SDG&E)
offers a $25 spiff.
Program Highlight
Puget Sound Energy's $30 spiff rewards equipment suppliers
for submitting completed incentive applications to the utility
for processing on behalf of the customer. The supplier discounts
the purchase price by the amount of PSE's customer rebate,
so the customer receives an incentive at the point-of-purchase.
Suppliers are reimbursed for the amount of the customer
rebate, and get the $30 reward for their time and effort.
This approach has led to higher turn-in rates for incentive
applications, and fewer paperwork errors.
Provide program information-Providing easy access to up-
to-date information about program offerings and procedures
is essential to engaging and maintaining effective trade ally
relationships. Initial kick-off workshops provide an opportunity to
discuss the benefits of ENERGY STAR qualified CFS equipment
and to inform participants of program requirements and incentive
offerings. Conducting regular visits to trade ally showrooms/
offices to discuss the program and distribute educational
literature, point-of-purchase marketing materials, and incentive
applications are also highly effective strategies for keeping
trade allies informed. Other best practices include establishing a
dedicated Web site and distributing electronic newsletters to keep
equipment suppliers updated on program activities.
Offering Customer Incentives to Overcome
First-Cost Barriers
The incremental cost of some ENERGY STAR qualified equipment
can be a significant barrier to purchasing products. In general,
the incremental cost is highest for fryers and hot food holding
cabinets; moderately high for commercial dishwashers.
refrigerators and freezers, and ice machines; and lowest for
steam cookers.
Equipment rebates—To overcome the significant barrier of
incremental cost, the majority of CFS programs offer prescriptive
rebates for the purchase of qualified equipment. Program
administrators typically set incentive levels at 50 percent or less
of the incremental cost of purchasing the ENERGY STAR qualified
model versus a standard efficiency model. There is, however, no set
formula for success when choosing equipment rebate levels, and
CFS programs are achieving success with a range of levels. As of
August 2008, the following incentive ranges were available from the
online ENERGY STAR CFS equipment incentive finder tool.
Table 1: Range of Incentives Offered by Program
Sponsors (as of 5/09)*
Product
Incentive Range
Fryers
$150—$1,000
Hot food holding cabinets
$200-$500
Refrigerators and freezers
$50-$500
Steam cookers
$200-$1,500
Ice machines
$50-$600
Commercial dishwashers
$200-$2,000
Some programs, like Wisconsin's Focus on Energy, promote
comprehensive kitchen efficiency upgrades by offering bonus
incentives for the purchase of two or more pieces of qualified
equipment. The customer is eligible for the usual per-unit
equipment incentive, plus an additional $100 if they purchase two
or more pieces of qualifying equipment, or $300 if they purchase
three or more pieces of eligible equipment at a time. This strategy
can be particularly effective when targeting commercial kitchen
renovation and new construction opportunities.
The following are common best practices related to incentives:
¦ Tie incentive levels to ENERGY STAR specifications whenever
possible to help customers easily identify products that qualify
for rebates and to take advantage of the growing consumer
awareness, market momentum, and supporting infrastructure
provided by the program.
¦ Keep incentive application processes simple and straightforward.
¦ Maintain relatively consistent incentive levels from year to year,
trending downward as market penetration increases.
¦ Ensure suppliers and buyers have easy access to a list of
qualified models and related incentive levels. ENERGY STAR
qualified product lists are available on each of the specific
Note: data include some programs offering incentives for equipment achieving higher efficiency levels than ENERGY STAR.
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product pages at www.energystar.gov/cfs. The California lOUs,
which offer incentives for CFS equipment beyond ENERGY STAR
qualified products, provide an online list of qualified equipment
through PG&E's Food Service Technology Center (FSTC).
¦ Promote program and incentives through the online ENERGY
STAR CFS equipment incentive finder tool [www.energystar.gov/
CFSrebate _ locator).
¦ Educate customer call centers about program offerings,
procedures, and where to direct customers for additional
information.
Audits—Offering free or reduced-cost audits for commercial kitchen
facilities is another form of incentive that can be useful for helping
customers, particularly regional and national franchise chains,
identify and correct operational inefficiencies, and for encouraging
customers to take advantage of program rebate offerings when
equipment purchases are needed. Customers are more likely to make
smart decisions about CFS appliances if they have time to research
options and secure the necessary capital to purchase new
equipment. Many utilities offer audits to national restaurant chains
as part of the menu of services they receive as managed accounts,
and offer a higher level of support in helping such customers specify
efficient equipment options for their facilities.
Audits can be offered
for a nominal fee or at
no cost to the customer.
Some programs make
a free audit contingent
upon implementation
of a minimum number
of energy- and water-
saving recommendations.
Immediate energy savings
benefits can be achieved
by conducting direct
installation of low-cost
measures (e.g., high-
efficiency pre-rinse spray
valves, gaskets on refrigeration equipment, or compact fluorescent
light bulbs).
Audits help to develop the customer relationship, increasing
the likelihood that the customer will take advantage of program
offerings when it comes time to replace equipment or conduct
comprehensive facility upgrades. To ensure that the program
is viewed as a credible resource, it is critical that auditors be
knowledgeable about the unique challenges and business realities
of CFS operations, and deliver realistic recommendations. A recent
evaluation of the PG&E's FSTC found that in order to deliver the
most value to food service operators, audit reports should include
detailed information on costs and savings associated with the
recommended improvements.3
Educating the Marketplace
Lack of knowledge about efficiency opportunities among end
users and equipment suppliers, as well as misperceptions about
tradeoffs between efficiency and performance, continue to inhibit
greater adoption of energy-efficient equipment in the CFS market,
despite improvements in this area since EPA introduced ENERGY
STAR specifications for a variety of CFS products—as of May
2009, there are more than 98 ENERGY STAR CFS manufacturing
partners and 2,600 qualified CFS products on the market.
The following strategies have been effective for getting
information to end users to overcome these barriers:
Target marketing—Program information needs to be timely and
relevant in order to motivate consumers to take action. For this
reason, program administrators often develop targeted marketing
strategies and messaging for each major market segment they are
trying to reach—restaurants, hotels, schools, hospitals, etc.—taking
into account business cycles and major industry events in timing
promotions and outreach.
Training and equipment demos-Equipment suppliers may have
little experience selling energy-efficient equipment, and they and
their customers may be confused by different efficiency claims
in the market or think energy efficiency comes with a tradeoff in
productivity or product features. Equipment demonstrations and
hands-on training can be particularly effective for persuading
consumers that ENERGY STAR qualified CFS equipment comes
with no tradeoffs in features or performance. Some programs
have dedicated demonstration facilities for this purpose,
while others work to assist suppliers in developing their own
equipment demonstrations.
¦ PG&E's FSTC evaluation found that training seminars were a
good way to build relationships with food service operators,
leading to energy savings impacts over time.10
¦ New York State Energy Research and Development Authority's
(NYSERDA) Small Commercial Kitchen Pilot successfully used
cooperative marketing dollars to assist suppliers in developing
their own equipment demonstrations (see text box on page 6).
¦ ETO gives an annual 45 minute sales training to CFS dealers
to ensure sales staff understand the energy, monetary, and
ancillary benefits of ENERGY STAR qualified CFS equipment.
Cooperative marketing—CFS programs create opportunities
for cooperative advertising, showroom promotions and other
collaborative marketing efforts with equipment suppliers. Programs
often provide collateral marketing materials such as point-of-
purchase banners, tags or stickers to identify rebate-eligible
equipment, and informational flyers and brochures. Providing
cooperative advertising funds is also an effective approach as
it allows businesses the flexibility to market and advertise their
ENERGY STAR qualified products in a way that is best aligned with
their business model. For example, equipment suppliers that join
Program Highlight
To effectively serve the diverse
set of CFS market participants,
the programs sponsored by the
California lOUs offer an array of
services, including site audits,
equipment testing, and new
restaurant plan review, as well
as regular energy efficiency
seminars for food service
professionals.
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Program Highlight
ETO developed a highly successful document modeled
after CFS dealers' handbooks (folders with equipment
specification and sell sheets) that dealers take with
them on the road. The handbooks contain all the relevant
information that a dealer would need to sell ENERGY STAR
equipment, such as:
• What is energy efficiency
• What is ENERGY STAR
• List of incentives available in Oregon
• A territory map showing where incentives are available
• Qualified product lists
• Tables listing the energy, water, and monetary savings
for energy-efficient equipment (e.g., fryers, ice
machines, refrigerators)
• Ancillary benefits of ENERGY STAR equipment
• Incentive application forms
Alliant Energy's trade ally network can be reimbursed for up to 50
percent of the cost of cooperative advertising, subject to utility pre-
approval and other minimum requirements. For OFS products that
save energy and water—commercial dishwashers, ice machines,
and steam cookers—a growing number of energy and water utilities
are pursuing opportunities for cooperative marketing, joint program
implementation, or both.
Trade association outreach-OFS programs can leverage
existing trade association networks to raise awareness of
program opportunities and boost participation by customers and
suppliers. Program administrators should consider joining the local
restaurant association and trade associations serving food service
equipment suppliers, as well as state restaurant associations.
Membership in these organizations will keep program managers
abreast of developments in the industry and alert them to outreach
opportunities available through trade shows, meetings, and monthly
publications. Informational seminars, industry conferences, and
well-crafted articles are excellent ways of reaching service decision-
makers. At these events, program administrators can also conduct
informational seminars and display information and materials to
publicize OFS program offerings.
Communications and outreach-A robust communications
plan utilizing multiple channels including newsletters,
targeted mailings, personal contact, seminars, and electronic
communications increases awareness of program opportunities.
Personal contact (i.e., "face time") is extremely important for
implementing a successful program. Energy efficiency is a new
concept in the OFS market and supply channel actors often need
additional support from utilities before stocking, promoting, and
selling energy-efficient OFS equipment. Program administrators
can contact ENERGY STAR for assistance in identifying trade
allies and developing outreach materials.
Program Highlights
1 Center Point Energy (MN) uses its Commercial Food
Service Learning Center in Minnesota to provide hands-
on education to trade allies about the benefits of high-
efficiency equipment. CenterPoint is also a member of
several food service trade associations and regularly attends
the Upper Midwest Restaurant Show.
2i Distributor Saratoga Restaurant Equipment Sales (SRES)
leveraged cooperative marketing opportunities through
NYSERDA's Small Commercial Kitchen Pilot and increased
sales of qualified equipment by 50 to 900%, depending
on the product. Promotional efforts included a showroom
event and equipment demonstration, hang tags on qualified
equipment, and direct mail. SRES also streamlined the
application process by filling out rebate paperwork on the
customer's behalf.
3) As part of their program outreach activities, the four
California lOUs attend the annual Western Food Service and
Hospitality Expo in Los Angeles. The show is a great way for
California program sponsors to engage with trade allies and
to reach their key audience: restaurants.
Motivating Behavior Change and Continuous Energy
Performance Improvement
In addition to purchasing energy and water efficient equipment,
there are a number of operational best practices that program
administrators can share with food service operators. The
ENERGY STAR Restaurant Guide provides both short- and long-
term recommendations for saving energy in commercial kitchens,
equipment use and maintenance tips, and general energy savings
tips, in addition to outlining the benefits of energy-efficient
equipment installation. Program administrators can use this guide
as part of education efforts with commercial kitchen customers
to promote additional savings. EPA's Portfolio Manager tool can
also be used to obtain a weather-normalized energy performance
benchmarks for buildings, assisting food service operators in
tracking their building's energy use and reducing it over time.
EPA also works cooperatively with the Consortium for Energy
Efficiency (CEE) Commercial Kitchens Initiative. CEE is a nonprofit
corporation whose membership includes utility, state, and
nonprofit administrators of energy efficiency programming. The
goal of the initiative is to define a high performance commercial
kitchen package that CEE members can deliver to customers in
targeted CFS sectors. A bundled whole-kitchen approach may be
particularly appropriate for new construction or major renovation
projects. For more information, please visit: www.cee1.org/com/
com-kit/com-kit-main.php3
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Program Highlight
PG&E has developed a Food Service Edition of the Smart
Business Rebate Booklet identifying over $6,000 in rebates
for the foodservice industry. The booklet provides
information on nearly two dozen ways that PGSE can help
customers save energy in commercial kitchens. The booklet
tells customers how to apply for rebates, how to access
education and training through PGSE's Food Service
Technology Center, and how to
develop an energy management
plan using PGSE's online tool,
SmartEnergy AnalyzerTM.
Smart Business
Rebate Booklet
MEASUREMENT AND VERIFICATION
Measurement and verification (MSV) are central to the success
of energy efficiency programs, and are used to assess the market
during program design, monitor program performance during
program implementation, validate program impacts, and justify
continued investment in a program.
During the program planning and design phase it is important to
establish a baseline and capture important data before it is lost.
Baseline Assessment
During the program planning process, it is useful to develop a baseline
market assessment of the energy savings potential from commercial
kitchens. The baseline will allowprogram managers to set realistc
savings goals and design programs that are well-suited for the target
market. Understanding market potential and the market penetration
of energy-efficient CFS equipment is well worth the effort providing
valuable insights into how the program should be delivered andwhat
incentive levels would be cost-effective and successful at moving
the market.
Many program administrators quantify kWh savings potential
by customer segment. Some market assessments employa
survey process to develop baseline assumptions. At a minimum,
a market assessment will identify the number of independently
own ed a nd fra nch ised resta uran ts, h osp ita lity businesses,
and large institutional users of CFS equipment (e.g., hospitals,
schools, prisons) within the service territory, and provide general
information on the baseline equipment installed in such facilities.
Growth projections for key end-use sectors and annual run time for
qualified equipment are also useful metrics to include.
Program Tracking
Developing and maintaining a program tracking system is
important for measuring program progress and tracking energy
savings. Program administrators have found the following
indicators useful in tracking program performance over
time: energy savings (kWh and kW) from approved incentive
applications; level of rebate activity by product type; level of
rebate activity by customer type (restaurant, hospitality, etc.);
trade ally participation; and program costs.
Incentive applications are an important source of information for
collecting basic information not only to justify rebate payment, but
also to inform future program impact evaluation. The following are
commonly required inputs:
Customer contact
inform at icn
Type of facility
(Test air ant, hote I, etc.
Equprnent type
Manufacturer
fYbde I number
Equipment cost
Number of qualified units installed
New installation cr retrofit
Proof of purchase
finclud ing serial number)
Trade ally contact inform at icn
fif trade allyincent wes are offered)
It is important to keep in mindthesignificant lag time
between implementing a program and achieving program
results. According to PGSE, CFS incentive programs
take approximately 12 months to demonstrate changes in
equipment stocking, selling, and purchasing behavior.
Process and Impact Evaluation
CFS programs are typically subject to two types of evaluations:
process evaluation and impact evaluation. Process evaluations
review program design and implementation to assess what
elements of the program are working well and identify
opportunities for improvement. Impact evaluations estimate the
energy and demand savings that directly result from a program.
The Model Energy Efficiency Program Impact Evaluation Guide,
a resource of the National Action Plan for Energy Efficiency, is a
useful resource for learning more and is available at www.epd.Qov/
cleanenerQyldocuments Evaluation _ gutde.pdi
PROGRAM COST EFFECTIVENESS
ENERGY STAR qualified CFS equipment provides substantial savings
opportunities for program administrators. While CFS programscan
be operational within a two to four month period given the diffuse
nature of the distribution and purchasing patterns associated with this
equipment seeing significant progress in terms of program participation
may take as long as one year.
Measure-level cost-effectiveness analysis, conducted during
program planning, requires data on incremental measurecost,
per-unit savings (kW, kWh, therms), annual hours of operation,
and measure life. Program administrators typically base hours of
operation assumptions on the type of facility where the equipment
is installed (e.g., full service restaurant, quick sen/ice restaurant,
hospital, school). As refrigeration measures are weather-sensitive,
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Figure 1: Example of Co-Branded Marketing Document
savings assumptions may vary based on the climate zone where
the equipment is installed.
Measure-level data are available from a number of public
sources, including the following:
¦ The Database for Energy-efficient Resources (DEER),
maintained by the California Energy Commission
and California Public Utilities Commission:
www.energy.ca.gov/deer
¦ Program work papers filed by the California lOUs, available
through the Energy Efficiency Groupware Application:
httpj/eega2006. cpuc. ca.goi/
¦ PG&E's FSTC Web site: www.fishnick.com
¦ NYSERDA also has a Deemed Savings Database, available by
request
Table 2 presents program administrator cost (PAC) effectiveness
results for three existing programs that provide incentives for
ENERGY STAR qualified CFS equipment. These calculations only
include the equipment incentive and administrative costs, but are
estimated for the useful life of the equipment and discounted to
net present value using 7 and 9 percent discount rates.
Program administrator costs are different, and usually lower
than, total resource cost (TRC), which include the end users'
marginal cost for purchasing energy-efficient equipment. For
example, PG&E's PAC cost per kWh is estimated at $0.04
for both 7 and 9 percent discount rates; TRC is estimated
Table 2: Estimated Program Cost Effectiveness for Three Utilities*
Pacific Gas Si Electric Company11
(PG&E)
Southern Minnesota Municipal
Power Agency12
(SMMPA)
Energy Trust of Oregon13
(ETO)
Implementation Period (years)
2.75
2.00
4.00
Implementation Dates
01/06 to 09/08
05/06 to 05/09
05/05 to 04/09
Total Rebated Units
3,026
60
4,757
Gas
858
7
2,601*
Electric
2,168
53
2,156
Total Therms Saved
490,625
1,402
458,970
Total KWh Saved
13.3 million
183,147
3.4 million
Levelized CCE - Natural Gas ($/Therm)°
$1.06-1.18
$1.54 - 1.70*
$0.44- 0.47*'*
Levelized CCE - Electricity ($/l
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between SO. 12 and 50.13pet kV\h for the same disccunt r3tes
(9 and 11 present res pective ly). 11 The difference bet ween these
two estimates is the end users' aided costs for purchasing the
equipment. Utilities should analyze both P AC ard TRC v
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¦ ENERGY STAR for Restaurants:
www.energystar.gov/restaurants
¦ ENERGY STAR Purchasing and Procurement with Product Savings
C a leu la to r s: www. energy star, gov/purchasing
¦ ENERGY STAR Small Business Network:
www.energystar.gov/smallbiz
¦ C E E Co mmercia I Kitche ns I nitiative: www.cee 1. org!com/corn-kit/
com-kit-main.php3
¦ PG&E's FSTC: www.fishnick.com
¦ GasNetworks: www.gasnetworks.com/efficiency/pdf/Fryer_
Reba te_Form_07_08.pdf
¦ Green Restaurant Association: www.dinegreen.com
¦ Natio na I Re stau ra nt A sso ciatio n: www.restaurant. org
¦ National Restaurant Association Conserve Initiative:
www. conserve.restaurant, org
¦ North American Association of Food Equipment Manufacturers
(NAFEM): www.nafem.org
PROGRAMS PROMOTING ENERGY STAR
QUALIFIED CFS EQUIPMENT
Selected efficiency programs offering rebates for ENERGY STAR
qualified CFS equipment include:
¦ Avista Utilities: www.avistautilities.com/business/rebates/
WashingtonJdaho/Pages/incen tive_ 7. aspx
¦ The Energy Trust of Oregon: www.energytrust.org/
bui/dingefficiency/restaurants.htmi
¦ MidAmerican Energy: www.midamericanenergy.com/kitchen
¦ New York State (NYSERDA): www.nyserda. org/Commercial_
Industrial/CommercialKitchens/default.asp
¦ Pacific Gas & Electric Company: www.pge.com/mybusiness/
energysa vingsreba tes/incentivesbyindustry/hospitality
¦ Puget Sound Energy: www.pse.com/solutions/forbusiness/pages/
comRebates.aspx?tab=4&chapter= 4
¦ San Diego Gas & Electric Company: www.sdge.com/foodservice
¦ Southern California Edison: www.sce.com/RebatesandSavings/
Sma/IBusiness/ExpressEfficiency/FoodServiceEquipment
¦ Southern Minnesota Municipal Power Agency (SMMPA): www.
smmpa. org/members. asp?u tillty=59&service=326
¦ Wisconsin's Focus on Energy: www.focusonenergy.com/
foodserviceincentives
SOURCES
1 Consortium for Energy Efficiency. Commercial Kitchens Fact
Sheet. Available at: www.ceef.org/resrc/facts/comkit-fx.pdf
2 PG&E Food Service Technology Center.
3 National Restaurant Association (2008). 2007/2008 Restaurant
Industry Operations Report, as cited in National Restaurant
Association, 2008 Restaurant Industry Forecast.
4 PG&E Food Service Technology Center.
5 California Public Utilities Commission (CPUC) (2008). Energy
Efficiency Groupware Application, 4th Quarter 2007 E3
Calculators. Available at: http://eega2006.cpuc.ca.gov
6 Personal communication. Energy Trust of Oregon, July 9, 2008.
7 Personal communication, Wisconsin's Focus on Energy,
July 16, 2008.
8 U.S. Department of Agriculture Economic Research Service.
Briefing Room: Food Marketing System in the United States.
Available at: www.ers.usda.gov/Briefing/FoodMarke ting System/
foodservice. htm
9 PA Consulting Group (2008). Pacific Gas & Electric: Process
Evaluation and Strategic Assessment of the Food Service
Technology Center. Available at: www.calmac.org/publications/PGE_
FSTC _ Eva! _ _ Report _ - _ Final _ Feb _14 _ 2008.pdf
10 PA Consulting Group (2008). Pacific Gas & Electric: Process
Evaluation and Strategic Assessment of the Food Service
Technology Center. Available at: www.calmac.org/publications/
PGE _ FSTC _ Eva! _ _ Report _ - _ Final _ Feb _ 14 _ 2008.pdf
11 Pacific Gas and Electric Company. E-mail communication and
data sharing, January 2009.
12 Southern Minnesota Municipal Power Agency. E-mail
communication and data sharing, April 2009.
13 Energy Trust of Oregon. E-mail communication and data sharing,
April 2009.
ENERGY STAR0, a program sponsored by the U.S. EPA and DOE, helps us all
save money and protect our environment through energy-efficient products and
practices. Learn more. Visit www.energystar.gov.
ENERGY STAR
June 30, 2009
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