Energy Central Power Perspectives: New York Point of Sale Foodservice Program: Conversation with AESP’s ‘Outstanding Achievement in Gas Energy Efficiency Program Design and Implementation'
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- May 15, 2019 1:00 pm GMTMay 4, 2019 11:40 pm GMT
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The Association of Energy Services Professionals (AESP) recently announced the winners of their annual awards honoring outstanding achievement across the industry. One of those winners was the New York Point of Sale Foodservice Program from National Grid and Energy Solutions.
This project saw the launch of a pilot in 2017 that partnered with commercial foodservice equipment dealers to offer incentives to make energy efficient purchases at the point of sale. After the 18-month pilot, the project reached 188% of their gas saving goals-- proving the success possible from such initiatives.
To learn more about this great success, I was able to interview Charlie Taylor from Energy Solutions and Janet Roods and Renee Devine from National Grid:
Matt Chester: Congratulations on the recognition and reward you received for the New York Point of Sale Foodservice Program. To start, can you give a background of who you are, what this program is, how it originated, and what problems and benchmarks it was looking to solve?
Energy Solutions: Thanks Matt, it’s an honor to be recognized alongside other industry-leading initiatives. My name is Charlie Taylor and I am a Project Manager with Energy Solutions, a clean energy consulting firm focused on high-impact, market-based energy, carbon, and water management solutions to our clients. We’ve been designing and implementing energy efficiency programs focused on equipment distributors since 1998 and have built a successful partnership with National Grid since this launch of this initiative.
National Grid: The National Grid Team is Renee Devine, Manager, C&I Energy Efficiency Program Execution for NY; Janet Roods, Lead Program Manger C&I Gas UNY; Michelle Baker, Lead Program Manager UNY, C&I Electric; Rosa Pena, Program Manager C&I Gas DNY; and Amy Dickerson, Lead Engineer, Technical Policy NY. National Grid is one of the largest investor-owned energy companies in the world – covering New York, Massachusetts, Rhode Island and the U.K. We are committed to delivering safe and reliable energy to the customers and communities we serve. Every day we work with stakeholders to promote the development and implementation of sustainable, innovative and affordable energy solutions.
ES: The National Grid New York Point-of-Sale Foodservice Program partners with foodservice equipment dealers to offer energy efficiency incentives for high-efficiency commercial kitchen equipment directly off the purchase price to commercial National Grid New York customers. The incentive is applied instantly on the customer’s invoice as a “point-of-sale” or “midstream” incentive so it is great way to ensure customers are able to compare equipment pricing including the incentive and make the right purchase for their business.
National Grid offers point-of-sale incentives on other items including residential lighting, thermostats, and other connected devices for homes. The team identified commercial foodservice equipment as another opportunity to create significant energy savings for their customers while offering a streamlined incentive application process.
The initiative initially launched as a pilot, with implementation partner Energy Solutions, in January of 2017. The pilot started with just natural gas cooking equipment. It has since expanded to a full program offering including a comprehensive suite of natural gas and electric equipment.
The main barriers the team was looking to address were:
- Local equipment dealers were not stocking high-efficiency equipment in their stores due to the higher up-front costs to customers;
- Low customer awareness of the existing mail-in rebate program for foodservice equipment; and
- Misconceptions around the performance of high-efficiency models not performing as well as standard-efficiency equipment.
The goals of the pilot were to:
- Show an increase in stocking and sales of high-efficiency equipment among participating equipment dealers;
- Increase customer awareness and prove the point-of-sale model can work in the New York market; and
- Increase customer and equipment dealer satisfaction.
MC: Why was foodservice equipment specifically chosen as the target for this. Is there a gap in efficiency of foodservice since most utility efficiency programs focus on residential programs? Or did the larger energy requirements of commercial foodservice equipment open up the ability to tackle a greater scale of energy savings?
ES: There were several reasons to focus specifically on foodservice equipment for this first point-of-sale program pilot. Commercial foodservice establishments are some of the most energy intensive buildings on the grid so even marginal increases in efficiency can lead to big energy savings. Independent foodservice operators can operate on very thin margins so they are extra sensitive to the up-front costs of energy efficiency investments. What they might not realize is that by purchasing cheaper, less efficient equipment, they are often paying thousands of dollars more per year in energy costs than if they had invested in high-efficiency alternatives. A point-of-sale incentive can level the playing field a bit on pricing and shorten the payback period of investing in high-efficiency equipment.
The foodservice equipment dealer community is also a prime market for a program like this because they often work directly with their customers and can explain the benefits of purchasing high-efficiency equipment while also making the decision to keep this equipment in stock and available to their customers. Programs like this do a great job at aligning everyone’s incentives so the end result is vastly increased program participation and more purchases of high-efficiency equipment.
MC: What was the main driver of success for this program. Did purchasers of the foodservice equipment not have a knowledge about the potential energy savings and this worked to put those numbers in front of them, or is the capital investment needed for higher efficiency equipment what scares them off so incentives are needed to nudge them in the right direction?
ES: Overall, we found that equipment dealers were not stocking a lot of high-efficiency equipment before this program due to the higher price. This made it challenging for customers to access it even if they went out of their way to request it from their dealer. In a replacement-on-burnout situation, the customer generally will want whatever equipment is readily available in stock so they can get back to business as usual. They often can’t wait two weeks for the equipment to be ordered and shipped to them. That led to a lot of inefficient equipment being installed in customers’ businesses.
Energy Solutions was able to leverage experience implementing midstream programs in other parts of the country to get a quick launch in this pilot utilizing existing relationships with key manufacturers to access their dealer networks. We have an easy-to-use online application system that allows participating dealers to track their incentivized sales.
The streamlined process to participate and the in-depth sales trainings conducted by the program team led to dramatic changes in stocking and upselling behaviors among participants. A third-party survey of participating dealers early in the pilot found that 80% of them did not stock and sell any high-efficiency models before the pilot but all had reported increases and sold between 25% and 90% high-efficiency models of qualifying equipment types since enrolling.
The combination of these led to over 800 units of high-efficiency equipment sold to over 500 National Grid customers in New York, yielding 400,000 annual therms of natural gas savings during the duration of the pilot and the program continues to grow year-over-year
MC: In this pilot program, customers obviously enjoy the benefits of more efficient equipment with cost incentives and the foodservice equipment manufacturers benefit from increased sales, but what is the motivation for National Grid to push this program and see it become a success?
NG: National Grid is always trying to find better ways to deliver value to our customers. When they stay in business, our communities are more vibrant, there are more jobs and we all win. The instant rebate model is a different delivery system, it’s easier for customers to see immediate value and it aligns nicely with New York State’s Reforming the Energy Vision of animating the marketplace. Through the mid-stream program, local and national kitchen designers, equipment dealers and manufacturers are working interactively to promote gas and electric energy efficient choices to foodservice customers. No longer is the utility solely responsible for educating customers on the benefits of energy efficiency programs; through this model we engage the manufactures, dealers, distributors and the end-use customer. The POS approach offers customers the opportunity and gateway to make informed and affordable energy decisions about new equipment and benefit from the instant rebate offerings. The equipment selling and inventory stocking patterns of the marketplace are transformed as high efficiency equipment becomes the norm, replacing the installation of standard efficient equipment. The ripple and positive effects are more efficient equipment being purchased and installed, customers benefit from bottom-line savings, and our communicates benefit from the reduction in greenhouse gases and reduced energy load on the grid.
MC: It's noted that this program proved that a midstream program can be effective for energy efficient foodservice equipment-- are there lessons learned that National Grid is potentially looking to (or has already looked into) expanding to other markets or sectors?
NG: Yes, the Point of Sale Mid-stream program demonstrated a new and successful channel for delivering energy efficiency programs to customers versus the traditional, downstream rebate approach. Customers delight in the rebate amount being deducted from their invoice at the point of purchase. Under the traditional downstream model, customers were required to complete and submit a rebate form with the expectation a rebate would be mailed within 6-8 weeks, dependent on the application having all the required information. Talking with distributors and contractors, we found customers and contractors often opt out of the downstream rebate program, citing the additional paperwork involved. This results in lost sales of energy efficient equipment and the capturing of potential gas and electric savings for the state. The mid-stream POS program easily reduces the potential for lost efficiency sales by offering a seamless, easy experience for the customer resulting in increased customer satisfaction with the utility, the vendor and energy efficiency programs.
The kitchen vendors are equally satisfied with the POS program. They are able to bring value to their foodservice customers by helping them reduce the cost of choosing efficient equipment and in the end helping the customer reduce their energy bill.
Building on the lessons learned from the POS Kitchen pilot, National Grid is making a foray into the Residential and Commercial Gas space and water heating marketplace. A pilot has been launched with HVAC Distributors and Installation contractors. Customers will reap the benefits of an instant rebate offered by their selected contractor. Contractors will specify energy efficient equipment purchased from participating distributors resulting in redefining inventory stocking trends, animating the marketplace and supporting New York State’s and National Grid vision of offering creative and affordable energy solutions to customers in both the residential and commercial segments.
National Grid NY is also reviewing options for a Mid-Stream (POS) Lighting program as well as some residential POS options for sales at big box stores.
MC: How has National Grid looked to tap into the success of this pilot program to allow it to become more widespread and impactful across a wider customer base?
ES: The program team worked with a third-party evaluator to collect feedback from customers and equipment dealers who participated in the early stages of the pilot and received feedback from many that they wanted more equipment types to be added to the program in addition to the two types of natural gas cooking equipment originally available in the pilot. We have since added a full suite of natural gas and electric commercial kitchen equipment and our engineering team worked with National Grid to add the equipment to the New York State Technical Resource Manual so that other NY utilities can offer this equipment in their programs. We are currently researching more potential additions to the program to ensure that we are in line with the latest technology in the foodservice equipment industry and can influence more sales towards high-efficiency options.
The program also expanded from initially only covering National Grid’s Downstate NY service territory to also incorporating Upstate NY customers. Surveys also reported that customers from neighboring utilities in NY were also interested in participating in the program.
The focus early on was to focus outreach efforts on a core group of the local foodservice equipment dealers selling into National Grid territory to ensure they were enrolled and participating. The Program Team has since expanded to engage with major manufacturers along with national and online equipment dealers to influence more sales to national chain account customers and those who make their purchases online. This expansion really maximizes the reach of the program to incorporate the different sales channels out there.
I think down the road we want this program to influence any equipment sale to a National Grid customer so they have high-efficiency options available to them and eventually look at ways we can leverage connected devices and machine learning to further drive energy efficiency in commercial kitchens. Once you have an engaged supply chain, it opens up the door for further opportunities to offer additional energy saving programs that ultimately lead to satisfied customers.
MC: Can you talk briefly about the value that receiving this Outstanding Achievement in Gas Energy Efficiency Program Design and Implementation Award from AESP brings to National Grid and the pilot program? What was the general reaction of those involved?
NG: We find our relationship and involvement with national organizations such as AESP helps us learn, grow and deliver best in program so that we engage our customers by bringing new and innovative ideas to our stakeholders and communities.
National Grid is extremely honored to have received the Outstanding Achievement Award in Gas Energy Efficiency Program Design and Implementation from AESP. The award was the culmination of many years courting the foodservice marketplace to purchase high-efficiency gas cooking equipment. National Grid was looking for new delivery channels to bring energy efficiency programs to customers, and the Point of Sale Kitchen program fulfilled this quest and proved extremely effective. It was also the first time an AESP award was given for a gas program, so National Grid is doubly proud to have been given this recognition and we appreciate Energy Solutions part in making this happen. As many state announce plans for greenhouse gas reduction, gas energy efficiency programs will continue to be large focus for our company efficiency portfolio.
National Grid prides itself on being a leader in energy efficiency. This award is a wonderful recognition of National Grid’s vision of creating value and exceeding the expectations of our customers and communities by providing innovative products and services through ease of use and a seamless experience that sets the stage and tone to make possible the energy systems for tomorrow.