Coles managed to reduce its gas use by an incredible 30 per cent despite the introduction of the carbon tax.
This remarkable achievement required a huge commitment from the entire organisation but the tax was the impetus for big change, according to Mark McKenzie, head of maintenance, energy and sustainability at Coles.
“The carbon tax pushed us to step up our game,” he said.
“We saw gas prices jump from $20 to $40 a kilo to $150 a kilo so we went out early to buy in bulk but we knew that gas wasn’t going to last forever.
“We were facing a massive hit to business including a bill of $3 to $4 million in gas costs every year.”
In a candid presentation to participants at CCN Live 2014, McKenzie said this marked the beginning of a rigorous gas containment strategy, which included a serious investment in leak prevention.
“We have replaced 60km of refrigeration lines in the last two years,” he said.
“Refrigerant loss is down and it’s staying down but first we had to drive awareness across the entire business.”
Back in the pre-carbon tax days, McKenzie said gas loss was seen as just something that happens.
“We’ve had to push the message that leaks are costly. Each store has a gas loss figure printed on its door which is ranked against all other stores. This led to everyone talking gas.
“Store managers now see it as important and leaks are reported immediately. That didn’t happen before.”
To really drive home the message, tech staff had gas loss incorporated into KPIs. Even the former managing director, Ian McCleod, was asking about gas leaks.
“The reduction in gas use we have achieved in recent years is equivalent to taking our entire trucking fleet off the road for a full year,” McKenzie said.
“Financial years 12 and 13 we did a lot of pipe replacement work and we are using leak detectors to track it closely.”
McKenzie was joined on stage by the national engineering refrigeration manager for Coles, Stuart Saville, who believes there is still more room for improvement. “I believe we can do even more,” Saville said.
“The carbon tax was the catalyst for us to lockdown process in areas where there was no process before.
“Considering the age of our fleet, this is a staggering result.
“Even with no carbon tax the mindset is still there, the awareness remains.”
Saville said this awareness is important because it is likely the carbon will return “in some form” in the future.
Outlining some of the challenges facing the retail giant, McKenzie said the biggest issue for his team is dealing with an ageing and varied fleet.
“We have a big range of stores all with different footprints,” he said. “We have stores that are 50 years old and each store is managed differently.
“With such a diverse fleet, we cannot take a one-size-fits-all approach.”
McKenzie said some of its refrigeration and HVAC systems are beyond their useful life due to under-investment for the past 15 years. He said it is too costly to simply replace equipment with new ones.
“We would love the latest and greatest but Wesfarmers is strict on spending. Whatever goes into a store must have a five year return on investment, which is a tough ask,” McKenzie said.
“We have worked hard to extend the life of our refrigeration assets because of the constraints we have on fleet investment.
“The average age of our assets are 11 years old but we have kit that is 25 years old.”
To tackle this issue, Coles embarked on an aggressive renewal strategy in 2009.
“We still haven’t reached the tipping point to lower the age of our equipment. But we have reduced maintenance costs which have been flat for the past four years.”
In an environment where all other areas of the business are increasing costs, this has been a big achievement. At the same time, Coles has invested $1.1 billion in new stores.
In the past five years alone, the Wesfarmers owned retail chain has opened 100 new stores and refurbished another 350.
Coles has a total store count of 750. Despite all this, McKenzie said energy efficiency is at the centre of everything they do.
He provided a graph showing the energy profile of a typical store including refrigeration (60 per cent), air conditioning (seven per cent), fans (seven per cent) and lighting (16 per cent).
“Customers expect corporates to be environmentally responsible and to keep greenhouse gas emissions to a minimum,” he said, adding that Coles has been transitioning to natural refrigerants and low GWP alternatives for many years.
“We were early adopters of CO2 technology going back to 2004 when we introduced the first CO2 supermarket in Australia.”
McKenzie said Coles is moving away from high GWP refrigerants to “something” but “we are still trying to figure out what that something is”.
“We’re converting our R134a systems and even at greenfield sites we use a water solution wherever we can.”
McKenzie said Coles is continually lowering refrigerant charges but it’s not a revolution, it’s an evolution.
On the subject of new technology, Saville said the refrigeration team is always trialling a broad range of new solutions.
“We expect to phase out R22 by 2015 and the R404 phaseout is almost complete,” he said.
Coles has 82 stores on CO2 and Saville said this figure will jump to 90 in the next month.
“We are working to lock down 134a and undertook a HFO trial which was a success. We have future proofed about 100 stores but we have 750 stores in total that’s a large exposure,” Saville said.
“We can’t just leap frog to naturals even though that is the direction in which we are heading.
“There is a lot to consider. Are we going to move to R32 and HFO1234yz or do we just go straight to CO2? We are also looking at ammonia at some stores.
“Basically, we will look at all the options to find what is best for us.” To do it successfully, Saville said Coles is undertaking staged implementations of new technology.
“This is because of our varied environment, we have greenfield sites and stores with 30 year old kit using R22,” he said.
“The ammonia plant functions well but the capital outlay isn’t viable plus there’s the challenge of maintaining technical staff with the skills to service this kit.”
Saville said Coles is also trialling self contained cabinets with hydrocarbon solutions.
“But once again there is the challenge of upskilling the workforce to deal with hydrocarbons,” he added.
Saville said the amount of electricity used at Coles is equivalent to 211,000 average homes.
In the past four years, there has been a four per cent reduction in energy consumption on the retail level.
“We are still getting reductions although we are managing 100,000 square metres more than we were five years ago,” he said.
“Most stores today are bigger but we are still reducing energy.”
Saville is also tackling HVAC savings and plans to introduce the first solar store in the next 12 months. Coles has an in-house energy centre that measures the energy use of each store.
If there is a five per cent movement in energy use, McKenzie’s team will investigate. Water use, energy and waste is all measured and Coles recycles five tonnes of plastic bags a week.
McKenzie said the next goal is for Coles to secure a Green Star rated building.