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Reducing dealership energy costs

November 18, 2010

Energy costs for a dealership can be significant, so doing a little research in order to save money can be worthwhile.


Dealerships conduct most of their activities during normal "business hours," when demand on electric utility grids is at its highest. During those hours, utilities may impose on electric bills what are referred to as demand charges: fees based on a facility’s highest electrical demand, or peak kilowatt (kW).


May utilities actively seek ways to reduce demand and increase their reliability without adding new power plants or new electric lines. Where permitted, electric utilities may continue to increase demand charges. Alternatively, they may price electricity used at different times differently, relative to market conditions.


For example, during low-demand periods electricity will be priced very economically, whereas electricity consumed during high-demand periods will be much more expensive. Such pricing programs reward customers with low, or off-peak, demand with low electricity costs, while encouraging high-demand customers to lower or shift their peak demand.


Overall, demand charges can contribute significantly to operational costs, especially in areas prone to electrical capacity shortages. Fortunately, there are opportunities for dealerships to lower their demand for electricity, including:


  • energy efficiency upgrades that permanently reduce electrical loads
  • scheduling equipment usage, such as setting cooling units to pre-cool and take advantage of a building’s thermal mass during peak billing periods
  • building automation and direct digital controllers with energy management features that automatically adjust equipment operation to flatten peak demand
  • thermal storage (ice) to offset cooling in areas of extreme peak electricity charges


Local electric utilities may offer programs specifically aimed at reducing the electrical demand of small- and mid-sized businesses. These programs may include incentives, equipment, or management practices that could help reduce a dealership’s demand and save money.


Opportunities and programs to reduce demand are detailed in an NADA management guide, "A Dealer Guide to Energy Star: Putting Energy into Profits," which is the source of this article. Order the publication and other useful resources from NADA Management Education, or 800-252-6232 ext. 2.