Energy Conservation: A New Opportunity for Vending

Dick Hatchik, owner, Merrifield Vending, Inc., Chantilly, Va., wasn't sure what to do when two federal accounts said they had been mandated to use only Energy Star machines. They needed Hatchik to change the 25 or 30 machines at their locations by fall of the following year.

He learned he could become an Energy Star approved vendor and rebuild his existing machines. Energy Star is the Environmental Protection Agency's energy conservation program. Hatchik received information that included the measurements he would need from each machine to be Energy Star compliant.

"It required so much detailed work," explained Hatchik, "that we had to drop our ideas on converting older machines to Energy Star compliance. We decided that we would just buy machines from companies that certified that their machines were Energy Star."

Swapping Old for New
The big relief for Hatchik came when the government agencies he'd been working with agreed to allow him to replace machines a little at a time with new Energy Star machines, avoiding a major and pricey conversion.

Most of his bottlers have complied with his requests for Energy Star machines. Hatchik is currently terminating relationships with those bottlers who won't comply.

Hatchik is sure if he had not agreed to change the equipment needed to comply with the mandate to go Energy Star, the locations would have found another vendor.

"I recently got a call from one of the local counties here in Virginia, and they were trying to find a vendor that would give them all vending machines that were Energy Star," said Hatchik.

However, since most of his machines are not yet Energy Star rated, he was forced to decline, although he doesn't know if any local vendor could comply with the request.

"I think the Energy Star equipment is here to stay, and when I look for any new equipment to purchase, it better be Energy Star certified," concluded Hatchik.

Hatchik's situation illustrates the issues operators are experiencing with energy consumption. In East Hartford, Conn., the town council is spending $5 million to upgrade heating, lighting and power systems in 18 public buildings, which includes refrofitting vending machines with the occupant-detecting device, VendingMiser, from USA Technologies Inc.

According to Shawn Shaw, an analyst at The Cadmus Group Inc., a consulting firm that helps address challenges in the environmental and energy sector, locations are seeking energy savings in vending banks not because of the percent of total energy consumption the machines use, but because vending is a very visible source of consumption and simple to cut.

For example, a typical laboratory building might use 8 million kilowatts of energy a year. The 20 or so vending machines at the facility would only use 80,000 kilowatts. Vending machines are a large load item, said Shaw, but they don't require a major building installation/adjustment, as a lighting system would. With one call to the vending company, there's an immediate savings, and the savings in energy and money adds up.

Save energy in Vending Machines
Still in its infancy, energy saving devices for vending are beneficial to operators facing requests from locations looking for savings with as few steps as possible. Universities and large corporations have been among the first to look at this.

A typical vending machine uses more energy than seven residential refrigerators, according to the Environmental Protection Agency (EPA). Current energy saving devices are reported to save 35 to 45 percent for refrigerated beverage and snack/beverage combo machines. One drawback is this equipment cannot be used in machines that dispense perishable food.

According to both Energy Star and USA Technologies, the reduced energy consumption can result in a $150 savings per machine per year. There are also rebates available by many utilities to the locations installing the devices.

Rebates range from the New York State Energy Research & Development Authority giving a $40 rebate for adding the VendingMiser to Connecticut Light & Power and Western Mass. Electric Co.'s $100 to $125 rebate, plus a 50 percent installation cost rebate for the VendingMiser. For rebates available for USA Technologies' products, visit: www.usatech.com/energy_management/energy_rebates.php.
Because monetary savings help the location, not the operator, the question remains: what benefit do these devices offer a vending company?

Value to the vending Operator
Offering a location an option to lower energy bills gives the vending operator a chance to use a "total cost" sales pitch, said Shaw, namely reducing commissions and still providing a benefit to the location. According to his research, a location that has 100 machines might have a yearly energy bill of $300 per machine (See chart 1). If an operator sold an average of 3,000 sodas a year per machine at a $1 price point, that would be $300,000.

Chart 1: Total Cost Advantage
Operators who show locations monetary savings with an energy savings device can ask for lower commissions in exchange for the cost savings. For a location with 100 machines, the operator can receive $6,000 more in revenue by offering the location energy savings.
 
Before Device
After Device
No. of Machines
at Location
100
100
Price Per Soda
$1.00
$1.00
Commission Rate
20%
18%
Energy Cost
Per Machine
$300
$150
Sales Per Machine
3,000
3,000
Operator Revenue
(after commission)
$240,000
$246,000
     
*Figures from Energy Star Presentation

Giving the account a 20 percent commission means only $240,000 makes it to the operator. However, if an operator presented a location with a way to cut its energy cost on each vending machine in half, to $150 per machine in exchange for lowering the commission to just 18 percent, the operator walks away with $246,000.

This would allow operators who are bidding on locations an edge with no additional expense since most new machines are Energy Star rated. Devices such as the VendingMiser could be purchased only when a location desires the technology.

Shaw said UPS has already sent out a request for proposal for Energy Star machines, and many other customers are mandating their use, such as Disney, Marriott, hospitals, park services, government contracts and many more. "We're seeing it (requests for energy savings in vending machines) in a lot of places," said Shaw, "colleges and universities are especially on board." At the recent NAMA Spring Expo, an operator told Shaw his Macy locations were requesting this type of equipment.

VendingMiser and VM2iQ
USA Technologies manufactures two basic types of energy saving devices for closed, cold beverage machines, the external VendingMiser and internal VM2iQ. The VendingMiser plugs into the vending machine and powers the machine down during times of inactivity. The lights will go out and the cooling system shuts down. The machine powers back up to keep the beverages cold and when the occupancy sensor senses a customer approaching.

Barb Scott, brand manager at USA Technologies, said the powering up happens so fast a customer doesn't realize the machine was in energy savings mode, except maybe the lights were off when he or she first approached. Installation of the VendingMiser takes around five minutes and costs around $180. This device is best for lower traffic areas where the machine can be shut down.

"I'd wager we have around 100 (VendingMisers) in the trade," said Denny Johnson, general manager, Farrell Vending, Burlington, Vt. Farrell Vending pays for the device as a gesture of good will to an account. The company has installed them in retail shops and colleges.

If a location requests a VendingMiser, Johnson said they look at the financial return from that account. If it's not enough to warrant the expense of a VendingMiser, they will offer to install the device if the account purchases it.

Energy conservation is part of Farrell Vending's goal of being environmentally responsible. The company is also using biodiesel in service vehicles, using low-watt bulbs, recycling their materials, and more. "If you're bidding on an account that works on a fixed budget, like a hospital," said Johnson, "these devices pay for themselves after a while if you get the business. It's a good selling point." It's where the world is going, he said, and getting on board sooner rather than later means competitors can't use it against you.

The newer, VM2iQ is a device installed on the inside of the machine. It controls the machines' cooling system and does not shut off lights or external advertising. The device powers down the machine, but continues to monitor the room temperature. It powers up every one to two and a half hours to keep product cold. These internal units cost about $112, plus installation, which is usually performed by the operator.

USA Technologies estimates energy savings for the VendingMiser and VM2iQ at 46 percent and 35 percent, respectively, leading to location savings of between $100 and $150 per machine per year.

Although the VendingMiser gives energy savings similar to Energy Star, it cannot use the Energy Star logo because it is not Energy Star rated. If part of the rebuild program, the VM2iQ can have the Energy Star logo.

Devices Extend Machine Life
A quantitative savings for the vending operator is extended lifespan of the vending machine. Since both the VendingMiser and VM2iQ affect the cooling system, USA Technologies has a built-in safeguard for the compressors, eliminating short-cycling and high head-pressure starts.

The wear and tear on machines is therefore reduced, extending the life of a single machine. Foster Miller, a third party research company, has found the USA Technologies' devices can prolong several of the components and forestall preventative maintenance costs.

"It seems as energy prices continue to increase, people are becoming more concerned about the environment, people will continue to look for these types of products and request efficient machines," said Scott of USA Technologies. Operators can buy and install these devices as part of the contract or when asked by the location.

They can purchase it through USA Technologies and install it or give it to the location. Scott said USA Technologies offers support data which operators can give to locations about how much they would save.

Energy Star With Internal Components
Most new machines meet the sticker requirements for Energy Star. Shaw, with the Cadmus Group, said the most typical components to this efficiency rating are the lighting, compressor and fan motor. There is also software that allows the machine's lights to be turned off. The machine goes into storage mode, with a raised temperature during a certain time of day/day of week, which saves 20 to 30 percent more energy. This can translate to $40 to $50 on top of the $150 a year per machine saved just by using energy star components.

In 2006, the Davis School District in Farmington, Utah, decided it didn't want to pay high energy bills any longer and attacked the vending machines in individual schools. They began charging individual schools a $25 a month fee per vending machine.

The principals immediately called the bottlers serving their schools, asking for the machines' removal. The principals knew they'd be taking a revenue hit, but they couldn't afford the fees. It was the district's director of utility services who came up with the solution of saving energy with Energy Star vending machines.

Pepsi agreed to replace the 221 machines with Energy Star equipment by 2007. The savings in energy costs eliminated the need for a fee.
Even more savings can be reaped by a location using both technologies, Energy Star and VendingMiser.

The Cadmus group measured a machine at a University in Buffalo, N.Y. with both types of equipment and claimed it resulted in a 40 percent energy savings.

The Energy Star software allows a set storage mode, while the VendingMiser uses an occupancy sensor, allowing the machine to power down more often based on usage, rather than time of day. This would be especially useful at 24-hour locations where the software could not be applied.

Rebuild Program
For operators who have locations complaining about vending machine energy costs but unable to afford the new $3,000 to $4,000 Energy Star machines, the EPA recently introduced a rebuild program.

Shaw explained the program as a collection of refurbishment centers that will retrofit older machines with newer components, measure the energy use and determine if the machines meets Energy Star standards.

Once a suitable set of kits is determined, the model will enable operators to rebuild their old machines without having to go through the detailed measuring process. (See Chart 2.) Still in its early stages, the EPA is asking for participation in this program.

Chart 2: Machines that can be rebuilt to meet Energy Star requirements
Following are machines made Energy Star compliant with the addition of USA Technologies kits or devices. The EPA hopes more machines will be added.
Orginal Equipment
Manufacturer
Model Name Rebuilt Model Number Rebuilding Kit Company Name
Dixie Narco DNCB 368 ES1DIX368-UDVM VM2iQ USA Technologies
Dixie Narco DN501E MC/SII-9 ES1DIX501-UDVMLRMT VM2iQ, T8 Lighting Kit, and SSC Fan Motor Kit USA Technologies
Dixie Narco DN600E MC?SII-9 ES1DIX600-UDVMLTMT VM2iQ, T8 Lighting Kit, and SSC Fan Motor Kit USA Technologies
Vendo Uni-Vendor 840 ES1VDO840-UDVM VM2iQ USA Technologies
Vendo V-Max 720HVV ES2VDO720-UDVM VM2iQ USA Technologies
         

For several of the machines already tested, adding the USA Technologies VM2iQ to the machine qualifies for this rebuild program, allowing the Energy Star sticker to be placed on the front. "We're really excited about the program," said Scott from USA Technologies, "because customers who want efficient machines and Energy Star compliance get it using existing machines."

Energy Star Operator List
EPA is also collecting the names of operators that offer Energy Star machines or VendingMiser equipment. They are planning to keep the operators on file to serve municipalities or companies that call them for operator references. To find out more information about this list and to be included, contact Shaw at the Cadmus group at: sshaw@cadmusgroup.com.

It's clear the demand for energy savings in the vending industry is growing. At NAMA's October 2006 National Expo, two attendees came to the Energy Star presentation. Less than a year later, at the 2007 Spring Expo in Las Vegas, there were around 50 people in attendance. Cadmus sponsored a booth and talked to 20 or 30 operators, most of whom were considering Energy Star because their accounts had asked for it.

Loading