A new case study in Supply Chain Dive takes a closer look at Target Corporation’s successful demand response approach. Since piloting a program in California in 2006, the company has extended demand response to 815 locations nationwide, which covers nearly half of its stores, the study says.
Demand response programs help lower costs for participating companies by reducing utility fees in exchange for lowering energy usage during peak times. For Target, the benefits include earning revenue, offsetting operating expenses, and advancing corporate sustainability goals. Currently the retailer is enrolled in 140 programs, according to Supply Chain Dive.
When demand response events happen, stores adjust sales floor lighting and air conditioning. David Johnson, Target’s lead program manager for demand-side energy services, told the publication that the mainly seasonal programs aren’t likely to be noticed by customers who come in on a hot day. “By and large, our guests probably don’t notice that something is happening,” he says.
Most stores are enrolled through an aggregator that agrees to handle program administration and absorb risk for Target, taking a cut of the monthly customer participation payment, the case study explains. Target also uses internal platforms, including custom-built ones, to track performance in a timely way and have enough data for aggregate analysis. Over the course of six months in 2016, Target stores adjusted lighting and HVAC systems 3,600 times with an average duration of 3 hours and 15 minutes, Supply Chain Dive reported.
Demand response isn’t an approach that works for every company, Supply Chain Drive’s Deborah Abrams Kaplan points out. “Some companies choose not to participate because they don’t want to adjust their production schedule and feel they have an efficient operation already. They also might have labor issues, like a union, which can affect a company’s ability to participate,” she writes. For Target, however, participating in programs across the country has been beneficial.
In recent years the company has received recognition from Energy Star for its commitment to energy management, including demand response. Energy Star noted that “most stores shed about 100 kilowatts per peak event, helping communities avoid power loss and utilities reduce power generation requirements.”
