What The Electric Grid Resource Shortfall Means for Material Handlers

How Propane Helps Warehouses Electrify – And Protects Their Investments

Supply chain executives have heard it all before American infrastructure is deficient today in supporting the country’s growing electrification needs.  

Then summer 2023 hit with some of the hottest temperatures on record in parts of the U.S., and it got worse. The North American Electric Reliability Corp. (NERC) reported this week that two-thirds of the country – especially the south and west – could face electricity shortfalls imminently due to the temperature peaks.  

The blackouts on the horizon aren’t temporary. NERC’s Long-Term Reliability Assessment released late last year determined that much of the United States and Canada faces a “high risk” of electric grid resource shortfalls all the way through 2027. And that’s during normal operating conditions. The reliability of energy sources is a top priority, and  NERC has called upon the electric industry to address the “extraordinary timesfacing the grid. 

Extreme weather isn’t the only cause. Other areas impacted by shortfalls like California, Ontario and the Midwest are being hit by infrastructure insufficiency and generator retirements as older nuclear, coal-fired and natural gas facilities go offline. Those also happen to be key regions in the North American supply chain areas rife with warehouses. Combine the importance of these supply centers with the volatility in the electric grid and the high cost of energy overall, and business leaders are presented with both a challenge and opportunity.  

Energy represents one of the largest costs businesses have, contributing to 50% of overall expenses. For warehouses that can be more. Three-quarters of energy costs go to heating and lighting in non-refrigerated warehouses. Here's a look at the risks of warehouse electrification and how to mitigate them with the help of alternative fuels like propane.  

Inside the Warehouse Energy Use 

Material Handling Equipment Electric equipment can’t be charged if the power is out. It can’t be used in extreme weather. And it doesn’t meet the needs of the average 24/7/365 warehouse because it requires charge times of up to 8 hours. Meanwhile diesel-powered equipment isn’t clean enough to safely operate indoors. That’s where propane-powered equipment comes in. “Propane forklifts, boom lifts and scissor lifts are still running even when it's 105 degrees like it was yesterday in Dallas,” explains Jim Bunsey, director of commercial business development at the Propane Education and Research Council (PERC). Refueling propane equipment is easy – swap in a full cylinder and go. Those cylinders also present a business growth area for warehouse operators. Propane is ready and able, regardless of the weather. Propane retailers love to fill 1,000-gallon tanks. They can move a lot of gallons fast. And there's a lot of companies that make a lot of money out of cylinder exchange,” Bunsey says. 

Doors – One of the biggest factors on heating costs and the largest contributor of energy loss in a warehouse is the doors. Electricity powers the doors, the air handlers that heat and cool entry points and the air curtains that keep the outside elements out. Doors also need power for security systems and remote or autonomous monitoring and operations. When the electricity goes out, warehouses turn to on-site propane-powered generators. “This goes beyond continuing with their business. These are life safety systems—fire alarms, exit lighting and emergency releases,” says Bunsey. 

Lighting – High-efficiency LED lights are notable for their small size and long life, eight times that of a standard bulb. They also use less energy. Combine LED lighting with skylights, a key portion of LEED certification, and warehouses can downsize their backup generators to smaller units with lower consumption, Bunsey says. Advanced warehouses then integrate on-site solar panels and wind turbines to create their own self-contained electrical microgrid. 

Cold StorageIn refrigerated warehouses, cold storage accounts for 60% of electricity used. It’s also a key vulnerability in a power outage. Hundreds of thousands of dollars can be lost due to downtime. Starting at the point of shipping, the cold chain is now relying on more skidded propane generators that can travel with containers and be plugged in immediately. Propane skids prevent catastrophic inventory loss in an outage at any point along the supply chain. 

Outside the Warehouse Energy Use 

Building - Warehouses and distribution centers have been one of the fastest-growing building types in the commercial sector since the pandemic. And most of those warehouses are being built where land is affordable. Why is it more affordable? Because the services—natural gas, electricity—aren't there. From the start of the building process, contractors will set up a 500-gallon propane tank to heat and power the temporary jobsite. Then, when the warehouse opens, they’ll put in an 18,000- or 30,000-gallon propane tank at low cost to power the warehouse’s HVAC system, Bunsey says. 

Heating & CoolingPERC’s Bunsey has a background in HVAC. He says that architects and engineers typically look at propane for HVAC needs only when the warehouse isn’t within reach of other services. But propane can actually power electrification. Warehouses today use combined heat and power (CHP) units that can generate electricity by reclaiming heat from the exhaust and turning it into thermal energy and propane-powered infrared heating units to direct heat to specific areas. They're also using 100-ton rooftop chillers for air conditioning that have their own propane power generator to create electricity.  

Fleet Electric trucks are far from ubiquitous. But low emissions trucks powered by propane are common, particularly at warehouses located near ports. Propane port tractors meet Tier 5 emissions standards aimed at reducing harmful emissions to zero; a PERC study showed propane tractors are 99% cleaner than diesel. “We call them ports because we're working in the ports mostly, but really any of the rail yards or any of the exchange facilities where they're just moving trailers to load them from place to place can use these smaller tractors,” Bunsey explains. And expect propane fueled over-the-road trucks, terminal tractors and drayage trucks in the future. Bunsey says OEMs like Peterbilt and Mack that have championed the advanced clean transportation movement with electric are now looking into renewable propane for easier fueling at near-zero emissions. 

Automation, Technology & TelematicsWarehouses, especially those used for data centers, are looking for 10+ days of off-grid resiliency to combat uncertainty. Building microgrids with a combination of propane, solar and wind achieves that goal. Warehouses used for other goods today operate as “micro-datacenters,” Bunsey says, with autonomous robotics, artificial intelligence, data tracking and processing and more. Having propane on-site in storage is an affordable “insurance” policy to protect those investments. Propane is scalable and a facility can start with a 500-gallon tank and go to over 500,000-gallons of storage on site. Propane can also be stored for decades without breaking down and without risk of ground contamination.