In its second-largest acquisition, Amazon buys the company for $970 million.
With an upgrade by consultants CleaResult, the retailer cut cooling costs by 93%.
Outdoor gear seller Recreational Equipment Inc. had known for years that its data center near Washington’s Puget Sound was not operating as efficiently as it could be, says Kirk Myers, the retailer’s corporate social responsibility manager. But after having the opportunity for more efficiency assessed by CleaResult Consulting Inc. and utility provider Puget Sound Energy, the retailer hired CleaResult to upgrade the facility’s layout and cooling system. Now REI’s data center is one of the most efficient in the country, Myers says.
Compared to before the upgrade, the retailer saves roughly 1.7 million kilowatt hours of electricity per year—enough to keep the lights on at five REI retail store locations, he says, declining to give the exact dollar savings. Puget Sound Energy says the investment should pay for itself in a year.
Myers notes that such data center improvements are becoming common at the biggest technology companies, like IBM Corp., Facebook Inc. and Google Inc. “But smaller companies like REI can do this, too,” he says.
Data center cooling expenses make up about half a typical online retailer’s operating budget, says William Gast, senior energy engineer at CleaResult. The more transactions a retailer processes, the more servers it needs in its data center, and because all servers generate heat that translates to more cooling expenses, he says.
Puget Sound Energy gave REI incentives to upgrade its data center, including paying for the costs of the initial energy audit to determine how much the retailer could save, it says. The company did not reveal exactly what it gave REI for the actual upgrades, but says its incentives typically cover 50% to 70% of the costs.
The upgrade involved removing all the box air conditioning units in the data center and replacing them with what’s known as a “free cooling” system, Myers says. The system uses air from the nearby Puget Sound to chill water, which then runs in pipes through the facility, cooling the inside air. REI kept the air conditioners as a backup, but it now uses them only on the hottest hours of the hottest days, which add up to roughly 1% of the year, Myers says. CleaResult also changed the layout of the machines in the data center and inserted a few in-row cooling units to optimize the air flow inside the building so it stays cool as long as possible, he says.
REI tracks its effect on the environment—including its overall greenhouse gas contributions, energy usage and the amount of waste it sends to landfills—monthly, for all the facilities it operates, Myers says. “We’ve put a lot of effort into putting this type of efficiency into stores, distribution centers, warehouses, etc.,” he says. “Since 2008, we’ve kept our energy use essentially flat, even though we’ve grown. That’s a pretty significant increase in efficiency per square foot of REI.”
Myers credits the retailer’s history of tracking environmental metrics with its ability to spot opportunities that improve operating efficiencies along with financial performance, he says. “Having that depth of data and scope over the years helps us understand how the opportunities fit together and where to focus resources to get the biggest value financially and environmentally,” he says.
While the retailer surmised that the data center’s cooling system was one of those opportunities, it didn’t have the technical expertise to upgrade the facility itself without risking downtime on its e-commerce site, Myers says. “It’s critical to business to keep our web site running, so anything that looks like it could have any chance of negatively impacting that, you’re really biased to not do.”
CleaResult, though, was able to make all the necessary changes in a few months without ever interrupting the operation of REI.com. “We would not have tackled this project if we did not have Clear and Puget Sound Energy expertise on board,” Myers says.
REI is No. 67 in the 2013 Top 500 Guide.