E360: Addressing the Challenges

Facing the Refrigeration Industry

Newark, N.J., August 24, 2016

Don Newlon

V.P./G.M., Refrigeration Marketing

Emerson Climate Technologies

0

50

100

150

200

250

HFC CO₂

Component electronics

are a larger spend

% of top 50 retailers testing

refrigerant alternatives

$K

DOE regulations require

new system designs

6%

83%

0%

20%

40%

60%

80%

100%

2010 2015

Optional

Mechanical

Electronics

Now '17 Now '18 Now '20

% E

ne

rgy

-37%-35%

-17%

Reach-In Ice Walk-In

Dwindling workforce impacting

maintenance costs

0

50

100

150

200

250

2010 2015

244

184

60K

shortage

Th

ou

sa

nd

s o

f te

ch

sWe’re Now Trying to Balance Four Variables

Where We Are: Regulations and Refrigerants

Today 2019

EPA refrigerants

Low-GWP

blend

CO2

Low-GWP

blend

Propane

Low-GWP

blendPropane

Low-GWP

blend

% M

ark

et

Redesigns Are Widespread.

Results Require System-Wide Optimization.

100%

40%

100%

50%

Today 2018 Today 2017

0

20

40

-37%-35%-17%

-25%

Today 2017

SupermarketCA Title 24

Walk-InIceReach-In

DOE energy

% e

nerg

y

2012 2013Today 2018 Today 2020

Today Voluntary

Consultant8%

Contractor16%

End user10%

Emerson17%

OEM24%

Wholesaler12%

Other13%

E360 Is Helping Making Sense of the Most Pressing Issues in Refrigeration

Event participants = 7,430 Further touchpoints = 12,677

6,179

E360 webinars

5,364E360 online

1,251E360 Forums

7,313

Outlook magazine

Co

min

g U

p

Re

su

lts

Sept. 11–14

Energy & Store Dev’tNew Orleans, LA

Feb. 9–12Aug. 24

E360 Forum Newark, NJ

Nov. 15–17 Jan. 30–Feb. 1

NAFEM ShowOrlando, FL

AHR ExpoLas Vegas

IntermodalEurope 2016

Oct. 12

E360 ForumTucson, AZ

We Have 9 Regulatory Requirements

The Next 5 Years

2016 2017 2018 2019 2020

Supermarket (Rack)

Walk-In (Remote CDU)

Cooler

Freezer

Reach-In (Stand Alone)

Cooler <2,200 BTU

>2,200 BTU

Freezer

Ice Machines

<2500 GWP

<2500 GWP

20-40%

<600 GWP

<1500 GWP

30-50%

5-15%

1/1/17

1/1/18

3/27/17

1/1/18

1/1/20

1/1/19

1/1/20

20-30%

7th Circuit Upholds DOE’s Final Rule

<600 GWP

In Proposal:1. EPA: ”Change Of Status” for Soft Serve, Frozen Carbonated, Nozzle Machines, Cold Storage in 2021

2. EPA: R-290 (Propane) Approval for Ice Machines in 2021

3. CARB: All Commercial Refrigeration <150 GWP by Jan. 2020

New

Industry Preparedness to Meet Compliance Dates

Level of Preparedness:

CR1. Does your company have a plan in place to meet the compliance dates?

CR2. Overall, how would you rate your company on being prepared to meet the compliance dates?

CR4. To the best of your knowledge, what percentage of your equipment currently passes regulations?

EPA Plan in Place (n=46) DOE Plan in Place (n=47)

Yes52%

Not yet44%

13% 52% 15% 17%

Very prepared Somewhat preparedOnly slightly

preparedNot at all prepared

Level of Preparedness:

15% 45% 19% 17%

Yes57%

Not yet36%

Over half have a plan in place and are prepared to meet compliance dates. This leaves quite a few companies not ready for the change.

The Majority Expect Components Will Change Based On The Regulations

Top-2 Box

CP3. Considering the impacts of meeting the new regulations for the DOE and/or EPA, please indicate the extent to which you agree or disagree with each statement below.

I expect some components

will change

I expect some of our products

to become obsolete

I expect component costs to

increase

89%

63%

73%

5 = Completely

Agree4 3 2

1 = Completely

Disagree

77%

53%

51%

12%

10%

22%

10%

14%

20%

2%

10%

4%

14%

4%

40%

32%

11%

6%

11%

Capital Investments Are Needed to Meet DOE Regulations

CP1. Would you say that DOE regulations are creating a need for your company to make…

Most foresee needing capital

investments within their organizations

to meet DOE regulations (72%).

Significant investments in

capital

Some investments in capital

Limited investments in capital

No investments in capital

Don’t know

47%

21%

6%

6%

2%

17%

Resource Planning to Meet DOE Regulations

CR10. In terms of resources needed for any redesigns in order to meet the new DOE energy efficiency standards, are you…

The majority plan to use existing

internal sources and staff; however, nearly one quarter

plan to hire additional staff in

order to do so.

Planning to use existing internal resources and have the staff

Planning to use internal resources, but need to hire

Planning to use external resources for the redesigns, and feel confident about it

Would like to use external resources, but unsure who to use

Would like to use external resources, but have some reservations

Does not apply to us

Comprehensive Industry Involvement

Original equipment mfg.

1000’s of engagements each year

Authorized wholesalers

55+ businesses — 1,000+ locations

Contractor calls and roundtables

End user calls and visits

Participation in agency meetingsActive participant in industry

associations

Educational services

Educate 1,000’s of service techs/year

Speaking engagements

and conferences

Our Approach to Innovation Will Need To Change

• Create and foster an environment of disruptive innovation that can help develop “out of the box or no box” thinkers and doers

• Encourage holistic thinking, with a global systems point of view that can lead to creative solutions for the ultimate user (customer pain points, today and in the future)

• Foster bold collaboration within Emerson, and with academia and industry partners that leads to novel ways to solve our problems

• Use stimulating real end-use scenarios that can help the thinking process and turn ideas into solutions that work

Innovation which will make us a success in the futureis different than the past

The Helix Innovation Center at the University of Dayton, Ohio

• Store optimization

• System architecture

• Refrigerants (CO2, etc.)

• Controls and sensing

Solving our industry’s most challenging problems

• Connected kitchen

• Facility management

• Equipment design

• Refrigerants

Supermarket and

convenience storeThe “Helix”

Foodservice

restaurants

5 Eco-systems Can Simulate Real World Testing In Weeks Not

Months or Years

BuildingHome

We’re engaged in solving some ofthe most pressing issues in our industry

Data Center Kitchen Supermarket

Equipment

Controls for complete

facility management

Precise temperature control

at the case

Integrated

compressor

diagnostics

Reliable, low-GWP, refrigerant-

based scroll compressors

Variable

speed drives

Anti-condensate

controls

Precise load matching digital

compressors

Economics

• Facility-wide optimization and control lowers

operational costs

• Predictive maintenance prevents costly downtime

and equipment failure

• Efficiency-enabled savings (space and energy)

• Improve food quality and safety

Energy

• Reduce energy consumption

• Achieve regulatory compliance

• Match energy consumption with facility

requirements

Environment

• Reduce carbon footprint

• Low-GWP/natural refrigerants (CO2)

• Provide a sustainable link in supply chain

Evaluating Multiple Solutions to Help You

E360: Four Resources to Help You Balance the Equation

Thanks for Being Part of the Dialogue

Questions?

DISCLAIMER

Although all statements and information contained herein are believed to be accurate and reliable, they are presented without guarantee or warranty of any kind, expressed or

implied. Information provided herein does not relieve the user from the responsibility of carrying out its own tests and experiments, and the user assumes all risks and liability for

use of the information and results obtained. Statements or suggestions concerning the use of materials and processes are made without representation or warranty that any such

use is free of patent infringement and are not recommendations to infringe on any patents. The user should not assume that all toxicity data and safety measures are indicated

herein or that other measures may not be required.

Thank You!

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