Case Study: How Lavazza Saved $150K Annually and Generated Tier II RECs from a Compressed Air Upgrade

When most people think of Lavazza, they think of rich Italian espresso and a brand synonymous with quality coffee. What they may not realize is that Lavazza's West Chester, Pennsylvania production facility is also a leader in industrial energy efficiency — and a compelling example of how manufacturers can turn operational upgrades into significant financial returns through utility incentives and Pennsylvania Tier II Renewable Energy Credits (RECs).

This case study examines how Lavazza tackled one of its largest energy costs — a compressed air system responsible for 37% of the facility's total electricity spend — and transformed it into a showcase project that eliminated over 2.5 million kilowatt-hours of annual energy waste, generated more than $150,000 in yearly savings, and unlocked a stream of Tier II RECs worth tens of thousands of dollars annually.

Lavazza's West Chester facility is a high-volume coffee production operation where compressed air plays a mission-critical role. The system's primary function is generating the nitrogen that keeps coffee fresh from the moment it leaves the production line to the first sip at the customer's table. While producing nitrogen on-site is significantly less expensive than purchasing and transporting liquid nitrogen, it remains an energy-intensive process. In 2022, the compressed air system alone drove 37% of Lavazza's total energy costs — a staggering proportion that signaled both a problem and an opportunity.

"We have a culture of continuous improvement," said Josh Miller, Lavazza's manufacturing engineer. The company had already earned LEED certification for major facility renovations in 2014 and had partnered with PECO on multiple energy efficiency projects, including comprehensive LED lighting retrofits. But the compressed air system represented the next frontier — and by far the largest remaining source of energy waste in the building.

Working with Kai Wong, Lavazza's energy solutions partner at Emergent Energy Solutions, the team used advanced analytics to map exactly where energy was being lost in the compressed air infrastructure. Wong and Miller had collaborated on past projects at the facility, including the LED upgrades, so they understood both the operational requirements and the opportunities for improvement. "There are so many run-hours on a compressed air system like this," said Wong, "that even very minor changes can have huge impacts on energy use."

The analytics revealed three primary areas of opportunity. First, the system had developed significant air leaks over years of continuous operation — a common problem in industrial compressed air installations that can waste 20-30% of total system output. Second, the piping infrastructure featured excessive elbows and undersized diameters that created unnecessary pressure drops, forcing compressors to work harder to maintain adequate pressure at point of use. Third, the compressor controls lacked the intelligence to scale down during periods of reduced demand, running at full capacity around the clock regardless of actual nitrogen production needs.

Miller and Wong designed a phased upgrade strategy targeting all three inefficiency sources. The first intervention addressed the leak problem directly — a comprehensive ultrasonic leak detection survey identified and repaired dozens of leaks throughout the distribution network, immediately reducing the volume of compressed air being wasted. The second phase involved repiping critical sections of the system with larger-diameter pipe and fewer elbows, reducing pressure drop and allowing the compressors to operate at lower discharge pressures while still meeting production requirements. The third phase implemented eco-mode controls that automatically shut off compressor units when demand decreased, matching energy consumption to actual production needs rather than running at full output continuously.

Upgrading a vital production system like compressed air in an active manufacturing facility is inherently risky. Any interruption to the nitrogen supply could halt production and compromise product quality. Miller and Wong pre-planned every phase of the installation to minimize disruption to production-line operations. "For the most part, we were able to work through it and valve off certain areas," Miller said. The team maintained continuous nitrogen and compressed air supply to the factory throughout the entire upgrade process, with production continuing at normal pace during installation.

The results exceeded expectations by every measure. The combined upgrades delivered annual energy savings of 2,531,772 kWh — a reduction that translated to $150,905 in annual electricity cost savings. For a project with an upfront cost of $210,360, the simple payback period would have been approximately 1.4 years even without incentives. But the financial picture got even better.

PECO, Lavazza's electric utility, evaluated the project through its commercial and industrial energy efficiency incentive program and approved an incentive of $253,180 — an amount that actually exceeded the total project cost. Because PECO caps incentives at the actual cost of improvements, Lavazza received $210,360 in incentive payments, covering 100% of the project cost. The compressed air upgrade was effectively free, with every dollar of the $150,905 in annual savings flowing directly to the bottom line from day one.

But the financial benefits didn't stop at utility incentives and energy savings. Under Pennsylvania's Alternative Energy Portfolio Standard (AEPS), verified energy savings from qualifying efficiency projects generate Tier II Renewable Energy Credits — one REC for each megawatt-hour of documented savings. With 2,531,772 kWh (approximately 2,532 MWh) in annual savings, the Lavazza compressed air project generates roughly 2,532 Tier II RECs per year.

At current market prices exceeding $20 per REC, those credits represent an additional $50,000 or more in annual revenue — income that stacks on top of the energy savings and continues for the useful life of the equipment. Over a conservative 10-year equipment life, the Tier II REC revenue alone could exceed $500,000, transforming what was already an excellent efficiency project into an extraordinary financial outcome.

The Lavazza case study illustrates several critical lessons for industrial facility owners and manufacturers considering compressed air upgrades. First, compressed air systems are consistently among the most energy-intensive and wasteful systems in industrial facilities. Studies by the U.S. Department of Energy estimate that the average compressed air system wastes 25-35% of the energy it consumes through leaks, pressure drops, and inefficient controls. For facilities where compressed air represents a significant share of total energy costs — as it did at Lavazza — the savings potential is enormous.

Second, utility incentive programs like PECO's can dramatically improve project economics. In Lavazza's case, PECO's incentive covered the entire project cost, reducing the payback period to zero and making the investment purely additive to the company's bottom line. Many building owners underestimate the generosity of utility incentive programs or assume their projects won't qualify. In reality, compressed air upgrades are among the most heavily incentivized efficiency measures because utilities recognize the massive, verifiable savings they deliver.

Third, and perhaps most importantly for Pennsylvania facility owners, Tier II RECs represent a revenue stream that most building owners overlook entirely. The AEPS program was designed to reward exactly these types of investments — measurable, verified energy savings that reduce the overall load on the electric grid. Yet thousands of qualifying projects across Pennsylvania go unregistered every year, leaving millions of dollars in REC revenue unclaimed.

The combination of three revenue streams — energy cost savings, utility incentives, and Tier II REC income — creates a compelling financial case for compressed air optimization that goes far beyond simple payback analysis. For Lavazza, the total financial impact over 10 years could exceed $1.7 million: $150,905 per year in energy savings ($1.5M over 10 years), $210,360 in upfront PECO incentives, and $50,000+ per year in Tier II REC revenue ($500K+ over 10 years) — all from a single $210,360 investment that was fully covered by utility incentives.

For manufacturers and industrial facility owners across Pennsylvania, the message is clear: your compressed air system is almost certainly wasting energy, and the financial tools to fix it — and profit from the fix — are readily available. Utility incentives can cover most or all of the project cost. Energy savings deliver immediate and ongoing returns. And Tier II RECs add a revenue stream that most competitors are leaving on the table.

Emergent Energy Solutions specializes in identifying, quantifying, and monetizing these opportunities for commercial and industrial building owners throughout Pennsylvania. From initial energy analytics through project implementation, utility incentive capture, and Tier II REC registration, our team manages the entire process — ensuring that every available dollar of value is captured from your efficiency investments. The Lavazza project is proof that with the right partner and the right approach, energy efficiency isn't just good for the environment — it's one of the best investments a facility owner can make.