Question: How do I calculate the ROI on a lighting retrofit to find out if it is worth the investment?
D.J., Santa Fe, N.M.
Answer:
A healthcare facility equipped with traditional lighting technologies is a potential "gold mine" to an informed manager who understands that old lighting technology can be a money pit, while the application of new, sustainable lighting technologies can - and will - produce substantial income. This makes a lighting replacement project easy to justify and is green that makes "cents."
Today's low-energy and long-life lamping technologies provide two significant capital resources: energy cost savings and maintenance cost savings. Today, the facility manager can produce guaranteed savings in both of these categories, yielding an immediate reduction in average annual spending that far exceeds the costs of a turnkey lighting improvement.
Other benefits of today's new lighting technologies that are not reflected on the electric meter are the high color rendering index (CRl) lamps that can improve the eyes' ability to see more clearly and the ability of security cameras to reveal proper imaging and colors.
Finally, the whole point of having lights is that they are on when they are needed. Today's long-life lamps and lamping technologies significantly improve the likelihood that the lights are on (even when nobody's around). Healthcare campuses across America are taking great strides in improving the safety of their facilities - and paying for the improvements completely out of the energy and maintenance savings from their new lights.
Today's Green lighting Technologies
Traditional lighting technologies typically found in parking structures and area lighting includes metal halide (MH) lamps and high pressure sodium (HPS) lamps. Today's new green technologies for parking garages and area lighting include induction and light-emitting diodes (LEDs). It is important to note that both of these technologies have lamp choices that have excellent CRI and come in a variety of color temperatures.
Induction
Otherwise known as "electrode-less fluorescent," this cousin of fluorescent is gaining wide popularity. Many believe that a parking structure is perfectly sui ted for this unique lamp style. With traditional mounting heights in parking garages of at least seven feet and not normally higher than 10 feet, the induction is an excellent one-to-one replacement lamp technology with good, even distribution. The two market players are the OSRAM-Sylvania Icetron with its "racetrack" -style lamp and Philips QL with its "globe" -style lamp. As these lamps have no filaments or electrodes, the induction is well suited to installations that see frequent vibration, like a parking garage.
Induction lamps are green in energy consumption, boasting very low energy usage compared to the higher wattage MH and HPS. Another green benefit of induction lamps is their 100,000-hour lamp life (that is 11.4 years of continual burn. This long-life lamp saves five or six lamp changes from traditional short-life high-energy-consuming technologies. Labor and equipment rental savings add up quickly when choosing induction.
Induction lamping technology is in widespread use in the following fixture types: Parking Garage, Cobra Head, Shoebox, Post-Top, Dusk to Dawn and Wall Packs.
Induction fixtures are quickly gaining deserved momentum and are carving out an enviable position in the replacement market. Facility managers concerned with the environment and budgets should consider induction as their lighting choice.
Light-Emitting Diode - LED
LED is an exciting product that will certainly continue to evolve into the marketplace in a variety of applications.
Similar to induction, LEDs have a great CRI and long life. LEDs boast life claims of 50,000 hours (that is 5.7 years continual burn) and beyond. The key to LED lamp life is effective heat dissipation There are scores of LED canopy fixtures on the market today, ranging from an affordable $250 to over $1,000 per fixture. When it comes to LED, "caveat emptor" ... let the buyer beware. A low-cost LED fixture typically means low quality, low output, low reliability and short life.A demonstration should be requested for any LED product being considered.
Energy consumption of an LED is excellent, as it is a directed light source and can be directed efficiently without waste. A possible drawback of this is potential glare in low-height installations. LEDs are excellent for use in area lighting, due to their efficient distribution and dark sky compliance.
Like induction lighting, LED is making its place in the industry. With a well-performing fixture having the highest entry cost in this market, the economic buyer may be first drawn to the lower initial cost of the induction. In today's tough economic times, it is imperative that facility management evaluate the efficiency (or inefficiency) of current facility lighting and then determine the energy and maintenance savings that new lighting technology can produce.
For-profit organizations can still enjoy an accumulated tax credit through the EPACT2005 for energy saving relighting projects. Any reputable engineering-based lighting company can demonstrate how to apply this tax incentive to make any project more attractive. Outside funding is also very attractive and affordable, and the cost of money does not jeopardize the quick payback periods of relighting projects.
Calculating Return on Investment (ROI)
Gather these facts to calculate the return on investment of a lighting project. To illustrate payback here, a parking garage of 470 canopy lighting fixtures in Chicago, IL, will be used. Total savings are calculated by adding the energy savings and maintenance savings demonstrating green that makes "cents"!
Sample Garage - Chicago, IL
Energy Savings - Part A
A: 470 MH lamps (175 watt)
B: Current electrical draw is 208 watts per fixture. New induction fixture draws 89 watts.
208 - 89 = 119 watts savings per fixture
C: Blended utility rate = $0.098/kwh (Take a monthly bill and divide the total cost of energy, demand, taxes, etc., by the month's kwh usage. This could be as low as $0.05 to as high as $0.18).
D: Hours of operation = 24 hours. Most parking garages are 24-hour burn, and most area lighting is 12-hour burn.
4 x 365 = 8,760 hours of operation per year.
((A x B) / 1,000) x C x D = ?
((470 x 119) / 1000) x C x D = ?
55.93 x 0.098 x 8,760 = $48,014 in energy savings per year.
Maintenance Savings - Part B
E: $35 cost per lamp change (parts and labor)
F: Number of lamp changes per year (assume 1/3 of lamps for MH) = 470 x 0.33 = 157
E x F = ?
35 x 157 = $5,495 maintenance savings per year.
Total Savings - Part A + Part B
$48,014 + $5,495 = $53,509 total savings per year.
Payback in Years
G: Cost of fixture (equipment, tax, installation) = $450 estimate for induction.
H: 470 current fixtures
(G x H) / Total Savings = Years to payback project.
($450 x 470) / $53,509 = 3.95 years.
To easily figure this calculation for any facility, an auto-fill form can be found at www.ecoparkinglights.com.
Extra incentives
Many utility providers, such as ComEd in the Chicago area, offer incentives to upgrade lighting. In this example, ComEd may approve at least $70 per fixture for a facility to upgrade lighting to low-energy-consuming lamping technologies like induction. The incentive would take at least 0.6 years off the above payback number.
For-profit healthcare facilities can benefit from the Energy Policy Act (EPACT) of 2005 tax incentives. In this case, EPACT could take another 1.2 years off the payback figure.
By taking advantage of available incentives for this project, the payback in years could be reduced to as low as 2.15 years. Keep in mind that utility rates are projected to increaseeach year by 5 percent or more.
Over 10 years, the above example, using only the utility rebate (not EPACT) will net the facility more than $350,000 in operating savings over and above the project cost (not even taking into account utility rate increases, just using today's rates).
JEFF PINYOT
ECO Lighting Solutions
and ECO Parking Lights
To view or print original article, click here.
