Friday August 12, 2016
Smart business owners and facilities managers are always on the lookout for ways to reduce expenses and increase revenue. Because of recent improvements and shrinking costs, lighting retrofits — replacing traditional lamps and controls to energy-efficient LED systems — have emerged as one of the easiest, most affordable ways to lower your electric bill and sharpen your budget.
According to the U.S. Department of Energy, today’s LED bulbs are six to seven times more energy efficient than conventional incandescent lights, cut energy use by more than 80 percent and often last more than 25 times longer.
“Not only do modern LED lamps and controls reduce energy consumption,” says Karl Shaw, COO at TPI Efficiency Consulting, “they also eliminate costs related to maintenance and labor for years to come.”
Smart Business spoke with Shaw about the benefits of modern lighting technology and the resulting cash gains that can support business growth.
What are the financial benefits of switching to LED?
Imagine a typical office environment. On the ceiling there are rows of four-foot lighting fixtures. Each fixture has four T8 fluorescent tubes. Every one of those T8s, when replaced with an LED, equates to nearly $11 in savings every year for the lifetime of the lamp. Since most LED lamps (tubes, high bays, floods, etc.) are rated at 50,000 to 100,000 hours, they can operate for over 10 years without replacement when running at 12 hours per day. That’s at least $110 of lifetime savings per bulb. And because LED systems generally pay for themselves in less than three years, businesses enjoy at least seven years of significantly increased profits.
What type of business should consider switching to LED?
Regardless of size or type, nearly every business can benefit from LED systems. For example, retail stores can highlight their products with the full spectrum of quality light that LED provides. Better atmosphere draws more customers and, in turn, boosts sales. In manufacturing and office settings, the proper level of light creates a brighter, more efficient and safer workspace. LED in schools and offices has been proven to eliminate eyestrain and even improve performance by eliminating the flicker and hum of traditional lights. Improved visibility in parking lots and garages increases the safety of personnel and property. In effect, LED upgrades are the fastest way for any business to reduce electricity costs, improve work environment and increase safety.
What are the steps companies should take to retrofit their lighting system with LEDs?
A good place to start is by talking with an LED expert — one who will take an inventory of your current lighting, discuss improvements and concerns and build an LED solution that creates the desired light output. An expert will also provide detailed energy savings and ROI analyses, several financial options and installation if required.
What commonly stops companies from making the switch?
The biggest obstacle is understanding how affordable LED lighting really is today. Aside from the fact that prices have dropped significantly over the last few years, LED rebates, rider reductions and tax credits may be available to greatly improve ROI.
There are also several ways to finance the project outside of traditional means. You may want to consider a business lease on the equipment. The term is usually five years. The return, however, is often realized within three years, so in most cases the company makes money. A new type of financing called an Efficiency Services Agreement is off balance sheet and guaranteed to be cash flow positive. Another finance program called PACE is paid back through real estate taxes over 20 years.
Most capital investments take several years before seeing a return whereas LED averages less than three. LED prices have dropped, their efficiency has increased dramatically and the savings is undeniable.
Businesses that have already upgraded to LED are benefitting from improved atmosphere, enhanced safety, more productive workers and the satisfaction of savings not left on the table. Isn’t it time you made the switch?
Insights Energy Solutions is brought to you by TPI Efficiency Consulting