For most facility executives, it’s no lon- ger a question of whether to improve nergy efficiency; it’s a matter of how
best to achieve that goal. Since LED luminaires were introduced, their costs are now
at such a low level that they can be used in
LED technology is very energy efficient,
but what determines a good return on
investment (ROI) with a lighting upgrade?
Many utility companies offer some form of
incentives for commercial efficiency projects,
including lighting. Most incentive programs
run on a fiscal year and are allocated based
on application approvals, so budgets are
limited and funding can be depleted early
in the year.
Incentive programs come in two basic
1. Prescriptive: A set dollar amount
assigned to each product category, type
and energy savings target. Prescriptive
are based on one-for-one upgrades.
2. Custom: Considers the whole project.
Generally, it’s used when there are unique
circumstances, such as a reduction in luminaires and/or when controls are added.
Custom programs can also involve total
project costs that include installation.
Research the program and follow the
application/documentation process. Many
programs require an application be filed
prior to orders being placed and/or the
completion of fieldwork. Notices to proceed are common, so make sure you have
that first. Custom programs may require
post-application filings and field verification
Energy saving incentives are available
for a variety of amounts. It’s all in knowing
what your options are based on the available programs.
n The federal government offers a tax
deduction for qualified energy efficiency
projects incorporated into commercial
buildings. Under the Section 179 energy
efficiency deduction (179D), customers
can reduce their taxable income as it
applies to lighting upgrades.
n Utility companies will often provide
incentives in the form of reducing energy
costs by a specific percentage if a certain
k Wh reduction is met. The project may
qualify for incentives that include a per-
centage of the total cost covered.
n Online databases, such as the Database
of State Incentives for Renewables &
Efficiency ( www.dsireusa.org), are avail-
able to search for national and state
incentives. This specific website allows
you to narrow your search parameters by
market, technology, utility and incentive
n Distributors, contractors and manu-
facturers can help research the energy
program and submit the application on
behalf of the end user.
When a facility’s lighting is upgraded to
LED, the main benefit achieved is a direct
reduction of the watts consumed by each
lighting fixture. These benefits are evident
just from looking at luminaire specifications.
Years ago, some properties were underlit
using lower wattage traditional light sources. Reasons for this varied from property
usage (hours in use) to lower security concerns to design mistakes.
As time passed, factors that influenced
the original design changed, such as growing security concerns or increased nighttime
use. To improve the lighting conditions in
these types of situations, a higher wattage/
lumen output HID would be used, so LED
luminaires that provide light levels consistent with the replacement of the higher
wattage HID luminaire (such as a 400W
metal halide) must be used.
The need to improve light levels for safety
takes precedence over the ROI. In some
cases, a reasonable ROI – 40 to 50 percent
savings over three to six years – can still be
achieved while increasing and improving the
For many facilities, maintenance is a chief
deciding factor on what type of lighting to
install. The longer the bulbs and ballasts
last in any fixture, the less manpower and
equipment is required to keep them running
properly. LED luminaires virtually eliminate
maintenance costs because the only maintenance that should ever be needed is the
Unfortunately, with traditional lighting
sources, because of the expense of renting a
bucket truck, end users often wait for batch
relamping so it's done at one time, which
makes sense except when you consider the
reduced illumination and light levels.
In large facilities, even more weight
should be given to maintenance costs.
Maintaining adequate lighting levels in
facilities with more than 200 fluorescent or
metal halide fixtures can easily become a
nearly full-time job for maintenance crews.
Replacement of outdated lighting systems allows for the fastest ROI for facility
managers — paying for themselves within
an average of three to five years or less —
as well as a practical way to reduce operating costs (in some cases by as much as 25
percent) for the total facility.
What’s an acceptable payback on this
investment? This is subjective. However,
people often think an investment that takes
more than two years to pay for itself isn’t
good, but where else could an investment
be made that yields a return of 50 percent
or greater annually?
Energy consumption, rebates and incentives, and maintenance costs are all factors
that, if positively in play, will create a short
ROI – and your facility will reap the benefits
of a smart investment. B
Jeff Gatzow ( email@example.com) is vice
president of Optec LED Lighting.
Deciding an Acceptable ROI on a Lighting Upgrade
NUMEROUS VARIABLES, INCLUDING MONEY AND ENERGY SAVINGS, CAN AFFECT IT
LED LUMINAIRES virtually eliminate main-
tenance costs because the only mainte-
nance needed is the power supply.