- 10 Questions to Ask Before A Lighting Upgrade
- 3 Reasons to Recycle Spent Lamps
- 5 Facts FMs Should Know About New Lighting Regulations
- 5 ROI-Generating Winter Facility Improvements
- A Case for Fluorescent Lamp Recycling
- A New Look at Lamp Disposal
- A new Pennsylvania law, in effect as of Jan. 24, 2013, bans e-waste from landfills.
- A Snapshot of Small Facility Lamp Recycling
- Air Cycle at U.S. Green Building Council Heartland Regional Conference
- Are Lighting Retrofits Worth the Money?
- Break a Bulb? EPA Safety Tips Can Keep You and Your Workplace Safe
- Bulb Recycling, Step by Step
- California Law Requires Fluorescent Lamp Recycling
- CFL Bulb Recycling Options Abound
- Cleaning Your Fluorescent Lights
- Colorado Enacts New E-Waste Law
- Congress Delays Incandescent Light Bulb Ban
- Daylighting: Obstacle or Opportunity?
- Efficiency, Avoiding Mistakes Key To Lighting Retrofits
- EPA 2010 Enforcement and Compliance Results
- EPA Reports Record Fine Levels for 2010
- EPA Updates CFL Cleanup and PCB Exposure Guidance
- Fluorescent and HID Lamp Troubleshooting Guide
- Fluorescent Lamp and Controls Myths
- Fluorescent Lamp Recycling: The "Green" Litmus Test
- Fluorescent Lighting Design Tips
- Fluorescent Magnetic T12 Ballast: RIP
- Fluorescent Magnetic T12 Ballast: RIP
- Getting Started On Upgrades To Older Lighting Systems
- Gmail Instructions
- Good Riddance to Old Fluorescent Lamps
- Hazmat Management: A Nine-Step Program
- Illinois Expands E-Waste Recycling Law
- Improve LEED Score and Building Efficiency
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- Macy's Settles with EPA for Lamp Violations
- Making a building go green doesn't have to mean making big structural changes. Here are 5 ways to do it simply.
- Managing Hazardous Materials in E-Waste
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- Sustainability: The Great Differentiator
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Are Lighting Retrofits Worth the Money?
A lighting retrofit is the practice of replacing components in the system with counterparts that make it use energy more efficiently. A lighting upgrade is any strategy that reduces the system's energy use. Energy savings are realized over time that can be significant enough to not only pay for the new equipment, but produce a return on the investment.While manufacturers and professional lighting managers have computer software that calculate the economic benefits of an upgrade, it pays to understand the principles.
Understanding Energy Consumption
|Lighting System A||Lighting System B|
|Hours of Operation/Year||3,000||3,000|
|Energy Consumption/Year (Wh)||525,000 Wh||300,000 Wh|
|÷1,000 to get kWh||525 kWh||300 kWh|
|Energy Savings/Year (kWh)||225 kWh|
|Utility Cost/kWh||$ 0.10||$ 0.10|
|Energy Savings/Year ($)||$22.50|
|Number of Fixtures Retrofitted||100||100|
|Total Energy Savings/Year ($)||$2,250.00|
So we save $22.50 per year by replacing the lamps and ballasts in this fixture. For the 100 fixtures, we save $2,250 per year. Note that additional energy savings can be calculated from the air conditioning system, which now works less hard because less heat is produced by the lighting system (see Lighting and HVAC Interactions for more information).Note that we simply could have installed occupancy sensors or some other controls that would reduce the hours of operation, or both strategies. If we installed new controls in this case and reduced the operating hours from 3,000/year to 2,300/year, we would produce an additional $700.00 in energy savings, or a total of $2,950 per year.
Payback and Return on Investment
Now that we know how much money we're going to save while still enjoying comparable performance from the lighting system, it is time to do an economic analysis, which includes determining payback and return on investment (ROI). A full-fledged net present value analysis or life-cycle cost analysis is a major undertaking (best to use software), so for our purposes we will determine simple payback and ROI.
Simple payback is the amount of time in decimal years that will go by before a system upgrade option's energy savings reach the net installation cost (also called the initial cost):
Payback (Years) = Net Installation Cost ($) ÷ Annual Energy Savings ($)
5-Year Cash Flow ($) = 5 Years - Payback (Years) x Annual Energy Savings ($)
Five-year cash flow was chosen based on expectations of the life of the lamps; by factoring in the cost of lamp replacement and other maintenance costs, a 10- or 20-year cash flow can be produced.
Simple return on investment is an internal rate of return, expressed as a percentage, based on the relationship between annual energy savings and the net installation cost:
ROI (%) = [Annual Energy Savings ($) ÷ Net Installation Cost ($)] x 100
Together, they represent a simple and effective first step at determining whether the new equipment would be a good investment for its owner.
In our example, let us suppose that the initial cost of the system (lamps/ballasts only) - - including the cost of the components and labor, waste disposal - - is about $70.00/fixture or $7,000 total (other initial costs may include financing, consulting fees, tax effects and waste disposal).
Simple payback is:
$7,000 ÷ $2,250 = 3.1 Years
Five-year cash flow is:
5 Years - 3.1 x $2,250 = $4,275
($2,250 ÷ $7,000) x 100 = 32%
These results usually must then be compared to the owner's financial policies regarding capital investment to see if the ROI meets the internal "hurdle rate" and therefore enjoy the best chance of a green light by senior management. It is often desirable to examine a number of upgrade options to make the best choice. Note that some utilities offer programs that reward lower energy consumption with a dollar rebate that can make the upgrade even more attractive; also note that an energy service company may finance the upgrade.
See also: Useful formulas
Recycling Spent Lamps During a Retrofit