Strategically Green - Lighting Retrofits Can Offer Big Energy Savings, Good Payback

Summer 2011

A lighting retrofit is not the lowest-cost energy strategy a commercial property owner or manager can pursue, nor will it yield the greatest energy reduction of any strategy. But when it comes to making a big dent in energy consump­tion at a cost that is affordable for most owners, lighting should top the list of projects to consider.

Owners and managers looking to reduce energy for little-to-no-cost generally start with strategies like energy management, dialing down the temperature on domestic hot water and turning off lights at night. Once no-cost strategies are exhausted, retro-commissioning is a good way to uncover additional energy reductions at an upfront cost that is typically less than the first year’s cost savings. At the other end of the cost-benefit spectrum are integrated energy ret­rofits, which can reduce usage by 50 percent or more, but are often cost-prohibitive and may have a payback period in excess of what owners and tenants are willing to pay for.

Lighting tends to fall into a middle tier between these two extremes and is being viewed as the next logi­cal area of focus. Payback periods are typically less than three years, and part of the cost may be passed through to tenants as operating expense, insofar as that expense is offset by lower energy costs. The amount of energy saved does not rival the savings achievable in a whole-building retrofit, but it lifts efficiency efforts well beyond the level achiev­able by low-cost strategies alone.

Lighting accounts for about 18 per­cent of all electrical use in the United States, and in commercial buildings it is a much higher percentage—any­where from 25 to 40 percent, accord­ing to various expert sources. With technological refinements in products and systems, initiatives around light­ing offer tremendous opportunity for energy usage and cost reduction—not to mention reduced greenhouse gas emissions.

An easy way to address lighting is to replace T12 bulbs. The National Lighting Bureau estimates that 500 million conventional T12 lamps are currently being used. In 2012, however, many of these lamps will be phased out. For a building that still uses T12s, the simplest replacement is a T8 fluorescent. Mike Colotti, a member of the Bureau, estimates that building owners are spending approximately $8 billion each year to operate T12s. Retrofits are easy because T12 and T8 lamps and bal­lasts fit into the same fixtures. If they were all converted to T8s, the energy spending would be nearly cut in half, notes Colotti.

In one instance, a lighting retrofit of a building with 24/7 operations involved switching T12 fluorescent bulbs with high-efficiency induction fixtures, T8 fluorescents and com­pact fluorescents. The total retrofit cost of $325,000 resulted in annual savings of more than $127,000, for a payback of just over 2.5 years. The initiative saved 1.4 million kWh per year and reduced the building’s car­bon footprint by 1.8 million lbs.

An increasing trend in lighting is the use of light emitting diodes (LEDs). A 2010 study from Pew Research predicts that LED will account for a 46 percent of all lighting in U.S. commercial and industrial build­ings by 2020. The biggest barrier to widespread deployment of LEDs today is the initial cost of the lights, which amounts to at least four times the cost per lumen than fluorescent lights. Technological advances are narrowing this gap every year, and there are indirect savings associated with LEDs that help offset the higher initial costs today.

LED lights last about four times longer than fluorescent bulbs and more than 20 times longer than in­candescent bulbs. So the high initial cost per lumen is offset over time by the long life. The advantage of longer lamp life is greatly enhanced in situations where lamps are difficult to change, such as lobbies with high ceilings and parking-lot lights. The labor and related inventory carrying costs of incandescent and fluorescent lamps may be the most powerful argument for switching to LEDs today, especially in places where LEDs are considered particularly effective, such as outdoor lighting and task or accent lighting.

WalMart announced in November 2010 that it would replace 70-watt ceramic metal halide lighting in the produce and electronics departments of 650 of its stores with LED lights that are 82 percent more efficient and have an expected lifespan of 50,000 hours.

In addition to the significant strate­gies previously mentioned, there are other lighting adjustment efforts that will reap big savings – and are often missed when property management teams take on no-cost/low-cost initia­tives.

  • Make sure the lights in your park­ing lots are shielded to focus light toward the ground instead of into the sky or onto neighboring properties.
  • Install task lighting at employee workstations, so that one or two late-night workers do not need to use overhead lighting for the entire floor.
  • Use motion detectors to control lighting in storage rooms, closets and other areas that aren’t used often.
  • Use dimming where you can. Research shows that if you cut lighting levels by 10 percent, most building occupants perceive it as only a seven percent reduction in lighting levels. The lesson to be learned here? There’s an opportu­nity to dim your lighting systems, and most people probably won’t even notice.
  • Do a quick survey of building oc­cupants and ask what’s working and what’s not when it comes to the lighting system. You may be surprised at what you learn!

In considering the cost of a lighting retrofit, remember that many times the implementation of these programs can be amortized and passed through in operating expenses to the extent of the savings realized. According to National Lighting Bureau President Howard P. Lewis, by qualifying for the Commercial Building Tax Deduction (CBTD), owners can gain a tax benefit of up to $0.60 per square foot to help cover the cost of a new lighting system or upgrade. Tax incentives or rebates might also be available from state governments and utility provid­ers. Utility companies, such as Xcel Energy, frequently offer Demand Side Management (DSM) funds to support energy saving initiatives. The key here is to research the program before beginning, as one may need to apply in advance for the utility company’s support. A rebate can escalate the payback, making the retrofit sale­able to building owners. With a little examination and planning, imple­menting a lighting retrofit program should not put a strain on a property’s budget.