When building a case for spending money on lighting system upgrades, it’s important to consider the benefits to determine if it’s worth it. This is the first in a series designed to help facility managers do just that.
Today facility managers must develop a solid return-on-investment (ROI) case for getting capital improvement expenditures approved. Lighting is no different, although it is often oversimplified by the assumption that if the payback on energy savings alone is less than three years, it’ll be approved. Since that’s not the whole truth, here are some tips:
Calculating Energy Use + Demand
The energy savings calculation is more than simple division. Consider showing how a lighting upgrade will impact precise (not just average) price per kilowatt-hour charge as well as other peripheral charges. A reduction of the demand charge alone can be huge. We’ve heard of some situations where the demand can represent half of a total energy bill. But you have to understand the difference between kilowatts and kilowatt-hours: Kilowatts (a measure of power) measures how fast a facility uses kilowatt-hours (a measure of energy). Including accurate kWh and demand calculations in an ROI justification argument is probably the most important part of the justification for a lighting upgrade.
Some experts promise a 50 percent reduction in lighting energy, and then complete that goal by simply removing half the lamps. This strategy has legs if you conduct a lighting audit as part of the ROI case to determine if lighting levels are deemed appropriate, or recommended by the Illuminating Engineering Society Handbook. Over-lighting a space is a powerful justification argument for a lighting upgrade, because it shows that it will not only reduce the energy used per lamp, but also reduce the number of lamps required for the space.