Many articles have been written in this blog and newsletter about the many financial benefits of energy upgrades. Not just the direct cost savings of energy efficiency and conservation, but items like employee productivity, satisfying customers, and reducing risk. Energy efficiency improvements depend on the effectiveness of the equipment being purchased, whether they be lights, appliances, or HVAC equipment. The great news is that for many technologies, both improvement in efficiency and reduction in price have been occurring simultaneously on a regular basis. Historically, new energy technologies become both more efficient and cheaper over time.
This leaves corporate and building managers with a dilemma. If energy-efficient strategies will improve and be cheaper in the future, is it better to wait to upgrade? Then when next year comes, should one wait another year for even greater savings?
Here is an example. A building uses 500 75-watt T12 fluorescent bulbs. Assuming the owner pays $0.15/kilowatt-hour and operates the bulbs 12 hours/day every day, the T12s cost the building owner $2,228 per month in electricity to light the areas (assume an extra 10% usage for the ballasts). This doesn’t include the extra cost to air condition areas for the excess heat during the cooling season (including demand charges, too).
What if the bulbs are replaced with LEDs which produce the same amount of light, but use only 20 watts. Electricity costs for the lighting will decline to just under $600/month, a savings of over $1,600/month. The real savings will be a little greater as LEDs will reduce summer AC needs. Assume an installed cost of $85/LED, the upfront investment is $42,500, for a simple payback of just over two years. There is additional cost savings through reduced maintenance efforts because LED lights last much longer than T12s.
Let’s assume that in one year, the installed price of LEDs drop to $75/LED and the wattage drops to 15 watts. Electricity costs will decline to about $450/month, a savings of an added $125/month or $1,500/year. The upfront cost drops to $37,500. However, the building had one extra year of using the T12s, paying out over $1,600/month extra. So while waiting an additional year saves the building an extra $1,500/year in electricity costs and $5,000 in upfront costs, the wait also cost the building about $20,000 in extra electricity costs. The incremental improvement of one year does not pay for the use of inefficient technology during that year awaiting potential efficiency and cost upgrades.
Yes, the great improvements in energy technologies that have occurred over the past decade or two alone justifies the move to perform an energy analysis and smartly upgrade your energy systems now and not wait for possible added future advances.
CCES has energy experts to perform smart energy analyses and audits to show how the latest strategies will both save you significant money and improve the comfort and productivity of your staff. Contact us at 914-584-6720 or karell@CCESworld.com.