Posted on 8/4/2014 2:48 PM by Charlie Szoradi
LED technology has the ability to cut electricity costs in half over traditional fluorescent and metal halide fixtures. And with illumination consuming 20% to 30% of a building’s electricity, (according to the U.S. Department of Energy) 50% savings on electricity costs is significant. The energy savings and cost efficiency of LED lights can lead to greater profits and a higher net operating income (NOI). However, building owners and managers have an overwhelming number of choices when it comes to LEDs, and this article provides insight into making the best decision for your company.
1) Where should I put the LEDs?
For new construction, renovations, and tenant fit-outs, LEDs are ideal because of the sunk cost of lighting and labor. For buildings that are currently illuminated, change to LEDs in areas that are expensive to replace when current lights burn out. Leading LEDs run for 60,000 hours (20 years at office hours and 7 years at constant illumination) so the maintenance savings is key. Also switch to LEDs at the time of regularly scheduled re-laming of existing fixtures since the labor cost is better applied to new technology rather than outdated lights. Overall, long run-time facilities like distribution centers, parking garages, hotels, and hospitals are ideal for LEDs. Areas like 24/7 exit stairs in office buildings and hallways in apartment buildings, hotels, dorms, and hospitals are also great places to generate savings.
2) Who should I buy LED products from?
Look for a company that has a proven track record with case studies to back up their product performance, references, a long warranty period, and options for $0 upfront cost financing. If you have the opportunity to work with a U.S manufacturer, you may increase the likelihood of quality assurance, warranty coverage, and overall support services.
3) What should I look for in lamps and fixtures?
Choose LED products that are “Rebate Ready” on the DesignLights Consortium (DLC) Qualified Products List. Most utility companies use DLC to determine rebate eligibility, and the incentives can significantly boost return on investment (ROI) on the path to a higher NOI. Look for robust thermal management heat sinks to ensure longevity. Also consider smart control enabled products for dimming, light harvesting, and utility demand response even if you do not think that you need it now. Beyond the the product unit cost, compare total cost of ownership since higher efficiency products will save more money over their lifetime than some initially less expensive products.
4) When should I say yes to LED lighting?
Proceed after you have called a reference that has the same proposed technology in a similar application. Make sure that you have either seen the lights for yourself at a demonstration or have received samples that you ordered and installed in your own facility and are pleased with them. Additionally, credible manufacturers and their authorized resellers should provide you with a proposal outlining the cost, savings, and performance benefits to meet your goals. Make sure you are happy with the proposal before giving the green light.
5) Why should I invest resources?
NOI is such a key driver in property valuations that you can leverage the capitalization rate to your advantage and save money today while increasing profit on a future sale. Plus, what is good for the planet is also good for business, and prospective tenants or buyers may appreciate the environmental stewardship as well as the lower operating costs.
Charlie Szoradi is the chairman & CEO of Independence LED Lighting. He can be reached at firstname.lastname@example.org.