Project cost vs value - communicating the difference

Released: 04-Jun-2015

Quality LED lighting is often a greater upfront cost than old technology replacement or lower quality LED offerings. Energy efficient LED lighting upgrades are competing with other valid demands for CAPEX budgets, so the more we can help in equipping the FM with the total project value data, the better.

As an Australian company that specialises in the design, manufacture and supply of high efficiency LED lighting & controls solutions for long lit areas, our experience from over 1000 installations is the need to focus on the long term project VALUE & not just the upfront cost.

Selling the project payback

For the enLighten team, it was strategically important to run an installation business, so that we could gain insights from our customers, which fed into the R&D process. We developed a thorough return on investment (ROI) spreadsheet, which took into account existing & replacement lighting types, hours of operation, use of sensors and site electricity tariff data. In the back end we inputted cost data of emergency light battery replacements, call out rates and lamp replacements. 

The end result is a calculation of energy savings per area (kWh pa), % energy reduction, greenhouse gas savings, approximate value of energy efficiency certificate rebate and project payback in years. 

This information assists our FM clients to propose lighting upgrades. On request we also provide further financial analysis incorporating internal rate of return (IRR).

enLighten customer feedback

Since the installation of Chamaeleon fittings to all car parking, loading dock, fire stair and areas where vandal proof fittings are required, we have achieved a massive reduction in energy costs to the sum of $21,000 in the first year. We have not allowed any significant funding within budgets for maintenance because they are extremely reliable and most importantly are not labour intensive. 

We have spent less than $300 annually to service 150+ fittings which is a massive saving compared to conventional fittings. I would highly recommend these fittings in any commercial environment where continuous maintained lighting is required.
Stewart M Tonkin CSM, Chief Engineer Rydges Hotel Parramatta 

 

What’s motivating the lighting seller?

Energy project companies and lighting companies selling directly are driven by the margin or markups they make on the one- off lighting sale. Often, maintenance costs and reduced vandalism for the user do not factor into the cost / benefit equation when assessing simple light fittings such as an LED tube or batten against a higher quality fitting.

Whilst LED light fittings have operating lives with much higher numbers than traditional fluorescent or HID lighting technologies, there is an enormous range of product quality & components within LED light fittings that will affect the maintenance.

Enlighten BDM for Victoria & Tasmania, George Tzoutzidis, recommends that customers look for established suppliers that have an Australian presence and to thoroughly assess the warranty conditions.

“We have seen warranty offerings of up to 5 or 7 years listed on product brochures, but on closer inspection the operating hours are often capped at 35,000 hours” comments George.

Another pitfall of lower cost LED fittings is the deliberate confusion between LED efficacy & luminaire efficacy. End users can get caught out by the terminology and experience significant and unexpected lumen depreciation over time, starting from as low as 30,000 hours due to poor quality heat management and LED drivers.


This story was featured in one of our quarterly "enLighten Me" newsletters… Go to Newsletter