Posts filed under ‘Emerging Leaders Series’
Emerging Leaders Series: How WESCO Turned on the Savings with LEDs
Billy Grayson
For the past few months, I’ve had LEDs (light-emitting diodes) on the brain.
At WESCO, we sell a LOT of lighting, and have seen tremendous sales growth in more energy-efficient fluorescent bulbs, ballasts and fixtures.
There are a lot of factors driving this growth in fluorescent sales: Companies are looking to cut energy costs, and even without incentives an upgrade to T5 or T8 lighting from T12 or metal halide [1] often has a payback of three years or less. Companies are also looking to take advantage of state and federal incentives. In some areas, this can reduce the payback on a lighting upgrade from three to five years to 18 months.
Federal regulation is driving investment as well. In July 2012, most T12 technology will no longer be available (even if Congress does stop the 100-watt incandescent phaseout). Companies that do not upgrade their lighting may not be able to buy new bulbs by the end of the year.
So the business case for a fluorescent lighting upgrade is compelling, but with stories like Wired’s August 2011 cover feature on LED bulbs, stories like Wal-Mart, Denny’s and Starbucks investment in LEDs, and even some recent big WESCO LED projects (including streetlighting with Pacific Gas & Electric Co.), there are many wondering if they should make the jump to LEDs now, rather than make a short-term investment in a better fluorescent technology.
There really is no “right” answer in the debate over LEDs vs. high-efficiency fluorescents: The choice depends on a number of factors. Below are some of the things that are making LEDs look more and more attractive:
- The price of LEDs is coming down: Over the past two years, the price of many types of LEDs has come down significantly, more than 50 percent in many applications.
- LEDs are becoming more flexible: New entries to the market include LEDs that plug into existing ballasts, LEDs that provide easy upgrades as chip technology matures and LEDs that are “smarter,” with dimming and occupancy capabilities well beyond the traditional electronic ballast fluorescent.
- The price of fluorescents is going up: With recent spikes in the price of rare earth metals, the price of fluorescent bulbs rose more than 30 percent in 2011. Although the price has recently come down a little, it is possible that challenges in obtaining these materials could spike the price again.
- LEDs save a LOT: LED’s use less energy, last longer and require less maintenance than fluorescents.
- LEDs have a lighter footprint: Even outside of energy savings, LEDs are arguably better for the environment, as they require less materials to manufacture, ship and install, and they do not have the challenges associated with mercury disposal that fluorescents do.
- LEDs are much “cooler”: There’s a lot of new lighting options available with LEDs, and many of them are arguably more aesthetically pleasing than traditional fluorescents.
With all the arguments for LEDs, why would anyone make the shift from T12 to T8?
For WESCO’s internal lighting upgrades, it all came down to dollars and cents. For our portfolio, a switch to 25 and 28-watt T8s had an average payback after incentives of 1.9 years and a five-year return on investment (ROI) of 225 percent. For warehouse lighting, LED payback was slightly longer than five years.
What’s right for WESCO is not necessarily what’s best for other companies. We’ve recently completed LED lighting upgrades for companies ranging from utilities to food distributors to retail food chains. For these customers, the payback on LEDs was more compelling than a short-term move to fluorescents. Some of the factors for these customers included:
- Running their lights all the time: For companies ranging from food distributors to 24-hour mini-marts, LED investments can pay back faster than flourescents. Where a 40-hour-a-week facility may save $1,000 a year with fluorescents and $2,000 a year with LEDs, a 24/7 facility would save more than four times as much in annual electricity costs.
- Pricey power: WESCO’s LED business is strongest across the board in Hawaii. Why? $.25-$.40/kWh. When you pay that much for power, the deeper the energy savings the more compelling the business case.
- Long-term commitment: The federal government has become a strong customer for LEDs. With a 10-20-year investment horizon, LEDs make great business sense – even now most LED investments will outperform efficient fluorescents over periods longer than 10 years.
- Companies for whom image means a lot: A number of companies are willing to forego the short-term ROI of a fluorescent upgrade for the aesthetic and reputational benefits from a big LED investment. As I mentioned before, positive public relations and prettier store and restaurant lighting may trump straight payback and ROI calculations for some companies.
At WESCO, we’ve decided for the time being to put most of our investment in a fluorescent upgrade. But even in our portfolio there are places where LEDs make sense. We are upgrading parking lot lighting in a number of facilities to LED this year (the lifetime ROI on these investments beat our metal halide and HPS). We are also setting up some conference room and warehouse LED demonstration projects in Charlotte, North Carolina; Chicago; Los Angeles and Pittsburgh, Pa., artly to provide a showroom for our customers, and partly to act as “guinea pigs” for some of the cutting-edge technology being brought to market by Philips, CREE, and others.
Billy Grayson is the Director of Corporate Sustainability for WESCO Distribution, where works with both the marketing and operations teams to help the company “Go Green” – a program to reduce energy consumption and improve environmental performance and communicating WESCO’s energy and environmental achievements to customers, suppliers, and other stakeholders. Before joining WESCO, Mr. Grayson was a Senior Associate at ICF International, working with public and private sector clients on greenhouse gas mitigation, energy efficiency, and other environmental mitigation projects.
[1] For those not familiar with common lighting types, Philips has a good calculator to help you get started at http://applications.nam.lighting.philips.com/ecocalculator/
Emerging Leaders Series: Numbers Talk. But what are they saying?
Kimberly Wallis
It turns out that how you present a number is often as important as what that number actually is. Executives and investors tend to focus on numbers because they are quantitative, readily-comparable and solid. Or are they?
A given piece of information, such as the amount of energy a new light bulb uses, can be presented in a variety of ways. For example, it can be stated as watts-per-bulb, dollars-per-year, kilowatts-hours saved compared to the old bulb, net present value, or lifetime costs, to name a few. Each measurement brings to mind different considerations and highlights different comparisons. This can sway the reaction of the audience.
Rick Larrick, a professor of management at Duke University’s Fuqua School of Business, studies how a single piece of information can garner multiple responses, depending on how it is presented. After attending one of his lectures, I read a paper he wrote with Jack Soll. They found that people respond differently to MPG and GPM (gallons per hundred miles), even though the two ratios nominally convey the same information.
People tend to favor switching from a 30-mpg car to a 40-mpg car over switching from an 8-mpg car to a 10-mpg car. The first option seems to be a better deal. However, assuming the distance you travel remains constant, you actually save more gas (and therefore more money) with the second option.
In GPM terms, the first option involves going from 3.3-gpm to 2.5-gpm, while the second option involves going from 12.5-gpm to 10-gpm. Obviously, saving 2.5 gallons per hundred miles is better than saving less than one gallon.
This is why the new labels for cars require GPM as well as MPG. By presenting the information this way, people are encouraged to minimize their need for fuel. The facts don’t change, but policy and policy goals affect how the facts are presented, which demonstrably impacts how people react to the information. Here’s a quick example, expressed in numbers:
|
First Option |
Second Option |
|
30 mpg > 40 mpg (3.3 gpm > 2.5 gpm) |
8 mpg > 10 mpg (12.5 gpm > 10 gpm) |
Though it may seem that choosing to present facts in a certain way, such as GPM instead of MPG, is a form of manipulation, consider the fact that each choice is a manipulation. Every time you present a number, you are making decisions: which units to use, what to compare it to, what scale to use — and, of course, what to measure in the first place.
In business, numbers are presented all the time. The health of a company is often represented by a single number, as is the measure of sustainability. The context in which you place a number can emphasize certain things and downplay others – in fact, it always does, whether we intend it to or not.
Are your numbers saying what you want them to? What tactics do you use to convey important numbers?
Kimberly Wallis is a graduate student in environmental management at the Nicholas School of the Environment at Duke University, where she focuses on energy issues and effective communication. She is particularly interested in how individuals and organizations change.
NAEM Forum 2011: Lessons of an Emerging Leader
Kealy Devoy
I recently had the opportunity to attend the NAEM Forum in Tucson, Ariz. My primary motivation for going was to learn about trends in corporate sustainability and start feeling out the job market. As a member of NAEM’s new Emerging Leaders program and a masters student at Duke University’s Nicholas School of the Environment, the Forum was a great way to learn about what sustainability professionals do, and to network with some folks. I heard a lot of bright, innovative people speak throughout the event, and each session was nothing short of inspiring.
With the increased interest in sustainability, companies are faced with tough decisions about how to be competitive. Many companies are improving operational efficiency. Other companies are taking innovation to the next level by making significant and sometimes controversial changes to their operations. Why risk, for example, telling consumers to use less of your product to reduce the lifecycle carbon footprint of the product? One speaker summed it up like this: “If not us, then who? If not now, then when?” If there are unaddressed inefficiencies in the way a company operates, they are essentially creating opportunities for other firms to win out.
As a future EHS and sustainability professional, I believe my generation has a lot to offer in the way of innovation and creativity. We are young, enthusiastic and have a fresh perspective — a combination of traits that can help us see a business differently. But even experienced professionals sometimes have difficulty convincing upper-level management to try something new. So what can newcomers do to get taken seriously without stepping on toes?
I asked this very question during one of the keynote sessions at the Forum. The three-member panel had a lot to say on this topic. After listening to them discuss solutions to my dilemma, I came away with several great ideas that all Emerging Leaders should know:
- Don’t be afraid to step on toes. Just because you don’t have as much experience as your supervisor doesn’t mean that he or she will be offended if you bring new ideas to the table. And if someone does get miffed that the new kid is trying to make a meaningful contribution, don’t let it get to you. Firms these days need new ideas to stay competitive. Don’t shy away from your desire to be heard.
- Do your homework. Have an idea? Get out there and find out as much about it as you can. Are other companies doing it? Will it help your firm gain competitive advantage? What do experts have to say about the issue? Whether it is a simple efficiency improvement, a new product, or a drastic change to the business model, you should have as many details about it as you can. If you can get in front of upper-level management to pitch the idea, they are going to have a lot of questions, and you need to be prepared.
- If at first you don’t succeed: try, try again. You may have heard this a lot growing up, and it is no less applicable now. When you’re new to an organization it might take time for those around you to realize the value of a fresh pair of eyes. Don’t let one (or two or three) “no’s” get you down. If your idea is sound and makes good business sense, you can make it happen. Try finding someone else in the organization that has been there for a few years. Ask them about how different managers like to get information, what questions they might ask, and what their primary concerns are. A more seasoned professional can guide you to the right person and help you collect the information they will want.
With these tactics, any young professional can pioneer a new process or project. I continue to be amazed by some of the initiatives being announced by NAEM member companies, all due to creative problem-solving on the part of their internal environmental leaders. The private sector has the opportunity to make serious changes in the way that they operate with no losses in the quality of their products and services. All it takes is the courage to be unconventional. What other advice might you have for Emerging Leaders?
Kealy Devoy is a second-year at Duke University’s Nicholas School of the Environment pursuing a Master of Environmental Management in the Energy and Environment concentration. She is originally from St. Louis, Missouri and received a B.A. in Environmental Studies at the Center for Interdisciplinary Studies at Davidson College. After earning her degree, she worked as the first Sustainability Coordinator at Davidson. Most recently, Kealy was a Climate Corps Public Sector Fellow with the Environmental Defense Fund, where she helped the Town of Cary, NC identify energy efficiency upgrades in fire stations, water and wastewater treatment facilities, and municipal buildings. At the Nicholas School, she is an Energy Improvement Management Intern with the Duke Carbon Offsets Initiative.
Conviction Alone Doesn’t Compel Change
Kimberly Wallis
This month in our ‘Emerging Leaders’ series, we introduce you to Kimberly Wallis, a master’s candidate at Duke University’s Nicholas School of the Environment, and a student member of NAEM. This summer she worked on energy issues as an intern with the Union of Concerned Scientists.
These days, a job in the hand is definitely worth more than two in the bush. No elected official is going to even consider a move that might cost their constituents jobs. So, convincing legislators in Ohio to invest in renewable energy, rather than in coal, one of their main industries, seems like a hard sell. Vague statements about ‘the green economy’ and ‘green collar jobs’ aren’t going to cut it with the legislators or with their constituents. “Maybe I would get better pay at a wind farm,” thinks the technician. “But I don’t know where these jobs would come from, or how many they would be. I’m better off just sticking at my old job.”
How many, where, and how much? Those are the questions the Union of Concerned Scientists (UCS) tried to answer regarding clean energy jobs in the Midwest states, including Ohio. It’s hard to convince people to give up the status quo for uncertainty, even if evidence shows that the change will be beneficial, so UCS put resources into erasing some of that uncertainty. As an intern there this summer, I helped paint a picture for Ohioans of what a different future might look like.
How would the change affect a household’s monthly energy bills? What would the net jobs increase be, not countrywide but in Ohio? In short, how would investment in renewable energy and energy efficiency impact the daily life of an Ohioan, and is it worth giving up the certainty of the status quo?
It’s not enough to tell people what not to do. It’s not even enough to tell them what to do instead. “Better the devil you know” – and uncertainty is always a devil. Painting a picture of what the future could look like gives people something to strive for, whether they are in your community or in your company. It’s the difference between a mission statement and a vision statement – and as the vision becomes more specific and tangible, it becomes more persuasive.
A call to “decrease waste!” or to “reduce GHG emissions!” isn’t going to convince anyone to give up the security of the status quo. What are you offering them instead, is the question.
When it comes to making the case for new EHS and sustainability programs, what tactics have you found to be most effective?
Kimberly Wallis is a graduate student in environmental management at the Nicholas School of the Environment at Duke University, where she focuses on energy issues and effective communication. She is particularly interested in how individuals and organizations change.
What’s the Prognosis for Hydrofracking?
Dania Nasser
Today we are kicking off a new series on the Green Tie, featuring the ‘Emerging Leaders’ within our membership. Dania Nasser is a student member of NAEM, pursuing a master’s degree in Environmental Management at Yale University.
In the wake of New York State Governor Andrew Cuomo’s decision to consider lifting the ban on hydrofracking, it seems like the term and the debate have gone mainstream.
As you probably know, hydrofracking (hydraulic fracturing) is a method by which natural gas stored in layers of rock is extracted through the use of chemicals, water and pressure to break through the rock and recover natural gas.
While several states allow the practice, it has become a lightning rod issue for many communities. There is serious concern that disturbing the layers of rock and sediment to recover natural gas can result in drinking water contamination. Currently, the Environmental Protection Agency is studying the general impacts of hydrofracking and looking to release a Federal report and possible guidelines in 2012.
Few things worth doing, however, pose zero risk. Risk should be monitored and tracked closely, but not automatically used as criteria for eliminating viable options.
I was recently discussing the issue of risk surrounding hydrofracking with a neurosurgeon friend, and it occurred to me the extent to which the practice might be compared with brain surgery. Take for example, a brain surgeon undertaking a patient suffering from an aneurysm. The source of the aneurysm is not always clear, and sometimes exploration for the source of the bleeding can cause more harm than good—but this is a major risk that doctors take. Doctors are able to take this risk because of all the risk mitigation that doctors take, such as years of practice and study, the latest equipment and time-tested procedures.
Hydrofracking poses a similar set of risks and obstacles. Just as with surgery, the risks must continue to be vetted and addressed. The same process is necessary to ensure proper practices and procedures set in place for hydrofracking.
If hydrofracking is increasingly seen as a viable option for recovering additional domestic energy, the concerns that have caused the controversy surrounding hydrofracking must be addressed. Areas that must be further addressed to ease anxiety surrounding hydrofracking include readying infrastructure and monitoring technologies, developing best practices, as well as working to carefully plan and manage the impacts of hydrofracking.
How do you weigh the risks of practices such as hydrofracking? How do you address the concerns internally as well as externally?
Dania Nasser is a student member of NAEM, completing a master’s degree in Environmental Management at Yale University. She is currently Director of Environmental Affairs at a New York law firm specializing in environmental and construction law. She is a member of NAEM’s Emerging Leaders group and the Board of the Manhattan Chamber of Commerce Green Finance Committee.
