Posts tagged ‘energy efficiency’
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/
Community Engagement is Key in Climate Action
Mark Posson
In helping my local municipality develop a Climate Action Plan, I reviewed several articles discussing the barriers to individuals and households making behavioral changes to reduce greenhouse gas emissions. An estimated 38 percent of the United States’ overall carbon emissions comes from household energy usage, which means significant changes in household behavior are necessary for our country to meet its greenhouse gas emission reduction goals.
Government regulations are driving technology changes, such as higher appliance-efficiency standards, but efficiency improvements alone are not going to do it. Individuals must make better energy usage choices in their daily activities to achieve needed usage reductions. Passing regulations is easy; changing decision-making and behavior is not.
Do I carpool or drive alone? Do I weatherize my home? Do I replace my incandescent bulbs—with CFL or LED? Do I need that light on? How and where do I set my thermostat?
There are multiple barriers to behavioral change and there is no silver bullet. The specific methods of intervention are best tailored to the specific change and outcome desired. There are, however, some common elements to making lasting change:
- Make it easy: Free community programs for energy audits and retrofits both educate and make immediate changes with only a phone call.
- Make it financially attractive: Show people the payback so they see what’s in it for them. Communicate the cost of leaving a light, power strips and electronics on when not in use; and the ease of turning them off. Rebates and credits may be needed to get some to act or to balance the financial equation.
- Make sure it works: Poor quality of a service or product will create only headwinds for implementation. Go with what works and shoot for the best.
- Provide timely gratification: A lower utility bill next month or an instant rebate is superior to a tax credit next April.
- Take a multi-pronged approach: Don’t rely on just one method. Easy, financially attractive, well-understood changes have a better chance of being adopted and maintained.
Reduction of greenhouse gases is only one of the many environmental improvements we are trying to tackle. As environmental leaders, we need to further integrate social science with the environmental science to achieve better use of our natural resources. The next increments of improvement will be the hardest as we are will need to address the individual behavior of the earth’s residents.
What methods are you using to change the behavior of your organization and community to make better environmentally-sensitive decisions?
Mark Posson is the former Director of Environment, Safety and Health at Lockheed Martin Space Systems Company and the current Chair of the city of Pleasanton’s Energy and Environment Committee. Mark enjoys fishing, hiking, biking, racquetball, time with the family and public service.
Identifying Opportunities for Energy Efficiency
John Hoekstra
Energy efficiency programs and renewable energy projects are growing priorities for many companies. This week, we spoke with John Hoekstra, Director of Sustainability with Summit Energy Services to learn more about how companies are addressing these challenges.
GT: How important is energy efficiency to the sustainability programs of companies today?
JH: Energy efficiency is a key component of any sustainability program. Investors, clients and supply chain stakeholders are interested in not only the sustainability footprint of an organization, but how to reduce it. Energy is often the largest contributor to an emissions profile. The alignment of project cost and emissions impact is what many companies are seeking today.
GT: What are some best practices that organizations can use to find energy efficiency opportunities at their sites?
JH: A sustainability site assessment is an efficient method of identifying no- and low-cost reduction opportunities for energy, water and waste. The assessment will produce a roadmap of low investment activities that can save resource usage and money.
GT: In this economy, how are companies paying for sustainability projects?
JH: In addition to local and federal incentives, collaborative solutions also can assist with moving a project from paper to action. This can be in the form of the contract structure (performance-based) and leveraging market resources (incentives, demand response programs, etc).
GT: We hear a lot about state and federal budget issues. Are there still incentives available?
JH: In general, yes, although funding has certainly been affected by recent budget constraints faced by these entities. Many incentives at the federal level are slated to come to a close at the end of this year, but can always be extended by Congress. In particular, many should watch the Federal Investment Tax Credit (FITC) grant for renewables. This is a program in which the government provides a cash grant for up to 30 percent of a project’s cost. If this incentive is not extended, it will be difficult to make renewable projects work in the United States.
GT: Do you see companies adding water and waste into their efficiency/reduction plans?
JH: Yes. Investors, clients and supply chain stakeholders have identified water as a scarce resource that needs to be tackled. Organizations are now being asked to report their water footprint and reduction strategies externally through vehicles such as the Carbon Disclosure Project survey. Waste efficiency is driven by many supply chain sectors: consumer goods, automotive and related packaging providers. Our experience shows that, similar to energy, waste management can be a substantial cost that needs to be actively managed.
John Hoekstra will share more tips for optimizing energy efficiency programs though incentives during NAEM’s “Capitalizing on Energy Savings Incentive Programs” webinar on Aug. 9.
