Emerging Leaders Series: How WESCO Turned on the Savings with LEDs

January 19, 2012 at 5:18 pm 2 comments

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/

Entry filed under: Climate Change, Conservation, Corporate Social Responsibility, Emerging Leaders Series, Greenhouse Gas Reduction, Sustainability, Uncategorized. Tags: , , , , , , , , , , , , , , , , , , , , , , .

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2 Comments Add your own

  • 1. Billy Grayson  |  January 26, 2012 at 10:55 am

    So the LED evolution continues – today I had the opportunity to see Cooper’s new lighting solution center in Peachtree City, GA. Their “experience” center is a must-see for those interested in this evolving technology. Most impressed with their new outdoor LEDs – for many of their parking lot projects, they are seeing 2-year paybacks already with big ROI.

    These outdoor products are very cool – for an example, see: http://www.cooperindustries.com/content/public/en/lighting/products/outdoor_wall_mount_lighting/_269859.brands.lighting!lumark!led.html

    Reply
  • 2. LED Truck Trailer Lights  |  February 7, 2012 at 11:26 pm

    LED Warehouse A Division of BR Industries Inc. has developed LED Lights that are affordable through optical efficiency. Through precise engineering we have been able to accumulate an immense amount of light allowing our LED’s to be one of the brightest in the industry.

    Reply

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