Community Leaders Dazzled by ROIs in Lighting Retrofits

Campaign Promotes Economic Advantages of Energy Conservation

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Posted: Wednesday, March 2, 2011 4:54 pm | Updated: 6:24 pm, Wed Mar 2, 2011.

DUBUQUE, Iowa - With ROIs in some cases exceeding 200 percent, and paybacks reported in one to three years, a coalition of local government, industry and economic development leaders in Dubuque are spreading the word: The low-hanging fruit in energy conservation is lighting.

Replacing outdated and inefficient light fixtures in commercial, industrial and institutional buildings has become a priority in this Midwestern city of 60,000. Why?

"Because it flat-out makes good business sense," said Dan McDonald, vice president of existing business at the Greater Dubuque Development Corp. (GDDC), a non-profit economic development group that is helping to champion the campaign.

With an estimated 900 million inefficient "T12" fluorescent lamps still being used in America, and a huge percentage of small to medium-sized businesses using out-dated lighting technology, experts say lighting retrofits could give businesses and institutions the biggest bang for their buck when looking to cut energy costs.

"To be brutally honest, a lot of business people hear the word ‘sustainability' and they wonder, ‘is this just a bunch of hype?' There's a healthy level of skepticism when it comes to environmental issues," McDonald said. "So, let's cut to the chase, we think there's money to be saved here and, oh by the way, there's a lot of energy to be saved, too."

Daniel Splinter, district manager at Crescent Electric Supply Company, based in East Dubuque, Ill., spoke at a recent meeting of the Dubuque Sustainability Innovation Consortium, a loosely defined network of businesses, utilities and civic leaders who all have a stake in the growing "green market" economy in the Dubuque area. When it comes to return on investment, he said the financial numbers for lighting retrofits speak for themselves.

"Upgrading lighting is the fastest, easiest way to achieve results in the energy piece of your business," Splinter said. "It can make a significant impact on your bottom line."

Lighting accounts for 45 to 70 percent of an average facility's electric load, according to Splinter, and with retrofits resulting in "cost-of-light" reductions of 22 to 50 percent, the numbers add up in a hurry.

Splinter said one of his customers, Morrison Brothers Company in Dubuque, a 150-year-old petroleum equipment manufacturer, recently upgraded the lighting in its plant. "They were just thrilled to death," Splinter said. "What's impressive is that their existing lighting system was consuming 35,000 watts and their new system is only drawing 17,000 watts. It cut their consumption in half, so regardless of what they're paying for electricity, they're going to reduce their lighting bill by that amount."

Taking an average energy cost of 10 cents per kilowatt of electricity, Splinter calculated Morrison Brothers' ROI at 216 percent, and the savings in electricity paid for the system in less than six months. The extraordinary ROI was fueled in part by the fact that Morrison Brothers had the staff to do the installation themselves, Splinter said.

More typical was Myers Cox, a wholesaler in Peosta, Iowa, that cut its wattage from 29,575 to 14,365 and got a 52.4 percent ROI with a payback in 1.91 years; and Frito-Lay, whose Dubuque office cut its wattage from 4,550 to 2,210 and achieved an ROI of 48.6 percent with a payback in 2.06 years.

Splinter said, when outlining the financial impact of lighting upgrades, the savings resulting from decreased energy consumption is only part of the equation. Other advantages include gains in employee productivity, fewer peak-demand charges and, for building owners, increased resell value and higher occupancy rates.

"The thing about productivity is that most of the costs in a building are people costs. So, if we can increase productivity by a simple 1 percent, basically what we'll do is pay for all the energy in the building," Splinter said. He cited a series of 11 studies conducted in 2009 by green building consultants Yudelson & Associates of Tuscon, Ariz., which showed that enhanced lighting resulted in a 3 to 7 percent increase in employee productivity.

David Lyons, project manager for Smarter Sustainable Dubuque, a partnership between the city of Dubuque and IBM, said energy efficiency can have a significant impact on economic development.

"The key concept to understand about sustainability practices in the business sector is that when done correctly, they add tremendously to the competitiveness of the business. If it takes me less of a resource to produce a product than my competitor, my cost of production should allow me to win more business. As the cost of resources continue to rise, I become even more competitive. Winning more business allows me to improve my scale of operation and invest in more sustainability practices ... which improves my competitiveness again.

"On the other hand," Lyons added, "if you think the cost of resources (electricity, gas, water, land, etc.) is going to get dramatically cheaper in the future, then you probably don't have to seriously consider sustainability practices. However, that's not the direction I see things going."

McDonald said the GDDC is working with the city of Dubuque and other local civic groups to get the word out to small and medium-sized businesses. "We're starting to take the message viral," he said. As an example, McDonald said one local bank is hosting a meeting with 50 of its business clients to share statistics about how much some local businesses are saving in energy costs following investments in lighting upgrades.

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