LED Lighting + Green Incentives = Astonishing ROI - ELB Consulting

You may have heard Thomas Edison’s teachers said he was “too stupid to learn anything.” And that he was fired from his first two jobs for being “non-productive.” And as an inventor, Edison famously made 1,000 unsuccessful attempts at inventing the light bulb.

When a reporter asked, “How did it feel to fail 1,000 times?” Edison replied, “I didn’t fail 1,000 times. The light bulb was an invention with 1,000 steps.”

Edison changed the world with the invention of the light bulb, and now LEDs (light-emitting diodes), while many 1,000’s of steps further down the path, are again transforming the lighting industry.

LEDs are the “latest lighting” phenomena with popularity soaring due to their high efficiency. While common belief is that LEDs are a new technology, the core LED light technology and first patent has been around for over 50 years. It has only been in recent years and another 1,000 steps, that the development of white LEDs has accelerated them as a replacement for other white light sources.

Just like with computers and cell/smart phones, these rapid advancements in LED technology are transforming the lighting industry and prices are drastically coming down with new innovation.

Since 2008, the cost of LED bulbs has fallen more than 85 percent, and most recently, a number of retailers announced that they will sell LEDs at $10 or less. Today’s LED bulbs are also six to seven times more energy efficientthan conventional incandescent lights, cut energy use by more than 80 percent and can last more than 25 times longer. (Energy.Gov 11/22/12)

The seemingly overnight shift from traditional lighting designs using incandescent, fluorescent and high-intensity discharge (HID) light sources, to new lighting designs using more energy-efficient LEDs are quickly becoming the wave of the future.

The very nature of LED technology makes them almost a necessity for future lighting needs. A few of the characteristics are listed below;

  • LEDs use very little energy while providing brilliant light. LED technology uses 70% less energy than an HID fixture, and 40% less energy than a T-8
  • LEDs use energy far more efficiently with little wasted heat, unlike incandescent bulbs which release 90 percent of their energy as heat, therefore LEDs reduce the demand on HVAC systems
  • LED technology can be implemented in retrofits (using existing fixtures), or new installations using new fixtures to maximize the technological benefit
  • LEDs intensity and color can be designed and controlled for the specific environmental needs (manufacturing, office, hotel, etc), plus they can use a dimmer unlike fluorescent options
  • LED’s are environmentally conscious; balancing social and environmental benefits with sound business practice

With the rapid technological improvements resulting in the dramatic reduction in lighting cost, many firms are replacing or retrofitting with LED lighting. In these energy projects, we find the payback period typically less than two years, and frequently less than one year. How is this possible you ask?

Besides the energy savings of as much as 70% and the incentives to ‘go green’, the ROI payback is boosted by;

  1. local utility and state energy tax incentives,
  2. EPAct Section 179D federal tax deductions (expired 12/31/14), and
  3. the abandonment or disposition of assets made easier by the new IRS tangible property regulations.

These collective benefits accelerate the ROI and payback, providing positive cash flow (even when financing the project). Utilizing a lighting partner with the expertise to process and complete all the incentives, versus an a la carte approach will reduce headaches and ensure financial benefits are maximized.

The question is not “if” you should evaluate the benefits of LEDs, it is when.

Note: Even though the EPAct 179D expired at the end of 2014, if you installed (or built) a project in the past several years that qualifies, you can still go back to take advantage of this federal incentive (up to $1.80 per square foot).

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