Economics of Energy Efficient Lighting Outdoor Prepared by
Economics of Energy Efficient Lighting Outdoor Prepared by ISR – University of Coimbra August 2017
Summary 1. 2. 3. 4. 5. 6. 7. Economics of Lighting Life. Cycle Cost (LCC) Payback LCC/Payback calculation – Example Online tools Energy Efficiency Investments 6. Additional Benefits of Energy-Efficiency 2
1. Economics of Lighting For the economic evaluation of different lighting solutions the Life-Cycle Cost (LCC) or Total Cost of Ownership (TCO) should be considered. Total lighting systems costs include: • Initial cost • Operating cost • Maintenance cost. 3
1. Economics of Lighting Life-Cycle Cost (LCC) / Total cost of ownership for two types of lamps 4
Economics of Lighting 2. Life. Cycle Cost (LCC) 5
Economics of Lighting 2. Life. Cycle Cost (LCC) 6
Economics of Lighting 2. Life. Cycle Cost (LCC) 7
Economics of Lighting 2. Life. Cycle Cost (LCC) 8
Economics of Lighting 3. Payback Simple Payback = Difference in Investment Costs ( IC ) Difference in Annual Savings ( OC+MC ) Simple payback period does not take into account the time value of money, which is a serious drawback since it can lead to wrong decisions in projects with long payback times (>5 years), and/or large discount rates 9
Economics of Lighting 3. Payback 10
Economics of Lighting 3. Payback 11
Economics of Lighting 4. LCC calculation - Example City X would like to examine a proposed street lighting retrofit project replacing 10, 000 150 W High Pressure Sodium (HPS) lights with 60 W LED lights City X especially wants to know: • Expected cost of project • Energy savings (€) annually • Payback period 12
Economics of Lighting 4. LCC calculation - Example Installation characteristics Halogen LED Number of lamps 10 000 Lamp Luminous flux (lm) 16 500 6 000 Lamp Efficacy (lm/W) 100 Lamp Power (W) 150 60 Lamp + Ballast/Driver Power (W) 163. 5 69 Luminaire Efficacy Factor (lm/W) 66 87 Lifetime (hours) 20 000 80 000 Annual operating hours 4 200 Cost (€) 3, 00 200, 0 Installation Cost (€) 5 5 13
Economics of Lighting 4. LCC calculation - Example Initial Cost (IC) Calculation • Number of luminaires (n) • Luminaire price including lamp(CL) • Installation costs per luminaire (CI): 14
Economics of Lighting 4. LCC calculation - Example Operating Cost (OC) • • Number of luminaires (n) Power per luminaire including lamp and ballast/driver, in Watt (PL) Electricity cost, €/k. Wh (CE) Annual operating hours (h) Annual Electricity Savings of 595 000 € 15
Economics of Lighting 4. LCC calculation - Example Maintenance Cost (MC) • • • Number of luminaires (n) Lifetime of lamp, in hours (LL) Lifetime of project, in hours (LP) Lamp exchange costs, including lamp and work (Cm 1) Other maintenance costs (Cm 2) – in this example are considered zero 16
Economics of Lighting 4. LCC calculation - Example Life. Cycle Cost (LCC) 17
Economics of Lighting 4. Simple payback calculation 18
Economics of Lighting 5. Online tools There are online calculation tools that, with varying degrees of complexity, can help in the economic comparison between technology options. Some examples are: http: //glamox. com/gsx/investment-analysis-calculator http: //hub. currentbyge. com/current-articles/simple-life-cycle-costestimator https: //energy. gov/eere/ssl/retrofit-financial-analysis-tool 19
Economics of Lighting Energy Efficiency Investments Ring fenced investment budget Maximise support from grants and other external sources Best practice for investment Retention of a % of savings by relevant department Retention of a % of savings for more measures Appraisal on whole life cycle basis 20
Economics of Lighting 6. Energy Efficiency Investments Financial options: • • own funding, third party financing, leasing, ESCO financing, rebates, incentives and others. 21
7. Additional Benefits of Energy-Efficiency Source-IEA, 2014 22
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