Companies that upgrade to energy-efficient lighting may benefit from lower electric bills and incentive programs.

As more and more businesses look to save money and go green at the same time, one of the easiest changes they can make is an investment in energy-efficient lighting. In fact, it may seem too easy.

"Some people think it's too good to be true," says Eddy Rajczyk, president of SNA Inc., or Sustainable eNergy Advancement, a New Albany lighting company. "But it really is a no-brainer."

Unlike many other environmentally friendly moves that can save executives' conscience but not cash, companies are almost guaranteed to save money in the long term by upgrading to energy-efficient lighting. But to truly maximize the financial returns, it's best to do some planning and seek expert help.

Taking Stock

For some companies, the first step on the path toward enlightenment is hiring a professional to visit their facility and review current systems.

SNA is one of a number of Central Ohio firms that perform such services. "We do a complete energy audit," Rajczyk says. "We take light meter readings, we take a look at their existing system and how they use it. We have a whole procedural book that we establish."

The goal of the audit is to save the customer as much money as possible, says Mike Walls, energy auditor and designer for LITECH Lighting. "We make sound recommendations of things that will give them the most bang for the buck," he says.

The cost of lighting a building typically breaks down into three categories, Walls says. About 80 percent of the cost is the electricity itself. Another 15 percent is material-for example, the fixtures and lamps (another term for bulbs). The final 5 percent is labor-a category that includes items such as an energy audit. People concerned that an audit will cost too much should keep that breakdown in mind, Walls says: "Everyone gets stuck on the prices being too high, but the least expensive part of a lighting system is labor."

To control the big cost-electricity-consultants might recommend a range of solutions, including swapping out light bulbs and/or fixtures. One option is switching to smaller-diameter fluorescent tubes. Fluorescent lamps are rated in 1/8-inch increments; the larger the diameter, the more energy they use. So switching from T12 lights (whose diameter is 12/8, or 1.5 inches) to a 1-inch diameter T8 can save some serious electricity. While two T12 bulbs use 86 watts of power, Walls says, two T8s use only 59 watts yet deliver the same-or more-light.

Another likely change involves the building's lighting ballasts-the part of a fixture that controls the voltage and current of fluorescent and other electrical gas discharge lights. Traditional magnetic ballasts are being replaced by more modern ballasts that use solid-state electronic circuitry to transform voltage. They are more efficient, yet deliver the same light output. "That technology has evolved where we can get more lumens through an electronically driven ballast and use less energy," Walls says.

Because they don't get as hot, they also can help lower a building's cooling costs. "The electronic ballasts can take the heat out of the office," Walls says. "We air-condition six or seven months a year in Ohio. We air-condition buildings longer than you think."

New Technology

While fluorescent lamps are the most cost-effective and proven energy-efficient lights, one of the most promising technologies is LEDs, or light-emitting diodes. These are more efficient than even fluorescent lights, but they're not suitable for all applications.

LEDs have been around since the 1960s, but early versions were only capable of emitting red light. That made them ideal for indicators on stereo systems and car brakes, but not for general purpose lighting. In the past few years, strides have been made toward getting "white" light out of LEDs and improving their performance.

But Walls, at least, still has reservations. For something like an exit sign, he says, they are "perfect. They are the best thing to come along." An older 40-watt sign can be replaced with a 2.5-watt LED that lasts for 25 years.

However, when it comes to overhead lighting, Walls is less enthusiastic. He says LED technology is still developing, and he's heard about problems at some locations that have switched over. "I'm just not ready to saddle up my customers with products that have warranty issues," he says.

Still, Walls predicts that LEDs will be ready for prime time soon. "The industry is definitely going that way," he says. "I will just be a little conservative and protective of my customers."

Other innovations also are making their way into the mainstream. "The technology that's happening is incredible," Rajczyk says. "In the next two to three years, lighting is not going to be just lighting, but lighting control." One example: programmable lights that increase lumen output over time as aging bulbs naturally become dimmer.

And instead of traditional on-off switches, individual lights will be increasingly monitored and controlled by programmable sensors. Let's say you have a row or two of lights located by a window. With a typical fixture, the bulbs put out the same number of lumens, regardless of whether there's already sunlight streaming through the windows.

By setting a photocell to a certain threshold, Rajczyk says, that can change. "The minute the natural light comes in, it starts dimming that product." The fixture also can be programmed to delay changes, such as when a cloud passes by. That way, the lights aren't constantly brightening and dimming-and frustrating the building's occupants.

In addition to switching out bulbs and fixtures, businesses also can realize cost savings by standardizing bulbs throughout their facility. "You can use the same lamp through the whole office," Walls says. This saves money and time by reducing both the type and number of replacement bulbs kept on hand.

Ultimately, the amount of money a business can save by upgrading lighting varies depending on what fixtures it currently has and what they're replaced with. Rajczyk says that, on average, it takes an office building two-and-a-half to three years to recover the initial costs of an energy-efficient lighting makeover, and about one or two years for warehouses, manufacturing companies and car dealerships to recoup their costs.

Lighting Incentives

In addition to long-term savings realized through lower electric bills, energy companies have sweetened the pot with incentive programs.

American Electric Power (AEP) created incentives to meet the requirements of Ohio Senate Bill 221 which was signed into law by Gov. Ted Strickland in 2008. SB 221 requires Ohio's investor-owned utilities to reduce customers' use of energy by almost one-fourth by 2025. In order to meet the law's goals, AEP Ohio has set up a website-www.gridsmartohio.com-that gives energy savings tips and information about financial incentives.

The cash-back incentives cover a number of things that businesses can do to lower their energy demand, from heating and cooling upgrades to refrigeration changes to new motors and drives. However, lighting is among the easiest changes to make, according to Mark Garrison, who oversees business energy demand reduction programs for AEP Ohio.

"Lighting is low-hanging fruit and it's easy to do," he says. "It doesn't require an extensive evaluation because you can pretty easily determine what you have and how you can improve it."

Lighting accounts for about 25 percent of all energy needs in business buildings, Garrison says. In office buildings, it represents an even higher percentage.

"There are lighting incentives for customers who are upgrading their existing lighting to a more efficient system," Garrison says. "The incentives are based on what system they have in place at the time and what system they have in place after they make the improvements."

For example, a business that installs a new interior, reduced-wattage, 8-foot T8 lamp and ballast will receive $7 back from AEP. The application form contains a comprehensive list of potential lighting changes and the dollar value of each. Lighting companies are familiar with the program and can help match upgrades to available incentives.

The current AEP incentives run through the end of 2010. "But each year, we do a program review and update the program," Garrison says. "This year's program ends in December, but we will have another program next year."

AEP would like to see more businesses participate. "We've had about 2,000 projects submitted since the program began last year in June," Garrison says. "We know there are many customers out there who have not submitted and could participate in these programs."

Financial help also is available through the city of Columbus. The city recently launched the $1 million Green Switch Loan Fund, which provides low-interest loans to fund building upgrades that improve energy efficiency. Qualifying projects include updated lighting as well as insulation, windows, heating and cooling systems and energy-efficient equipment in industrial and commercial facilities.

"It's a revolving fund, so as people pay back the loans, we'll be able to loan out more," says Erin Miller, environmental steward for the city of Columbus.

The program, funded by federal stimulus dollars from the U.S. Department of Energy, also has a job-creation component, Miller says. The idea is that money saved through increased energy-efficiency can help maintain existing jobs or create new ones.

When the city unveiled the Green Switch Loan Fund, it also announced the $1 million Green Columbus Fund. It has a more ambitious goal of giving grants to businesses that purchase brownfield sites, complete environmental assessments or undertake a project that earns the U.S. Green Building Council's LEED for New Construction status, the nationally accepted benchmark for evaluating sustainable buildings.

Both city funds are capped at $200,000 per project and are offered to eligible applicants on a first-come, first-served basis. For more information, visit www.getgreencolumbus.org.

Aggressive Benchmarks

With all the advantages of energy-efficient lighting, why aren't more businesses jumping on the bandwagon?

One problem is that companies are often so busy dealing with day-to-day operations that they're unable or unwilling to tackle a major project that doesn't relate to their core business, says attorney Tom O'Brien, a member of Bricker & Eckler's energy, public utilities and environmental law practice group.

"Businesses are funny things," O'Brien says. "Sometimes payback is not the only thing. It's still not an investment in what they do. The competition for the capital dollars is just too strong. And most businesses don't have the luxury of a facilities manager who can sit around and think about this stuff."

Bricker & Eckler advises clients on energy-efficient incentives, including those for lighting. O'Brien says the requirements set by SB 221 will likely yield project incentives for years to come. The bill mandates that investor-owned utilities demonstrate a 22 percent cumulative reduction in energy usage by 2025, with incremental targets along the way. "It's the most aggressive benchmark in the country and, frankly, as we sit here right now, we're not sure how we're going to achieve that," O'Brien says.

"These [incentive] programs are going to be targeted at the total electric load," he notes. "There's nothing magic about lighting other than it's the easiest to do."

O'Brien predicts that Ohio utilities will become even more aggressive in future years when it comes to energy-efficiency. Columbia Gas of Ohio already has begun sending technicians to homes and businesses to find ways to decrease energy consumption. "The electric utilities are going to have to do the same program for their consumer or business customers sooner or later," he says.

The pressure to lower energy usage won't be unique to utilities in the next decade, O'Brien says. Businesses will feel the impact, too, as energy costs rise. That's another reason to consider making the switch to green lighting.

"The cost of power is going to continue to escalate, and they need to figure that escalation into what the true payback [of energy-efficient lighting] is," O'Brien says. "I'm telling people that you can count on the price of energy outstripping the rate of inflation for the foreseeable future." !

Lawrence Houck is a freelance writer.

Reprinted from the December 2010 issue of Columbus C.E.O. Copyright © Columbus C.E.O.