But what about looking at the cost of NOT DOING something? Ever thought about that? For example, what’s the cost of getting a lung transplant if you need one? $500,000….$800,000….more? I have no idea. No matter the cost of DOING the transplant, the cost of NOT DOING it is more.
Let’s take the life-and-death matter out of the equation for a minute and ratchet the seriousness of this blog post back to a more pleasant tone. Let’s look at an LED lighting upgrade for your commercial building.
DOING it vs. NOT DOING it.
What does DOING an LED lighting retrofit cost? $100,000….$500,000….more? Depends upon the size of your facility, of course.
1. Ongoing High Electric Bills
LEDs save you money on electricity costs because they consume as little as 10% of the energy used by your existing lighting system. So, no matter what the cost of the LED retrofit is, it will likely never be as high as the cumulative ongoing higher electric bills for the rest of the time you occupy your facility.
If LEDs could save you $200,000 per year every single year once they are installed, then the cost of NOT DOING the LED upgrade is $200,000 times the number of years you stay in your facility and continue to use the old lighting system. If you plan on staying in your current facility for ten more years, then the cost of NOT DOING an LED upgrade is $2,000,000. (And that doesn’t include the escalating energy costs over the next ten years.) Ouch!
2. Ongoing Maintenance Costs
LED lighting lasts up to 50x longer than traditional lighting systems. So, no matter what the cost of the LED retrofit is, it is likely not nearly as high as the ongoing maintenance and replacement costs of a traditional lighting system.
For example, if your current lighting system has a three-year life span under perfect conditions, then every 36 months you are having to buy a new bulb or ballast for every fixture. They don’t all go out at once, of course, so that means you might actually have to employ a full-time employee (FTE) to monitor and maintain your lighting system. Those daily work orders for buzzing, blinking, and dark light fixtures don’t handle themselves, do they?
What is the annual cost of an FTE who has to replace bulbs and ballasts constantly? What is the cost of a bulb and ballast? Multiply those numbers out over the next ten years. That is yet another cost of NOT DOING an LED retrofit in your facility.
3. Lost Opportunities to Do Other Projects
No matter what the cost of the LED retrofit is, you have to compare that to the other items on your to-do/wish list for your facility. Need a new roof? A new parking garage? A new piece of equipment? A new conveyor system? All of those items are important and necessary to your business, but they don’t necessarily save you any money in the long run. They are straight up capital expenditures (i.e. the cost of doing business).
Consider the fact that an upgrade to LED lighting could put as much as 30% of your overall electricity budget back into your cash flow. Every. Single. Year. That’s a lot of money. But, you’ve decided you’re NOT DOING the LED upgrade in order to allocate capital to these other areas, right?
Think through this again with me:
- You need a new widget for your facility. It costs $1M.
- You could upgrade to LEDs for $250,000 (for example) and save $120,000 per year in energy and maintenance costs for the next ten years.
- You choose to take the $250,000 you would have spent on the new LED system and applied it to the $1M widget instead.
- You pass over a lifetime savings of $1.2M the LED system would have brought you to apply the $250,000 today for a capital expense that costs $1M.
- If you’d done the LED retrofit and the $1M widget at the same time, the LED retrofit pays for the widget over the next ten years.
Doesn’t make sense to wait on the LEDs now that you look at it that way, does it?
There you have it. Obviously you need to look at the cost of DOING an LED retrofit. That’s just good business sense. Don’t pay more than you should and don’t buy cheap LEDs. On the other hand, make sure you also look at the cost of NOT DOING the LED retrofit.
Ninety-nine times out of 100 the cost of NOT DOING an LED retrofit is a lot higher than the cost of DOING the LED retrofit.
If you want a professional evaluation of your lighting system to determine the cost of DOING and NOT DOING an LED retrofit, give Energy Lighting Services a call at 855.270.3300