LED fixtures save you money on your electricity because they only produce light in the visible spectrum and therefore there is no energy wasted on heat and ultraviolet light. At CitiGreen, when we conduct an LED retrofit, we raise the light level around 50% and we carefully select the color of the light of the new LED fixtures. Exterior lights, warehouses and manufacturing areas get a bright white light, office spaces and lunch rooms get a warmer light.
This article will explain how the savings are calculated and how the PG&E On Bill Financing term length is determined.
Light fixtures are measured by input Wattage, and the difference between the Wattage of the existing fixture and the new fixture will give you the savings per fixture. Multiply that by the number of hours that the light is typically powered on and you will get Watt hours which if you divide by 1000 will give you kiloWatt hours. That is the unit of power that utility companies bill you for power. In PG&E territory that is about $.22/kWh, in SMUD it is about $.14/kWh.
When we compute the savings payback in our LED Proposals, we start with the total cost of the project, with all the costs included. We subtract the amount of any rebates available, which come to us. We then deduct the amount you can claim for depreciation. Then we deduct a small amount for your savings you will see in reduced maintenance costs. Since this number is something most companies do not quantify, we do not apply very much to this maintenance amount. This will give you a net cost of the project.
Then we calculate the energy savings per fixture, multiply by the number of each type of fixture, and enter the number of hours each fixture is powered each month on based on our conversation with you. When all of these individual fixtures are added up, you will have a total monthly savings of kWh per project. When multiplied by the kWh cost of electricity, we have a monthly cost savings per project. By dividing the monthly savings into the net cost, we arrive at the payback period in months.
We highly recommend paying for these fixtures with PG&E’s On Bill Financing program. It is a zero interest loan to pay for energy saving upgrades. The payments are made right on your electric bill. The fact that there is no capital required for this LED retrofit makes the decision easier for companies large and small. We have to add several months to the length of the project to accommodate PG&E’s processing time, but the program has been in existence for over 30 years, and actually works quite well.
The number of months the payments are spread out over is a function of the (Total cost of the retrofit minus the rebate) divided by the (amount of savings in kWh per month times the cost of electricity). This number cannot be greater than 60 months. We typically adjust the number of hours of operation so that we spread these payments out for 50 to 60 months, so that you have savings from day one. If you have a different length of the loan you would like for any reason, we simply adjust the number of hours to meet that length of loan. It helps us to get a reading on how long you would like to have the loan run before we start the process because every adjustment can take up to 2 months. Between the time you sign the loan terms document and we fill out the actual loan document, you can tell us a different term length. It is not worth filling out a different loan terms document because you will lose 2 months of better, brighter light for no gain.
CitiGreen fills out all the paperwork required for PG&E. We will ask you for signatures on our contract, then the PG&E loan terms document, then the PG&E Final Loan Document. No cash is required for an LED upgrade using this process.
If you have any further questions, simply contact one of our Account Executives at 877-506-2010.