Energy savings and resource efficiency

Business

Case study: Lighting

Find out how CMR determined that they would be better off by about $11,500 over 8 years if they invested in an energy-efficient system, using on-bill financing to finance a lighting upgrade.

Situation

Office tenant CMR runs a whole floor tenancy in a relatively modern office building. Their current lighting installation comprises 190 fairly standard dual 36W T8 fluorescent tube fittings, with older style magnetic type control gear (i.e. ballasts). These fittings each consume approximately 88W, of which 72W is consumed by the lamps and an additional 16W is consumed by the ballasts. These lamps are coming to the end of their lifespan, and can be replaced with similar T8 fluorescent technology in combination with upgrading the ballasts to more efficient electronic versions.

Alternatively, a more energy-efficient option would be to replace the fittings with 210 single tube 28W T5 lights and fittings. This would replace both the tube and the ballast of the older fittings. A few additional fittings are also required where light output is not adequate. The T5 tubes also have a slightly improved lifespan when compared to the standard T8 fluorescent tubes.

How does the energy-efficient (EE) system compare to the standard system?

Equipment type Standard EE
Cost to install ($) $7,600 $25,200
Operation and maintenance costs ($ p.a.) $988 $546
Electricity use (kWh p.a.) 41,800 14,700
Equipment life (years) 6 8
Electricity cost reduction in first year from the system($)   $5,420
Simple payback period for the system (years)   4.7
Simple payback period for the system, with marginal capital1 (years)   3.3

Item  NPV 
Standard system -$46,235
EE system -$34,728
Difference $11,507

Finance option selected: On-bill financing

CMR decides to seek on-bill financing for its lighting upgrade. The provider of this finance will manage the planning and installation of the equipment, which suits CMR’s needs. In addition, this option results in the highest expected NPV.

 

1This is the payback period for the energy-efficient (EE) option using the difference in capital outlay between the standard and EE equipment, rather than the full capital outlay for the EE equipment.

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Page last updated: 10 December 2015