Special Report: Seeing The Light
By John Parkinson
Published in the April 2010 issue of Facility Executive
Greater survey participation, combined with an overall strong facility manager interest in either committing to lighting projects or having just completed them, are the two most important findings from this year’s second annual Today’s Facility Manager (TFM) lighting survey, sponsored by the National Electrical Manufacturers Association (NEMA) enLIGHTen America initiative. Serving as a snapshot for what the facility management industry across various marketplace segments is doing with regard to lighting, this survey—considering the existing economy—shows encouraging signs of numerous organizations looking at lighting projects in 2010.
There were a total of 342 survey respondents for 2010 versus 182 from last year. And a wide swath of industries was represented as well. Commercial office spaces had the highest representation (35.6%) of the types of facilities respondents managed, followed by manufacturing (20.1%), education (18.3%), government (15.7%), healthcare (12%), and other (12.5%).
The 2010 survey showed that nearly 45% of respondents had upgraded lighting in the last three years, with 22.2% having done it in past year, and 22.7% having undertaken an upgrade in the last three years (see Chart 1 below).
Meanwhile, 30.2% plan to execute a lighting upgrade within the next year, and 23.7% are planning for it within the next three. This means nearly 54% plan to make upgrades within the next three years, suggesting a distinctive pattern of respondent interest in lighting related projects (see Chart 2 below).
Respondents also ranked their reasons for performing lighting upgrades (see Chart 3 below). (Note: The portion of colored bars in Chart 3 that do not feature a % indicates a response rate of 6% or less for that answer.)
“Retrofit projects are the largest growth segment for 2010 and possibly beyond,” says Bob Freshman, marketing manager, Leviton. “And some new products that have been introduced recently are focused on this market.” Anecdotal evidence and the survey results confirm this trend, which lays the groundwork for facility managers and the lighting industry to work together to navigate project upgrades that create efficiencies for organizations.
For those who are going to make upgrades, there remains—albeit for a limited time—a number of financial incentive programs available. “The time to strike is now while you have all these incentives that can help reduce your capital cost,” asserts NEMA member and OSRAM SYLVANIA Energy Relations Manager Susan Anderson.
Combine this with informational resources to help facility managers navigate through the paperwork and project necessities, and the resulting formula should enable facility managers to get up to speed on the technologies and realize their return on investment (ROI) more quickly.
2010 Survey: Types Of Lighting?
Along with greater participation and overall interest, there were some other important results from this year’s survey. One question asking respondents to indicate all the types of bulbs they use in their facilities showed linear fluorescents (87.7%) having the highest penetration in the market, with compact fluorescents being second with 79.9%. (See Chart 4 for other responses.)
A follow up question asked respondents what type of bulbs provide the most light in their facilities. Here, linear fluorescents were also the most popular bulbs being used, with 76.8% saying this type of product provided most light. Compact fluorescents came in second here at 10.2%.
Taking a closer look at fluorescent lamps, the survey found that 70.8% indicated T8 lamps are the fluorescent type most used, and only 16.2% indicated the same for T12s; it appears a true transition has taken place with regard to T8s.
When asked if they use a lighting management system to control use, 47.3% said yes; 40.7% said no; and 12% were planning to implement one in the future. This shows a positive trend in favor of lighting controls.
2009 Survey Versus 2010 Survey
While the number of participants and the survey takers may have changed from 2009 to 2010, some questions confirmed trends from year-to-year. Load shedding is one example. (Load shedding, a component of demand response programs, occurs when a facility temporarily reduces its demand for power from its utility company.)
When asked in the 2009 survey if they were considering load shedding as a way to control consumption and costs, nearly half of the respondents (46.1%) said “no.” This year, the same question had an even higher “no” response (55.4%). This, coupled with a higher number of total of respondents answering the question, indicated a majority of facility managers are still not using this strategy.
Another year-to-year trend was confirmed, albeit at a lesser rate for the 2010 survey. A question asking participants if they were going to take advantage of the Energy Policy Act of 2005 (EPAct) Commercial Building Tax Deduction (CBTD) showed that for 2009 an overwhelming 82% said “no,” and for 2010 the “no” rate was 48.8%. However, what may have been most telling was that an additional 32.2% of 2010 respondents did not know about this tax. So, if the “no” responses and the “did not know” responses from this year were combined, it would add up to 81%—almost identical to the 82% “no” response from 2009.
This leaves the impression that many facility managers in the industry are not only opting out of seeking the EPAct tax deduction, but that a sizable number are not aware of it at all.
Why Some Incentive Inertia?
While it appears that a majority of the survey’s respondents were not using or aware of the EPAct tax deduction, another of the important federal incentive programs—The American Recovery and Reinvestment Act (ARRA) of 2009—fared only a little bit better. When asked if they were going to apply for ARRA funding, 6.5% said they had already done so; 23.7% said they were looking into it; but 29.2% said no; and another 28.3% said they did not know they could apply for ARRA funding for lighting projects. So, the largest single percentage of respondents were not taking advantage of it, but almost equally as many facility managers did not know the option might be available to them.
Interestingly enough, when participants were asked their top reason for failing to undertake a lighting upgrade—besides those who had already done an upgrade recently (43.7%)—23.7% said it was “too expensive” and 29% responded “other.”
Those who responded “other” were given an opportunity to provide written feedback as to why they had not done opted for an upgrade. “Controls and lighting updates were deemed too expensive in light of the economic recession,” said one facility manager working in a large commercial environment. Another comment: “Don’t have the capital at this point and also waiting to perform other building renovation projects,” explained one manager in a large education environment.
Ironically, there appears to be a disconnect between what facility managers see as the main challenge to lighting upgrades and what is available. This perceived financial challenge may be the cause of some inertia.
Another area where there has been some reluctance has been third-party financing. When asked whether they would consider third-party financing from a manufacturer or service provider (ESCOs and contractors) for lighting upgrades, 59.1% said no, but combine that number with the 16.6% of respondents that said yes along with 24.3% of facility managers who said they would need to know more, and there is an opportunity for some growth development in this area.
Finding Funding For Lighting
Today, incentive programs exist at the federal and state levels as well as with local utilities. From a federal standpoint, the aforementioned EPAct Commercial Building Tax Deduction (CBTD) allows building owners (or tenants) to write off the complete cost of upgrading a building’s indoor lighting, HVAC/hot water, and building envelope in the year the new equipment is placed in service, capped at $1.80/square foot. Alternately, the owner (or tenant) could upgrade just one of these three systems to earn the CBTD capped at $0.60/square foot.
In short, with the CBTD, the cost of new lighting or other building systems can be claimed in a single tax year instead of amortized over a period of years. The CBTD can be claimed for qualifying projects completed before January 1, 2014. NEMA’s special site, (www.lightingtaxdeduction.org), is a good resource to find out more about the EPAct CBTD.
Technical Consumer Products (TCP), Inc. has an EPAct checklist it provides to prospective clients, advises Chuck Wood, linear spec manager at the company. TCP, Inc. recommends facility managers create a cross functional team of in-house experts to assist with providing the necessary and correct information quickly and efficiently.
Another funding opportunity is ARRA, which is applicable to companies who create lighting efficiencies through upgrades. One sector taking advantage of ARRA is taxpayer-owned buildings. “We are seeing more public facilities doing lighting upgrades, and that’s really being brought about by the stimulus money,” asserts Anderson.
Although more widely known in California and New York, there are efficiency programs in many states. Individual utilities also offer efficiency incentive programs as well. While there is variability in what they are offering, collectively, utilities are gaining a reputation for working with facilities to help develop efficiencies and reward them with incentives. Some utilities are open to customizing plans with individual organizations to tailor such programs.
Pay-as-you-save type programs offered by lighting retrofit contractors and ESCOs provide facilities with the benefit of not having to pay upfront. These contractors and ESCOs evaluate where lighting efficiencies can be realized in a facility and then make upgrades. Consequently, these efficiencies save facilities on their utility bills, and these savings in turn are used to incrementally pay back the contractors and ESCOs incrementally over time.
For its part, the NEMA enLIGHTen America initiative is getting the word out on available technologies and funding. The group provides information on its Web site, and its members continue to speak with facility managers at seminars, conferences, and Webinars. NEMA and TFM recently held a Webinar in March 2010 entitled, “Qualifying for the Federal Commercial Building Tax Deduction Program with Lighting.”
Jeanette Strainic, manager, programs and strategic initiatives, GE Lighting, says, “There are so many regulatory issues going on right now, and not only here in North America, but globally. We are trying to give [facility managers] an overall understanding of what those regulations are, then show them where they can go get help.”
Members of the NEMA enLIGHTen America initiative can be a helpful resource, doing everything from performing energy audits to answering questions about the tax credit programs. As there is so much variability to every lighting project, an accurate assessment beforehand is vital.
“Retrofit projects have different requirements than new construction,” explains Freshman. “There are many technologies available today for lighting controls, and the cost to implement versus the savings potential can vary greatly. Energy audits can give a good determination of potential savings and are one of the tools that we suggest.”
“Most of the NEMA manufacturers will offer free lighting audits,” adds Strainic.
Bulbs. While the aforementioned linear fluorescent bulbs (76.8%) were chosen as providing the most light in a facility in the survey, Anderson suggests re-examining the metal halide bulb again. “It’s a high intensity discharge source that is used in many high bay applications—20' or up,” she says. These are especially applicable in industrial and manufacturing settings. Anderson also notes that new technologies are being used in metal halide lamps and ballasts and that consumers obtain more lumens per watt, more efficacy than from older technologies.
LEDs. While being considered a hugely important development in lighting, light emitting diodes (LEDs) still have the impression of being costly and needing more technological development before they can be more widely adopted. When asked if they use LED lighting anywhere in their facility, 42% of survey respondents said no.
Comments from those responding “no” included: “Waiting for LED technology to be advanced enough to use and cheap enough to afford,” said a survey respondent who manages a large healthcare setting. “It was too expensive when I had it quoted,” said another. (See Chart 5 for more on this question.)
Strainic acknowledges that LEDs (a solid state lighting technology) are still evolving in all lighting categories with its early adoption in exterior and interior signage. She also believes that less than legitimate manufacturers are partially at fault. “They are claiming things that just aren’t true about LEDs,” she says. “They sell the product, and six months later it doesn’t meet the claim. Customers have to do the research and work with a reliable manufacturer.”
To address this issue, GE Lighting has developed a campaign to help people understand LED technology better. “We think it is incredibly important for the customer to understand what to look for when choosing an LED solution,” says Strainic.
Meanwhile, Juno Lighting Group is offering a four part e-learning course on the importance of LEDs. “[This course] allows potential users to evaluate LED products and compare them with similar products using more familiar technology,” says Janet Cecchettini, manager, lighting education for the company.
Lighting Controls. “Many of the lighting trends correlate directly with the increased adoption of energy codes nationwide as well as the increased level of control provisions in those codes,” says Dorene Maniccia, director of policy and industry affairs, WattStopper. She cites the example of ASHRAE’s 90.1 standard and its mandate requiring manual-on lighting.
“Manual-on is something we are going to see more of, because it’s more energy efficient than automatic-on. With manual-on, occupants make a choice to turn lighting on when they enter a space,” says Maniccia who was recently named chair of NEMA’s lighting controls section. This approach provides the ability to control the lights manually with some type of switch or interface when entering a room, but still ensures lighting will turn off automatically via a sensor after a person leaves.
In the controls market, Maniccia sees trends that will offer better efficiencies and ease of use. For example, she sees more facilities adopting variable lighting controls in the forms of bi-level switching strategies or continuous dimming. She also anticipates greater adoption of daylighting, self commissioned products, and digital lighting control technologies.
“The market will increasingly demand products and technologies that control lighting in response to daylight,” Maniccia notes. For example, she points out that current photosensor technology may be measuring either the light coming from outside, or inside the space, but not both. “We are beginning to combine closed and open loop technologies into one product that looks up at a skylight and down at the space at the same time. This strategy improves performance, energy savings, and reliability.”
The other trend she sees involves products that self commission. These allow facility managers to make adjustments and modifications to lighting with handheld remotes—avoiding a manual “climb up the ladder” adjustment.
Where Do We Go From Here?
As the green building movement grows, it now has national ramifications with Congress enacting laws that legislate energy efficiency. “Federal policy is regulating what product manufacturers will, and can, produce,” says Maniccia. “Policy is setting building energy performance goals, and energy codes are becoming more stringent. These trends will continue to drive the lighting and controls market and will greatly influence the products and solutions available to facility managers.”
The desire for greater energy efficiency will drive government regulation and technological innovation as lighting manufacturers look to change the paradigm in how facilities are illuminated. With a wealth of information and financial incentives to help offset outlying costs, facility managers have an opportunity to address their lighting systems today, because ultimately, these incentive programs will expire, yet lighting demands won’t.
For more information on how you can implement effective lighting upgrades in your facility, contact the NEMA/EnLIGHTen America companies listed below.
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