Tops tips for selling lighting upgrades to building owners and facilities managers
In this economy, nonresidential building owners and managers are looking for ways to cut back on spending. Rising vacancies and declining rental rates in the commercial sector, as well as budget shortfalls for public facilities, are forcing them to look for savings in operations and maintenance.
Instead of replacing old systems, owners and managers are choosing to put off costly up-front replacement fees by periodically repairing them under a deferred maintenance plan. For example, in February, Raj Modha reported in the Daily Titan that the many projects for the Physical Plant at California State University, Fullerton, in Fullerton, Calif., were at a financial impasse. The accepted industry standard to maintain the university at optimal performance totaled an estimated $8.1 million per year, according to Modha, yet the year's deferred maintenance budget comes to only $1 million.
The majority of building owners and facilities managers are facing this same predicament. To save money, they're temporarily patching systems to limp along into what they hope will be a more affluent future. It's under these conditions that electrical engineers and contractors must try to separate reluctant clients from their dwindling cash reserves.
However, the older systems may be as much a cause of their financial straits as the recession. More than 75% of the estimated five million commercial, industrial, and institutional buildings in the United States were built 20 years ago — and are in dire need of systems replacement. Because of their age, many were grandfathered in when stricter energy-use requirements came into play in the last decade. Accordingly, many of these older systems are energy hogs. Each year, these buildings consume nearly 900 billion kilowatt-hours of electricity, costing approximately $115 billion. Therefore, energy-efficiency and improved system performance are at the heart of the argument for systems replacement in commercial, industrial, and institutional buildings.
Lighting is one of the least efficient energy conversion processes in buildings, and the Department of Energy (DOE) estimates it consumes about 22% of the total electricity generated in the country. More than half of that amount is consumed in the commercial sector, where the majority of energy use for lighting occurs during peak hours of electrical demand and adds to a building's internal heat generation. This causes an increase in cooling requirements — newer energy-efficient lighting can drop air-conditioning demand by up to 30% in certain applications and in some geographic areas of the United States). Lighting can comprise up to 30% and 40% of the energy used by a building, and more than $50 billion is wasted each year by the owners of 2.8 million U.S. commercial, industrial, and institutional buildings that keep their outmoded lighting systems, says the DOE.
Ironically, replacement of outdated lighting systems allows for the fastest return on investment (ROI) — paying for themselves within an average of three to five years or less — as well as a practical way to reduce operating costs (in some cases by as much as 25%) for the total facility. “Lighting is the absolute quickest bang for your buck,” says Don Oberkiser, sales manager/construction division manager for electrical supplier Wabash Electric, Fort Wayne, Ind.
Because of this, you would think that lighting upgrades should sell themselves. Unfortunately, they don't. Although there has been an increased awareness of the benefits of replacing older lighting systems with energy-efficient products and controls — as well as the rebates and incentives that can help pay the up-front costs of new systems — selling a lighting upgrade still requires due diligence on the part of electrical engineers, contractors, and lighting designers. Following are some top sales tips for convincing clients that a lighting upgrade may be their best investment during these tough times.
TIP #1 — DISCUSS ADDITIONAL BENEFITS WITH POTENTIAL CLIENTS.
Clients may not be aware of the multiple benefits of lighting upgrades, particularly if their buildings reside in a state with lower electricity rates. “The contractors in those states have to work twice as hard to sell the upgrades because people aren't freaking out yet about how much it's costing for them to run their lights,” says Isaac Jaten, who heads a local lighting rebate program for the Energy and Carbon Management division of Nexant, Inc., Tempe, Ariz. “Electricity makes up on average 85% of the cost of a lighting system. The cheaper it is to operate, the cheaper the lighting system is to own. As for local commercial buildings and industrial [facilities], their reason for an upgrade is either inadequate light levels or antiquated lighting systems.”
Contrary to popular belief, energy-efficient luminaires and lamps can provide improved light quality, uniformity, light output, color, and appearance. One response to the energy crisis of the 1970s was to reduce energy costs by removing a lamp or two from a multi-lamp luminaire or removing luminaires altogether, resulting in decreased lighting levels. However, current technologies allow facilities to maintain, increase, or focus light levels, depending on the application. “Are bulbs removed to darken the space?” asks Bill McFarland, P.E., director, Electrical Engineering Services for Borton-Lawson, Wilkes-Barre, Pa. “Then the customer needs a correction.”
A bonus of improved light levels is an increase in productivity. An increase of 1% in productivity — measured by production rate, production quality, or absenteeism — can provide savings to a facility that exceeds its entire energy bill, according to “Building Momentum: National Trends for High-Performance Green Buildings,” a report prepared for the U.S. Senate Committee on Environment and Public Works by the U.S. Green Building Council, Washington, D.C.
As a real-world case study, the lighting upgrade to the postal sorting facility in Reno, Nev., proves this point. Enhanced visibility through a lighting retrofit there caused a 6% increase in the number of mail pieces sorted per hour. Other facilities that have upgraded lighting have also reported improved safety (fewer complaints of headaches and eye fatigue), increased retail sales, and higher resale value. Possibly the most important benefit, particularly for office buildings, was elimination of the hum or buzz associated with stereotypical older office lighting technologies, such as HID core and coil ballasts and old T12 magnetic ballasts.
TIP #2 — CONVINCE THE CLIENT TO PERFORM AN ON-SITE INSPECTION.
Lighting upgrades require more than a simple over-the-phone quote for labor and parts. “If the client is serious about doing it, and they seriously want to know what your company offers versus your competitors, you want to schedule a meeting so you can look at the facility,” Jaten says.
During the visit, you should have a discussion about the current lighting system, and point out inefficiencies in energy use, light levels, and color, advises Jaten. This is the time to find out the client's budget and talk about expectations. “You don't want to over-bid something they could never have afforded in the first place,” Jaten continues.
Furthermore, an in-person inspection will reveal any dirty or damaged luminaires, outdated or mismatched technologies, or under-lit areas. “Obviously, the more data you can gather, the more accurate your bid is going to be,” says Randy Barnett, training director for American Trainco, Englewood, Colo.
In his article “How to Successfully Bid Lighting Upgrades,” (Insights, March 2009), Barnett urges contractors performing an on-site visit to record the number and type of luminaires, lamps, and ballasts; room square footage and height from ceiling to floor; current footcandle or lux levels; height from ceiling to floor; current kilowatts of energy consumption; and hours per day of usage. “At some point, you need a step ladder to go in there and see what's being used,” explains Barnett, who says potential clients typically will offer full access to their facility for this purpose. “Then just count the number of luminaires.”
When visiting client sites, Jason Matthias, lighting layout and design professional for electrical supplier Wabash Electric, also assesses the design goals of the space. “Certain areas of the building are going to need more light than others,” he says. “Warehouses don't require as much light as a manufacturing or quality control area would.”
This is what the National Lighting Bureau (NLB), Silver Spring, Md., refers to as High-Benefit Lighting (HBL): designing the system to match the tasks for that area. For more information on HBL, visit the NLB Web site at http://www.nlb.org/.
In addition to realizing the scope of the project, you can also discover any further impediments that may be in store for the installer. “A lot of times, there are obstacles in the way,” Jaten says. “Cubicles may be located directly under luminaires, or the ceiling height may exceed 30 ft.”
Finally, while you are on the premises, offer to install a proposed new or retrofitted fixture for free. If that seems like going too far, you should at least be prepared to discuss case studies or hypothetical situations that apply directly to the client. “Most offices have a conference room or pantry,” McFarland says. “These lights are almost always left on. Suggest occupancy sensors be installed in these locations.”
You can also provide before and after pictures of other projects, as well as catalogs of new products and systems that are currently available. “It is more impressive to show them rather than just telling them,” Jaten explains.
TIP #3 — PREPARE A FREE WRITTEN ENERGY AUDIT.
There may be no such thing as a free lunch, but when selling a lighting upgrade, free energy audits come with the territory. “It's hard for clients to say no to free,” Jaten says.
However, the audit doesn't have to be too lengthy. This type of energy audit doesn't require data loggers and tracking over an extensive period of time. Instead, it's more of a general survey. “Count the number of luminaires, the luminaire types, total up their energy usage, their hours of operation, and do some simple math calculations to come up with an energy-savings proposal,” Jaten explains. “If you know your stuff, this is a fairly easy and painless process. You will make up any time or money lost when you are awarded the project.”
The audits from Wabash Electric contain a determination of the current lighting requirements, current light levels, and any changes to either of these items. From there, a drawing is rendered showing the footcandle measurements of the existing lighting system. The next step is to create a crossover plan showing an upgraded lighting plan. Once a new drawing (one showing the new lighting levels) is rendered, a firm price can be applied to the new luminaires — and a dollar savings comparison can be calculated.
Barnett advises using the calculations software available on manufacturers' Web sites. “They have their own software that's downloadable, or you can use it right on the Web,” says Barnett, explaining that the software requires answering a few questions with the information gathered from the on-site visit, such as existing lighting measurements, the dimensions of the rooms, height from ceiling to floor, and current luminaires. “Once you plug in all that information, it will tell you what types of lamps, ballasts, and fixtures it recommends. If you plug in what the client is currently paying for energy now, it will tell you how much energy and how much money your client would save per year by agreeing to the proposed retrofit.”
However, this may mean going through the audit process two or three times for different product options. “In some cases, there is only one professional recommendation, but in some instances, you can offer two or three options,” Jaten says. “Each option may come with a different price tag, energy savings, and performance. This will allow your clients to choose which option best suits their needs and expectations.”
In addition to the audit, a complete bid will demonstrate potential payback, ROI, environmental impact (carbon footprint reduction), cost savings, and the cost-of-waiting value. Do the math, advises McFarland. Calculate energy savings (wattage reduction), labor savings (increased lamp life), possible HVAC reductions, tax incentives and rebates, decreased utility costs, and the added cost of specialized bulbs, and present that to your client. For more on lighting retrofit economics, visit Lightsearch.com, a searchable directory of lighting sites and resources, at http://lightsearch.com/resources/lightguides/retrofitecon.html.
TIP #4 — RECOMMEND THE USE OF TESTED TECHNOLOGIES.
Clients may want to try out the latest trends in technology, but advising them to stick with products covered by manufacturers' warranties and those that already have been field tested is the safest bet (NEMA Launches Lighting Upgrade Initiative on page 28). “Honestly, some [alternative technologies] are kind of a risk,” Jaten says. “The best thing to do is look for the manufacturer's warranty.”
On average, newer technologies have 25% longer lamp life than their outdated counterparts, Jaten says. That's not to say that designers and electrical contractors shouldn't be aware of products on the horizon. They should be able to discuss alternative technologies such as light-emitting diodes (LEDs), cold cathode, induction, and plasma.
In addition to warranties, the DOE Energy Star program provides a reference point for energy-efficiency ratings. This can assist in specifying applications for certain technologies. “Energy Star is only stamping seven different applications of LED products, as an example,” Jaten says. “They're really narrow applications, like step lights and under-cabinet lighting. They're not approved for general area illumination yet. So if a company wants to specify nothing but LEDs for the entire building, they're going to be up against some serious maintenance issues down the road.”
TIP #5 — DIVERSIFY TECHNOLOGIES.
De-lamping or one-for-one lamp replacement — with either higher efficiency or lower wattage lamps — are the least expensive lighting upgrade strategies available. “Many older buildings are over-lit or use inefficient lamps and ballasts,” Jaten explains. “De-lamping is quick, easy, and only costs the customer labor and disposal fees.”
However, these methods may not provide the greatest benefits. For one, this maneuver won't correct any under-lit or over-lit areas. In addition, luminaires, which also may have lost their reflecting surface over time, are not as efficient as improved luminaire designs.
Luminaires and lamps aren't the only options for upgrades either. Lighting control devices, such as occupancy sensors or photosensors, can be used to great advantage. “We look at procedures or building controls that are in place to make sure that the lights are out when they're supposed to be, when everybody has left the building,” says Barnett. However, he warns against using dimmers. “You don't see a whole lot of dimmers in commercial buildings — maybe in some training areas or meeting rooms — because you have to watch if you're going to go with compact fluorescent lamps (CFLs). You can't use an incandescent dimmer on a fluorescent fixture.”
In addition, daylight harvesting can be used to light an area and also add heat to a building. “The sun shining can reduce your use,” Oberkiser says.
Photo- or daylight sensors dim lighting levels and raise or lower window shades based on the light provided through glass exterior walls, skylights, or windows. In a recent report, the Canada Green Building Council revealed that successful daylighting increases productivity by 13%, retail sales by 40%, and school test scores by 5%.
TIP #6 — INFORM YOUR CLIENT OF ANY REBATES, TAX CREDITS, AND GRANTS.
Lighting upgrades are extremely cost-effective, generally providing an ROI in three to five years. However, in this economy, many companies may find themselves low on cash to pay the up-front costs of lighting system replacement. “It's great if a company has the budget to do it,” Oberkiser says. “But it doesn't do any good if you're strapped for cash.”
Fortunately, there are many programs at the local, state, and national levels that can help companies willing to upgrade. For instance, a $35,000 grant from the Illinois Clean Energy Community Foundation, Chicago, allowed Saint Xavier University, Chicago, to switch the outmoded T12 fluorescent lighting in its 286,000-sq-ft Ward Academic Center to a system using nearly 1,200 2- and 4-lamp electronic ballasts, which use 3,050 more efficient, fluorescent 30W T8 lamps. This enabled the university to reduce energy costs by up to 40% per year and also improved overall illumination levels.
The Commercial Building Tax Deduction (CBTD), which gives owners a tax benefit of as much as $0.60 per square foot for qualifying lighting systems, has been extended through December 31, 2013. In addition, designers and contractors can check with their state and local governments to see if there are any further tax incentives. A quick reference for these programs is the DOE-funded Database of State Incentives for Renewables & Efficiency (DSIRE) maintained by the North Carolina Solar Center, Raleigh, N.C., and the Interstate Renewable Energy Council (IREC), Latham, N.Y., DSIRE database. For more information, visit the DSIRE Web site at http://www.dsireusa.org/.
Electric utilities also offer rebates or energy-saving incentives. “Some pay for 100% of the project on retrofits,” Jaten says. “Other electric utilities pay up to a certain percentage, like 50% of the project costs. There's definitely a lot of money available for people to upgrade their systems.”
Many local electric utilities have a trade alliance program where a contractor or distributor can sign up with them to get listed on their Web site as an approved vendor that's familiar with the rebate program and can actually do projects and help get the rebate money, Jaten says. Signing up for these programs is a good way to find new clients as well as reassure existing ones.
After you've located any and all rebates/incentives, you could complete the applicable paperwork on behalf of your client and bring it to them, ready to see and sign, when you present your bid. “There's a lot of paperwork involved that some people don't know how to do or don't want to do,” Jaten says. “A good contractor is going to do all that paperwork for the customer and have it ready when they turn in their bid.”
However, Barnett takes a more low-key approach when it comes to the paperwork. “I just tell them they can get a tax deduction for going to more energy-efficient lighting if they qualify,” he says. “But you always have to check with your tax accountant to make sure what's available.”
Instead of getting into specifics, he points his clients to the programs but doesn't go into further detail. “We go all over the country, so we don't deal with any particular region or city,” he continues. “I just tell them they need to get with whoever does their taxes and see what kind of programs they qualify for.”
TIP #7 — OFFER CERTIFICATION OF YOUR PLAN.
In order to qualify for the federal tax deduction, lighting systems must be certified by authorized individuals, such as qualified electrical contractors and engineers and lighting-system designers. If your firm does not employ a qualified individual, then hire one to certify your clients' upgrades. “We have an engineer that does the walk-through and signs off on the project. That way, our clients get an immediate tax advantage for this change-out if they meet the right criteria,” Oberkiser says. “We try to lay it out in such a manner that it will meet those criteria.”
TIP #8 — PRESENT YOUR BID IN PERSON.
It may be tempting to hire a courier to deliver your final bid package to your client — and even more expedient to e-mail it — but this isn't advised. When the data has taken this long to complete, you should meet with the potential client face-to-face to present the bid and explain it. “Hand something to them in person: a folder or a binder, printed out in color,” Jaten says. “Make it look professional and actually show them page-by-page and line-by-line what you plan to do for them. Answer their questions, and make sure they're comfortable with your proposal rather than e-mailing it to them and hoping for the best.”
In addition, this will give you an opportunity to tailor the information even more closely to your client's expectations. “Be willing to negotiate, compromise, and find middle ground,” says Jaten. “If needed, rewrite your bid to prove their satisfaction is your priority.”
If you've crunched the numbers correctly, the proposal should ultimately sell itself, says Matthias. “Once you tell them you can get better light and a tax credit savings on their reduced energy usage, they really start to look at it,” he says.
Sidebar: NEMA Launches Lighting Upgrade Initiative
The National Electrical Manufacturers Association (NEMA), Rosslyn, Va., recently partnered with the lighting members of the electrical industry to launch a Web-based program aimed at persuading building owners and facility managers to save energy and reduce energy costs through lighting upgrades. By providing information on energy-efficient lighting products, case studies, tax incentives, and recycling programs, Enlighten America targets building owners, operators, and executives who make decisions about upgrading lighting products in un-renovated buildings.
“Enlighten America is an attempt by the lighting industry to promote their newer energy-efficient products,” says Ron Runkles, industry director, NEMA. “In some cases, we have systems with lighting controls that can save 50% or more lighting energy, depending on the application. It's just a matter of getting the word out to people and educating them, especially those in existing buildings.”
For more information about the Enlighten American initiative, e-mail NEMA at email@example.com.