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A Bright Spot in a Gloomy Market

Apr 1, 2010 12:00 PM, By Michael Eby, Editor-in-Chief

Aging commercial and industrial building space in the United States offer opportunities for lighting retrofits

Lighting retrofit projects have always seemed like a no-brainer to me. Replace poor quality, inefficient components, products, and systems with their new high-quality, long-life counterparts. Because these projects can typically be completed quickly and easily — with little disruption to a customer's day-to-day activities — they offer you and your clients a desirable return on investment. The extra revenue stream during these slow periods of new construction isn't bad either.

With the enormous amount of aging commercial and industrial building space in the United States, the supply of potential projects continues to grow. According to a recent survey by the Global Facility Management Association, “Green Practices Study,” 92% of respondents are working toward making their facilities more sustainable. Offering a similar positive projection, the U.S. Energy Information Administration estimates that by 2030, more than 250 billion sq ft of building stock in the country will consist of renovated space.

As more building/facility owners look for ways to reduce their energy consumption levels and make their facilities more environmentally friendly, the case for lighting retrofit projects makes even more sense. That's why you need to have your “Why It's Time to Consider a Lighting Upgrade” presentation polished and ready to go. Two articles in this month's issue should help you do just that. “The ABCs of Lighting Retrofits” on page 12 provides a basic overview of these types of projects, presenting the benefits to the end-user, typical steps to follow in a lighting audit, a few types of retrofit paths to take, and helpful rebate and incentive sources. Starting on page 22, this month's cover story, “Green Lighting,” discusses how sustainable design and construction practices, governmental policies and regulations, and new codes and standards are helping drive new technology development and end-user acceptance on the new construction front. The closing section of this article turns its attention to the retrofit market. What I find interesting is that these trends on the new building front help hammer home the drive for improvement in existing building stock.

The biggest obstacle you'll face when pitching a lighting upgrade project to a client — or even your own vice president or executive management team — is the up-front costs associated with the conversion. If the long list of benefits, such as lower energy bills, improved lighting levels, reduced carbon footprint, and rebates/tax credits/grants, aren't enough to get them to sign on the dotted line, then you might have to consider another interesting option — subsidize or cover the up-front costs of the project yourself. If you're fortunate enough to have access to cash reserves or can form a strategic relationship with a finance group or bank, then it might be worthwhile for you to throw a financing component into the equation. Some utilities and energy service companies (ESCOs) already offer this option on different types of projects, so a working model exists for you to review. Basically, the monthly service fee you charge your client is offset by the electricity cost savings realized from the system upgrade.

The bottom line is financing options are becoming a critical component of energy-efficient upgrade projects, so the more options you bring to your client's table, the better your odds are of walking away with more work in hand.

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© 2012 Penton Business Media, Inc.

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