LED Lighting Financing Options Eliminate Up Front CostsTim Riley’s article for MANN Report Management Edition originally published in the August 2016 issue. mydigitalpublication.com/display_article.php?id=2546263&id_issue=324600
LED lighting installations have increased exponentially as continued improvements in technology, an increasingly attractive ROI, and a major Federal tax incentive set to expire by the end of this year have come together to drive building owners and property managers to install LED. By 2030, this revolutionary leap forward in lighting will account for 75% of all lighting sales worldwide, according to industry analysts.
Here in the U.S. property owners and consumers will save $250B in energy costs, reduce electricity consumption by nearly 50 % and avoid 1,800 million metric tons of carbon emissions. From supermarkets to parking lots, hotels and higher education facilities, building owners have installed LED lights due to their compact size, ease of maintenance, improved aesthetics and enhanced ability to direct light to specific areas. For others the installation of LED has helped them in their effort to respond to the growing influence of millennials and other clients who embrace and support renewable, sustainable energy.
The Capital Investment Challenge Despite the increasing interest in LED lighting across a wide range of industries, the initial investment has been a challenge for some, particularly for those who are operating under tight profit margins. One of the most important developments spurring the further growth of LED installations is the ability to utilize 100% financing to pay for them. This allows businesses to realize immediate positive cash flow with no upfront cost, making the choice to switch to LED lighting an easy one. Supermarket Moves to LED Capital Solution With the rapid evolution of LED lighting technology, property owners in retail businesses and other public venues have started to incorporate LED as a significant element in their storefronts and throughout their buildings. The main factor driving them to this decision is the opportunity to create a more inviting environment for their clients.
One example of this trend is supermarkets, as consumers are attracted to stores that provide distinctive lighting to improve their shopping experience. When a major supermarket in New Jersey needed financing for their LED retrofit, their lighting engineer introduced them to Original Energy Capital Solutions to provide 100% financing, experienced project review and a solution that created positive project cash flow from day one. This supermarket has been operating at their current location for over 30 years and was focused on cutting their operating costs by reducing expense with an LED lighting retrofit to save on electricity costs, improve the quality of the store’s lighting and increase the attractiveness of the store and its food products, especially fresh foods such as produce and meats. The only obstacle to moving forward on the project was the significant upfront costs.
In order to bring this project to fruition, the supermarket partnered with a lighting vendor to engineer the best solution for their space, find a financial partner in OECS who was able to provide a cash flow positive 100% loan for their first project, and lay the groundwork for a continued relationship when they are ready to upgrade other locations.
- OECS financed 100% of the total retrofit for this project
- Simple projected payback term of 33 months
- This project reduced store lighting energy consumption by 73% and will save close to $100,000/year in electricity and maintenance expense.
- This project will produce positive cash flow immediately–including financing at approximately $30,000 per year.
The benefits of financing LED projects with OECS include:
- Avoid large, upfront payments by paying fixed monthly payments over a 2-5 year term
- Savings from lower utility bills create more savings than the finance payments, creating positive cash flow from day one.
- Specialized LED program enables property owner/operators to finance energy efficiency LED lighting at competitive rates
- OECS engineering review creates peace of mind that the LED solution will perform as designed.
Tim Riley Director of Financial Services Original Energy Capital Solutions