$42,000 Fact About Energy Efficient Lighting And The Cost Of Waiting

Posted by Jimmy Hovey on Wed, Feb 01, 2012 @ 14:02 PM

Do You Have The Time Or Money To Wait For Energy Efficient Lighting?

Waiting Too Long Can Cost You Big Timecost-of-waiting-energy-efficient-lighting-hovey

We started working on a project in early 2010 that still has yet to be completed. The existing lighting system was a real mess so it took some time to layout a completely new energy efficient system. 

We had determined that the annual energy savings would be around $3,000 per month on a $12,000 per month bill or a 30% savings. 

Just about the time we were ready to move forward, the incentive program from the local utility had run out.  The incentive was going to be around $24,000. 

So we put the project on hold until the next years program came out. We contacted the owner when the 2011 program became available. 

Since it had been about 6 months, and this project required a lot of re-wiring, we had to calculate the additional cost of the copper wire and steel conduit which added about $6000 to the project cost.  We re-worked the the numbers and re-submitted them. 

Again nothing happened. The utility again ran out of money in the incentive program early in the year, so it again brought the project to a hold.  Why didn't the owner proceed? 

He wanted the $24,000 utility savings that would be due to him if we completed the project. 

But, was the wait really worth it? 

So what was the cost of waiting on a utility program in this case? 

Since March 2010, 20 months have passed.  Assuming he would have saved $3,000 per month on utility costs, we can safely calculate $60,000 in lost savings.  If he had installed at that time, they would not have incurred the $60,000.  Make sense?

(The Math - 20 months x $3,000 per month in savings = $60,000)

Since so much time had passed, AND Copper wire became ridicously expensive, the project would have cost an additional $6,000 if it would have been completed last year.  Since the project was now going to cost more, we would add that to the amount of lost savings calculated above; ;

(The Math - $60,000 + $6,000 Additional Cost = $66,000)

The original incentive was $24,000.  The reason this project did not move forward both times was due to the fact that the Utility Program ran out of money and they wanted the incentive. 

But what did waiting really cost the company?

(The Math - $60,000 in lost energy savings + $6,000 additional cost of materials- $24,000 forecasted cash incentive= $42,000)

It cost the owner an additional $42,000 to wait up to this point.  Plus each month, he goes another $3,000 in the hole.  The cost of waiting keeps getting more and more expensive. 

So, does it always make sense to wait?

This is an example of a project that would stand alone on energy savings alone, without the incentive.  While incentives are a great motivator, don't become blinded by the thrill of receiving a big check. 

Even though in the same situation, I would have likely done the same, you have to look at all the numbers before making a decision.  That $42,000 is enough to pay for more than 50% of the original project.  

If You Want The Incentive, Don't Wait

One of the craziest things about this business is showing owners how they can save 30% on their monthly energy costs, and after 6 months they still haven't done anything. 

Usually we here "we don't have the time" or "we don't have the money", but in reality, if you do nothing, you will never have the money.

It is just that simple.....we know for a fact the utility bill will be on time next month!

Get Educated Now

The incentive programs in our area has again kicked in.  If you are thinking about doing something this year, now is the time. 

If you have a project or are thinking about a project, download our FREE E-Book to learn more about Energy Efficient Lighting Technology.  By being better informed, you will be able to make a more decisive decision when you are presented with your options. 

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Topics: cost of waiting, energy efficient lighting, energy efficient solutions