Econ 401 Monte McGrath Light fixture replacement

Standard 4 T8 lamp 32 Watt 80+ CRI lamp w/NLO ballast produce light much more efficiently than existing light fixtures, and provide a government rebate in commercial buildings. Adding motion sensors to the light fixtures also provides substantial energy savings. Is the savings in electricity cost worth the substantial cost of the new light fixtures? The attached Excel file shows the present value over 20 years of the electricity savings by the new light fixtures, Standard 4 T8 lamp 32 Watt 80+ CRI lamp w/NLO ballast, and contrasts it to the fixtures rebated price. Over a short amount of time, the present value of the electricity savings exceeds the net capital expenditure of the new light fixtures installation and capital cost. Columns C, D, and E break down the differences of the three options. Replacing light fixtures with motion sensor controls, replacing light fixtures without motion sensor controls, and replacing light fixtures only in the warehouse and manufacturing divisions of the building respectively. In the Energy table, replacing the light fixtures in Option 1 saves 165,118 kilowatts per hour (kWh) and 118, 917 kWh in Option 3. The motion sensor controls save 36, 578 kWh in Option 1 and 25, 615 kWh in Option 3. Ultimately, the new light fixtures reduce total energy expenditure of 201,696 kWh in Option 1, 165,118 kWh in Option 2, and 114, 532 in Option 3. What amount of money is the energy savings worth? The answer depends on the rate of kilowatt per hour in your area. Tacoma Powers rate is currently 0.0653 cents per kilowatt hour. The values in the Energy table multiplied by the kWh rate provide what is seen in the Energy Cost table. The total annual savings amount to about $13, 171 for Option 1, $10,782 for Option 2, and $9,438 for Option 3. The bottom of the Excel file discounts the value of the annual total energy savings for each option using a discount rate of 5% per year. As seen in the introduction, the purchase of the light fixtures passes a cost/benefit test if the PV energy savings exceeds the net capital expenditure of the new light fixtures. The income stream in the PV table shows that Option 1, Option 2, and Option 3 show returns on investment within one to four years. The cumulative cost (seen in red) shows when the present value is less than net capital expenditure. Every year after is when you will see return in investment. Over 20 years the net benefit will be $88,753 for Option 1, $91,725 for Option 2, and $116,735 for Option 3.