LED purchase risk management
LED purchase risk management
I have a client who wants to convert all their bulbs from 4 ft fluorescent t8 to line voltage led tubes. two bulbs per fixture with reflective shield. This requires changing out two sockets out for non-shunted ones and line siding them. the opposite sockets get disconnected from the ballast and terminated. Fixtures get marked line voltage. the rooms are full cubicles and work stations that i will have to work over. approximately 300 fixtures to start. probably another 300 down the road. They want a per fixture price to get approval from board.. What range would you be in per fixture? they want to pay $16 per fixture. i feel like no matter what because of the obstacles i am going to be killed on time.. location south jersey..
Take a look at it from their point of view. LEDs are
extremely expensive and savings over super T8 alternative is so little that there's only a hair to go around for labor to have the necessary rate of return. LED retrofits are a high risk investment and requires a proportionately high rate of return.
Would you invest $300,000 on something that gives the same reward as buying bonds(which is pretty much zero risk), but has a fairly high risk of loss? Investors in LED technology and such would not even consider it.
My numbers suggest they've only got about $93 total to spend per fixture. Parts, labor, and any out of warranty expenses incurred by them over the eight years. we're talking about proprietary LEDs, so safety inventory of about 5% is needed and that has to come out of that budget too.
Fudging some numbers here.
Give the LEDs a generous credit of 20W saving per fixture (59W/fixture F32T8 to two T8 TLED that can meet arguably acceptable performance level) 11c/kWh energy + $20/kW demand.
Estimate usage at 5,500 annual hours.
2,760kWh/month and 6kW demand reduction.
Let's assume a generous 8 year useful life.
LEDs have a sell sheet rated life of 50-100K hours.
I stuck in 10% as required rate of return. Inflation eats about 3% of that.
LEDs are a
riskier investment than other alternatives and require a higher rate of return and here's why:
Useful lifetime of 8 years if all goes accordingly to the plan. We have no evidence of long term reliability of LEDs in lighting use. Only speculations. We have proven record of LEDs going over 100,000 hours for things like indicators and alarm clocks, but they're not driven hard and they do not use phosphors.
LED parts warranty is usually way less than 8 years and it expires at the end of the warranty period or the demise of the vendor, whichever comes first. The latter is a very significant risk for "re-wire LEDs" as they're often sold by start-ups that may not exist in a few years.
Warranty usually excludes labor and color shifting. Furthermore, some warranty may exclude excess lumen loss. Fluorescent technology existed long enough to have statistically predictable life span.
So, compared to something like a 28W super T8 retrofit, LED is a riskier investment and requires a higher rate of return to make sense. You'll then realize how little saving there is in ripping out perfectly functional lamp-ballast systems. Forecast of 50,000 hour life is about as good as a used car salesman telling you how the car you're gong to buy will go another 100,000 miles just to make the sale.
Currently, my opinion is that LEDs should not be purchased. They should be leased for monthly payments somewhat less than utility savings. If they fail early, that's selling dealer's problem, but LED and green sales companies don't work like that. They want all the money now, then make it the customer's problem.