Business report & product recommendations


Published on

Published in: Technology, Business
1 Like
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Business report & product recommendations

  1. 1. Outsourced Innovation, LLCSustainable LightingTechnologies forSWD Inc.910 S. Stiles Drive, Addison, Illinois 60101MJC1/1/2012
  2. 2. Table of Contents PageIntroduction and Background 3Executive Summary 3Implications and Recommendations 4Competitive Technology Review 5RightLumen™ Lighting System Comparisons 8Financial Assumptions 10Appendix – Product Spec Sheets 12A. Lusio (E3 Building Solutions)B. Digital Lumens (Groom Energy)C. Albeo TechnologyD. Neptun LightingE. EPS Energy Services 2
  3. 3. Introduction & BackgroundThe SWD Company based in Addison, Illinois is a metal finishing, coating and sorting companywith a mission that includes environmentally responsible manufacturing. The company hasstrategically positioned itself of that by achieving ISO Certification to meet stringentenvironmental standards that demonstrate their stewardship to business and the localcommunity.The rise of emerging solid state lighting (SSL) is driving a significant transformation of thelighting industry. SWD expects to leverage new technologies to lower energy costs within theirexisting manufacturing facility and integrate SSL into plans for facility expansion in 2012.The market has been recently flooded by a vast number of new and unproven lightingmanufacturers. Some make dubious claims about performance that are too good to be true ornot supported on a technical basis. As things stand, it can be difficult to know who to trust orwhat to believe. As part of this, SWD has commissioned Outsourced Innovation, LLC to helpguide a transition to more sustainable lighting technologies, including light emitting diodes(LEDs) and induction technologies.Although the current SWD facility represents about 100,000 square feet, a 25,000 square footsection of the manufacturing facility was identified as the first place to begin this transition withthe goal of achieving 20 footcandles in the 24/6 operation, and ideally as a one-for-one retrofit.SWD is interested in collaborating with Illinois-based lighting manufacturers for economicdevelopment reasons if possible.Executive SummaryThe SWD fastener company based in Addison, Ill will commence with a more sustainablelighting conversion starting with manufacturing operations through a replacement of 400 wattmetal halide, high-bay lighting.A vendor-neutral comparison of 4 different and more energy efficient lighting solutionssuggests a conversion to induction technology will be the least risky alternative with a projected35% energy savings and a good return on investment compared to the metal halides theyreplace. Induction technology is anticipated to deliver the shortest payback at 2.7 years andwith the lowest 20-year NPV cost compared to other competitive LED lighting systemsevaluated for this project and with strong assurance of long-term performance. 3
  4. 4. An investment in a solid state lighting (SSL) technology will position SWD as an early technologyadopter, but is more risky. Long-term reliability projections are extrapolations so working withhigh-quality LED manufacturers that meet standards and show proof of field experience iscritical. From a lifecycle cost analysis, a solid state lighting system could deliver a somewhathigher energy savings of about 48%, a longer 4 year payback compared to induction and showsa 20-year NPV cost of $85,000 compared to $112,000 to operate the metal halide system.It is important to understand that long-term SSL reliability is unclear with this immaturetechnology making strong 5-7 year full product warranties and manufacturer support essentialto your procurement.A higher first cost of SSL could be viewed as part of SWDs continued investment inenvironmental stewardship and begin to understand how intelligent lighting can be integratedinto your strategic marketing message and future energy-management systems.Implications and RecommendationsBoth LED and induction solutions can provide a significant energy savings in the range of 35%-48%. Fixture efficiencies today of about 70-80 lumens per watt make both technologiesrelatively equal in terms of energy savings. Efficiency improvements with induction havereached maximum potential. Whereas, LEDs continue to advance rapidly and is expected tosurpass induction efficiencies, with 120-140 lumens per watt fixtures that should be marketready in about 2 years.The upfront cost for induction is much lower. Their capabilities are not as effective as LED butstill provides an excellent energy efficient device with a faster payback.Because LEDs are emerging and induction is considered a more proven technology, thefollowing recommendations are offered for consideration. 1. Understand your tolerance for risk. The least risky, energy saving lighting conversion today can be achieved with induction technology provided by Neptun. This technology can be expected to provide a 35% energy savings with comparable footcandles to the 400 watt metal halide fixtures they replace and with a strong assurance of a maintenance free, and long lasting service life. 2. LEDs could provide a viable solution with the Digital Lumens product projected to deliver a 48% energy savings and relatively close to meeting 20 footcandles as a one-for one-replacement. Thermal management with LED is crucial to performance so this vendor must understand the maximum and minimum operating temperature environment of SWD, especially if heat or humidity might be a concern. 4
  5. 5. 3. It may not be feasible to achieve 20 footcandles as a one-for-one retrofit with some LEDs or even induction technology within your existing manufacturing space. The facility may require about 2-5 more fixtures to achieve that level of light output, and with good uniformity. 4. If LEDs are of interest, work with vendors who support full product warranties (not limited) and demonstrate confidence in product performance. Five-year warranties are norm, seven-year is best). Further, LED purchase orders might include legal verbiage that addresses things such inclusion of drivers and power supply, or protection on other important issues such as color shift or droop that is reported to occur with LEDs. 5. The most ideal time to spec a new lighting system rather than shoehorn or retrofit into an existing space is with a new build out. That might be a more ideal time to specify an LED or intelligent lighting system so it is integrated into building design or energy management system. 6. Advanced lighting control strategies have a tremendous capacity for saving energy and money within commercial buildings. Occupancy sensing could be leveraged with either induction or LED with pre-selected fixtures (storage, warehouse) but generally does not appear to be an option in the production area. 7. The cost of LED luminaires continue to drop about 10-20% each year, making that investment more palatable each year. If SWD begins to convert to LED today, make certain that LED fixture modularity is addressed so that lamps can be easily upgraded as greater efficiency hurdles become market ready. 8. Consider using a vendor-neutral purchaser of energy. SWD might consider bidding their electricity supply requirements out to several different suppliers in a formal RFQ process. Companies that do not ask for competing proposals typically pay higher prices than companies that bid out requirements. Further, consider fixing the price for the next available time frame due to the recent downturn in futures pricing (see appendix).Integration of LEDs will be determined by SWD’s tolerance for risk, future interest in advancedlighting control strategies and ability to fund a lighting conversion that is more costly upfront.ComEd incentives of about $100-$150 will help make the investment of LEDs more palatablebut SSL is more than twice the cost of an induction lighting system. 5
  6. 6. Competitive Technology Review (Induction versus LED)Solid state lighting is a more expensive technology upfront but offers great promise forreducing energy use and operating expense. However, it is important to remember thataspects of the technology are still emerging and under development whereas the need forbusinesses to cut energy and maintenance costs is more immediate.Induction could provide a good transition for those seeking more efficient options thantraditional fluorescent technology. Induction does away with electrodes that are lifespan-limiting in a fluorescent design. A specially designed heat conduction rod and coil creates anelectromagnetic field to energize gases, promoting the same phosphor reaction as fluorescent.The elimination of electrodes gives induction a useful and more proven track record to deliver a100,000 useful life.Intelligent-based lighting using semiconductor chips can be equipped with adaptive lightingand/or wireless controls to leverage daylight harvesting or occupancy sensing to achieve evenfurther energy savings. Today’s induction can include bi-level switching to lower energy usageas well, but is not conductive to occupancy sensing as LED.Table 1 below provides a general comparison of HID fluorescent technology, induction andLEDs. 6
  7. 7. In conclusion, LEDs are considered emerging technology with performance promises that areextrapolations. Conversely, induction is a more mature technology with recent marketresurgence due to improved electronic ballasts.LEDs are a SystemLEDs are more complex than traditional lighting. It is an electromechanical system that includessemi-conductor light sources, provisions for heat transfer, electrical control, opticalconditioning, mechanical support, and protection, as well as aesthetic design elements.Because the LEDs themselves are expected to have long life, all of these other components,adhesives, sealants, solder joints and other materials must be equally long‐lived. To the extentthey are not, they will limit useful life1.While LEDs do not radiate forward heat, half or more of the input energy may be converted toheat that must be conducted away from the diodes (or the back side of the chip). This requires1 SSL Product Quality Lighting Initiative, May 2010; Next Generation Lighting Alliance and US Department of Energy 7
  8. 8. a reliable, heat‐conducting assembly, in addition to a heat sink component or means for furtherconduction.For proper operation, the power supply and electronics must provide a well‐controlled DC drivecurrent and possibly other control features, and must not fail for the life of the product. Anyoptical components must be able to withstand years of exposure to intense light and possiblyheat without yellowing, cracking, or other significant degradation. Reflecting materials need tostay in place and maintain their optical efficiencies. Even if the design itself has addressed all ofthese issues, questions of Was the epoxy properly mixed? Was an essential heat‐transmittingpaste omitted? Were the wire bonds properly made? Any of the failure mechanisms inherent inelectronic assemblies, and many others, may apply to an LED luminaire.The following visualizes all the system components of an LED lighting system. Thermal Finish/paint Mechanical LED Fixture Adheasives Optical Electronics LED ChipsAn important message is that these mechanisms must be accounted for by LED vendors whendiscussing product life to ensure a long-lasting and reliable light source. 8
  9. 9. RightLumen™ Lighting System Comparisons for SWD, Inc. Lusio Digital Lumens Albeo Neptun InductionDelivered Lumens 23,950 18,000 20,310 (3 Modules*) 20,000Wattage 239 210 238 262Lumens/watt 103 85 85 80Chip supplier Lumileds Rebel ES CreeXMC Nichia N/ADriver supplier Advanced Driver mfg by Digital Universal/Advanced (1 for Ballast designed Lumens** each module) & mfg by Neptune**Drive current 700 mA 900 mA 1 Amp N/ADimming/Occupancy Sensing Yes, separate 1-10V, Yes Yes, 0-10V;on/off Bi-level dimming agnostic?Active/passive heat Passive Passive PassivemanagementTemperature range -31˚F – 122˚F -40˚ - 122˚F -30˚ - Max 131˚FKelvin 5,148 5,000 – 6,000 5,000 5,000CRI 68.1 70 74 83Rated Life* 70,000 hours 50,000@77˚F 60,000 hours 100,000Power Factor .996 .90 .98 .98THD 6.93% <20% <.10% <10%Do you have factors for ambient Probably, will provide Yes, from LM-80 Below -36˚C (tested intemperatures above and below Federal Center in Boulderyour test? If so, please provideCan you provide technical Yes - Yes Yes, from Boulder Yessupport/troubleshootingLM-79 test data Provided (attached) Yes, but not only Yes N/A 15,000 lumen fixtureLM-80 test data Provided w-TM-21 Yes, provided on Yes, copies provided N/A projections of 54,000 hr 15,000 lumen fixture lifeWhat is your case temperature Maximumper LM-80 (junction point) At ambient of 70˚ was 74˚ Yes, 55˚C or 133˚F Operating Temp? 132˚FDoes mfg own IP? Yes, on design Yes Yes YesHow long have you been 8 years; Division of 3 years- 6 years 10 yearssupplying LED fixtures LightWild (control company)What is the longest burn hours in 12,000 fixtures 2actual field installation Since 2009 years, 2 yearsHow many installed inUS?/globally 6,000 12,000 fixtures 90,000 fixtures deployed >100,000Share some problems you’ve None shared; no Yes, ½% failure rate, Published failure rate .62% 1.5% failure ratehave? Resolved? experience; chip only moisture damage, and under 1% ; driver failure (combined 1/10 of 1% resolved by but accessible from bottom fixture and manufacturer of fixture ballast)IES files Yes, provided Yes, provided Yes, provided Yes providedWarranty (driver and power 7 years, limited and 5 year full (power 5 years, limited and includes 10 years, full;supply) includes driver and supply/driver; not power supply/driver (does fixture and power supply color shift) not cover labor) ballastInterchangeability; modular Modular; with serial and Everything is modular Yes, easily add or remove N/A version #’s to upgrade (fixture and power modules; more robust to supply) accommodate upgradesUL rated/listed Still going through UL Listed No, but CSA listed UL Rated 1598 processIP Rating IP65; ProOptics Enclosed; IP-30 and IP-65 No, but damp locations No IP, but sealed IP20 Pro Optics & under CSA fixtures EssentialsBuy America Certification? Mfg. in Kansas City Mfg in China Mfg. in Boulder, CO Lake Bluff, ILLighting Facts™ Label Yes Yes Yes DNAShielding for glare Yes No Yes, diffuser sleeve 9
  10. 10. Lusio Digital Lumens Albeo Neptun InductionAdaptive to different sizes and Yes: 2x2; 2x4, 1x4 20x16 inches Yes, add or remove (6,000 Noconfigurations lumens each)Wireless control? No, not in today’s fixtures Yes, available Yes, available today (zigbee) No today(Zigbee protocol)RoHS Compliant Yes Yes No No, trace mercuryAC or DC based LED DC based DC based DC based AC basedCost per fixture $714 $737 ($80 install) $1,086 (includes shipping) $374 (includes shipping)Cost per lumen .02 .04 .05 .02Average footcandles 19 fcs 21 fcs 19.8 – 24.3 fcs 14 fcsMinimum footcandles 2 fcs 12 fcs 3 fcs 10 fcsProjected Energy Savings (%) 40% 48% 40% 35%NPV Costs (20 years) $86,499 $85,628 $99,042 $73,768Projected Payback (yrs) 4.22 3.88 9.21 2.75Financial Assumptions and ProjectionsThe following assumptions support the financial analysis. A sharpened pencil will create a more exactanalysis of SWD rates and understanding whether fixtures will be purchased with cash or borrowedfunds. Financial projections shown below make relatively confident comparisons of each lightingsystem and will be fine tuned going forward.Hours of 6,912operationLabor Rates $20/hrHours to provide 15 minutes*maintenance perlampk/Wh rates .083* time of use rate, separate consumption that is lights; calculate rates with old vs new, that would get you something lower in terms of electricity costs. On-peak and off-peak buckets (summer/winter?). Need to isolate energy use of lighting versus on-peak/off peak rates.Demand charge Captured in varying energy charge/none;Ballast or driver 5 yearsreplacementCost of capital 10%*Inflation rate 3%Discount Rate 5%ComEd Incentive $100 for LED; $50 for induction 10
  11. 11. Lighting System Net Present Value (20 year, costs) Payback (yrs) Internal Rate of Return (IRR) Lusio $86,499.91 4.22 28%Digital Lumens $85,628.65 3.88 30% Albeo $99,042.99 9.21 12% Neptun $73,768.47 2.75 69%METAL HALIDE $112,012.81 N/A N/AIn conclusion, a conversion to either LEDs or an induction lighting system will make good business sensecompared to the existing metal halide system in place. A 20-year net present value (cost) of operatingthe existing metal halide system is projected at $112,012 and exceeds that of any of new lightingsystems proposed above.Induction appears to be overall, the best lighting system investment for this application but deservescareful consideration of future energy management and sustainability plans for SWD in the future. 11