Wasting energy, would your company invest in a project with zero return?
When a company decides to delay an energy cost reduction project like upgrading an obsolete energy sucking lighting system to LED (wait, nobody makes such decisions… do they?), sophisticated managers of the 21st Century usually proclaim that an “energy cost reduction project is a low priority for us at the moment”.
So, top priority projects are implemented.
At many companies, the top priority project is one based on short term pain points and creates no long term value.
Paying for projects that do not add value to the final product is, effectively, an investment with zero return. “Energy cost reduction is a low priority” effectively means “wasting energy is a top priority”.
With so many companies wasting energy year after year, it must be a top priority.
Let’s consider a small to mid-sized manufacturing business with a $500.000 electricity budget. Like any manufacturing operation, the plant is busy every day with production, safety, sanitation, stoppages, scrap, maintenance, audits, new products, new machines, costs, budgets… you know the drill.
The last thing any business owner or facility manager needs is a new project. Hence, “Energy projects are low priority”.
In manufacturing, only about 60% of procured energy ends up in the final product. The rest is wasted one way or another. Half of this wasted energy can be eliminated through projects with profitability higher than that of the core business. With no action, this plant effectively invests $100,000 (not to mention maintenance costs) annually into creating no value.
Alternatively, such a plant could replace an out dated lighting system with LED and controls and realize value through lower costs, higher quality and employee engagement.
A complete lighting project can be implemented with the funds already in a company’s operating and maintenance budget by utilizing a short term equipment lease with $10.00 buyout at last payment. A business should be able to negotiate the lighting upgrade project cost which would pay for itself within 1 to 2 years if they operate 24/7, or 3 to 4 at regular business hours.
Pay for energy cost reduction or keep paying for using more energy; either way, it’s the same result on this year’s P&L, but not on the next year’s… when money invested in cost reduction will generate return, while money spent on wasted energy will continue to create nothing of value.
Done properly, an LED lighting upgrade allows for the fastest return on investment (ROI) | Workplace Wellness, Increased Productivity, Reduction in Operating Costs & Carbon Emissions.