CEO Joseph Dobosz says that interest in LED lamps and lighting has generated 30 percent to 40 percent in sales growth at Lexicon Lighting Technologies.
More companies each day, it seems, are jumping on the bandwagon of LED lights.
And why not? The ROI appears very high, especially with state, federal and utility company financial incentives, and wasted staff time spent changing burned out incandescent and fluorescent lights can be nearly eliminated.
With an LED light failure rate that can be as low as 1 percent over a five-year period, companies like Greektown Casino-Hotel, Nino Salvaggio International Marketplace, JK&T Wings Inc., a franchisee of Buffalo Wild Wings, Erhard BMW, and, most recently, MGM Grand Detroit are converting.
For the Aug. 19 issue of Crain’s Detroit Business, I wrote about the fast-growing trend of LED lights and how Lexicon Lighting Technologies, a Shelby Township-based manufacturing company, is growing at a 30 percent annual clip.
I didn’t have space on the page to get into some of the really good stuff. For one, I wanted to describe the real-life experiences companies have when they purchase and use LED, which stands for light-emitting diodes. Besides saving money on electricity costs, executives talked about improved employee efficiencies, enhanced customer satisfaction and how they are contributing to worldwide environmental protection.
I mentioned in my story that as prices drop, as they have been, the use of LED lamps will account for 36 percent of all lighting sales by 2020 and 74 percent by 2030, a federal study said.
Over the next 20 years, the conversion to LED could save the U.S. $120 billion in energy costs, reduce electricity use by 25 percent and eliminate 246 million metric tons of carbon emissions, said a 2010 U.S. Department of Energy report.
So, here, as Paul Harvey used to say, is the rest of the story.
MGM converts parking garage
MGM Grand Detroit recently completed a three-month project to install 3,117 LED lamps in its 61-acre parking garage. The $1.4 million project is expected to cut annual energy use of the garage by 80 percent and energy consumption of the casino-hotel by 7 percent.
MGM officials said expected ROI will occur in less than two years.
The LED lights were manufactured by Oxford-based Relume Technologies Inc.and installed by Motor City Electric Co. of Detroit.
“Like many of our conservation initiatives, this renovation is a win-win for us and the environment,” Steve Zanella, president and COO of MGM Grand Detroit, said in a statement.
“This project reflects our high regard for the planet, but it also ensures that MGM Grand Detroit is meeting our customers’ desire to be more environmentally conscious with their meetings, conventions and travel.”
Zanella said MGM’s LED retrofit will save enough electricity to power more than 350 average homes per year.
Greektown saves big with LED
In 2011, Greektown decided to make a long-term investment by spending $260,000 to convert the lighting systems in its 100,000-square-foot casino and 400 hotel rooms to LED, which reduced its energy use by 88 percent, said Cleveland Simmons, Greektown’s director of engineering.
“You have to have the commitment for the capital expense. We spent $260,000 for this program and got back $142,000 in DTE rebates” for replacing 50-watt and 75-watt halogen lamps with Lexicon’s MR16 LED lamps.
Lexicon CEO Joe Dobosz said the company’s seven types of LED lamps range in price from $25 to $80. DTE rebates can cut the individual lamp cost by 25 percent to 50 percent, he said.
“We will save money in the long term because we won’t have to use staff to retrieve new bulbs and spend money to replace burned out ones,” Simmons said. “We also have a better service to customers because they don’t have to experience lights out.”
While most companies have investment paybacks of less than one year, Simmons said Greektown’s investment payback took less than two years.
Federal tax incentives, which can increase total capital savings by more than 50 percent, were unavailable to Greektown because it is a casino, he said.
Before, traditional lamp replacements were taking place every two to three months. Now, Greektown has had no lamp replacements for the 2,000 MR16 LED lamps and only 15 for the 1,500 PAR30 long-neck LED lamps, less than a 1 percent failure rate, he said.
“The illumination is superior with LED,” Simmons said. “It is a cleaner light, more crisp. You can see more color in the carpet. The LED does not generate heat, so our air conditioning costs are lower. It is a major benefit all the way around.”
Changes good for Nino Salvaggio products
Nino Salvaggio recently replaced more than 3,000 75-watt halogen lights in its lobbies, hallways, dining, and bar areas with low watt (6W and 19W) LED lamps and generated 75 percent energy savings, said Kirk Taylor, Nino Salvaggio’s president.
“We’ve enhanced the shopping experience as the new lamps provide more natural light illuminating the true and beautiful colors of our produce,” Taylor said.
“Our fresh produce brought daily to the stores is no longer under the heat of the higher watt bulbs adding to its freshness. By changing to LEDs, we fully focus the new energy efficient lighting on the variety and scope of our product selections in our many departments.”
Taylor said the LED lamps also reduced heat in the store that has cut its air-conditioning and refrigeration costs.
DTE, Consumers Energy offer incentives
Since 2009, DTE has been offering customers a variety of energy efficiency incentives through Your Energy Savings Program, which includes financial rebates to purchase LED lamps, said Ken Randazzo, DTE Energy’s manager of energy efficiency, commercial and industrial businesses.
“It is designed to cover 25 percent to 40 percent of the cost of lighting to bring the cost down for a two to three year payback” for the replacement light program, Randazzo said.
So far in 2013, DTE has reimbursed customers for 960 LED projects, a number that has been growing every year, he said. Overall, 5,000 customers have participated in energy optimization programs, Randazzo said.
“LED is really taking off as people have gotten comfortable with the concept and more variety of products become available to them,” said Randazzo, noting that large retail furniture stores and auto dealers that run lights 12 to 24 hours a day benefit from LED dependability and lower operating costs.
“It is more than electricity savings. You have to think in life-cycle capital costs,” he said. “An incandescent lamp has expected life of 3,000 to 6,000 hours. Fluorescent is 8,000 to 12,000 hours. LED is 30,000 to 100,000 hours. Replacement costs add up over the years.”
For example, auto dealers typically spend 50 percent of their total electricity costs on lights. LED lamps can cut those costs in half, and adding controls that include motion sensors and management-control systems that shut off lights at pre-determined times can increase savings up to 75 percent of costs, Randazzo said.
Josh Brugeman of Detroit-based nonprofit NextEnergy said DTE, Consumers Energy, and other utility companies have different LED incentives.
“DTE has a set dollar amount based on the type of bulb you replace and an additional 15 percent if you purchase in Michigan. Consumers has incentives based on the amount of watts you decrease,” Brugeman said.
But Brugeman said Michigan’s energy optimization program is scheduled to expire in 2015.
Later this fall, Gov. Rick Snyder is expected to issue recommendations for a new energy plan that is expected to continue the energy rebate program, which is funded by surcharges to consumers’ energy bills.
“Everybody pays into it and anybody can tap into it,” Brugeman said. “It is very cost-effective because it is cheaper to reduce a unit of energy than to produce one.”