New technologies are making it possible for commercial businesses to reduce energy consumption and lessen their environmental footprint. Many U.S. companies are taking advantage of tax incentives for projects that have major impact on energy reduction such as LED lighting retrofits, which can cut electricity costs by 80 percent.
The federal Energy Policy Act of 2005 offers tax incentives to energy-efficient commercial buildings. Any building that can cut its lighting power density by 25-50 percent is eligible to receive a tax reduction of 60 cents per square foot.
By converting to LED bulbs, companies can reduce their light electric output by 80 percent. Not only do LED users see immediate reductions in their energy bills, they also receive government endorsed tax incentives for making their buildings more energy efficient.
The change to LED lighting also eases buildings’ impact on the environment. Aside from reducing the amount of electricity used, updating bulbs has a not so obvious impact on CO2 emissions. Over 65 percent of American electricity is produced from burning coal. It is estimated that for every $1 of electricity you save, you reduce carbon discharge by 8 pounds.
An LED lighting retrofit and financing provider in the Philadelphia area has taken this new technology a step further and created a lending program for commercial businesses looking to make the switch. LED Saving Solutions has a comprehensive lending program that allows companies to reap the benefits of this new lighting technology without ever seeing an initial capital outlay or an increase in their net operating cost. The program is cash flow positive from the very first month.
“We have recently established some ground-breaking international production and financing relationships that reduce up-front costs to $0 for property owners,” says Charlie Szoradi, president of LED Saving Solutions. “We literally take all of the risk of replacing the bulbs, and we only get paid on a portion of the savings results each month.”
Case studies help to illustrate the value. A major east coast hotel with significant convention and meeting rooms had a run rate of just over 5 million kilowatt hours (kWh) per year for its lighting. The annualized lighting cost for 2009 is $492,000 and with deregulation in 2010 the cost could increase to over $690,000. With the new LED lighting retrofit, the electricity consumption will drop to just over 665,000 kWh. The cost for 2010 will be just under $90,000. That is an annual savings of $600,000. For a million square feet, the $.60 per square feet tax deduction adds up to another $600,000. In a 33 percent tax bracket, the net to bottom line savings are $200,000.
Since the Led Saving Solutions finance team is structuring the loan, the hotel will have a zero up-front expense and they will put money in their pocket every month for years to come and get a great bonus at tax time.
Users of LED lighting simultaneously increase their financial savings and decrease negative impact on the environment. The benefits are obvious, and it is only a matter of time before people realize the significance of that light above their head.
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