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Companies investing in energy-efficient improvements realize payoff quickly, experts say

Companies investing in energy-efficient improvements realize payoff quickly, experts say

From #jcmo Inside Business

February 12th, 2018 by Philip Joens in Business

Looming high above shoppers in Capital Mall sit wonders of the digital age.

Light-emitting diodes fill each new light bulb in common areas of the mall, each one using a fraction of the energy of the fluorescent light bulbs they replaced. About a year ago, Farmer Holding Company, which owns Capital Mall, replaced the fluorescent bulbs with LED lights.

Curt Neuenswander, who leads development and construction projects for Farmer Holding Company, said savings from maintenance costs and hassles alone made the project worth it.

"Those bulbs are good for 10 years," Neuenswander said. "You'd replace one (fluorescent bulb), and the one right next to it might be about ready to go out."

Representatives from businesses like Capital Mall said the new lighting systems save them money and benefit the environment by using less energy.

State and federal tax credit programs expired years ago, but Ameren Missouri and electric cooperatives around Jefferson City still offer generous rebate programs to businesses and residents wanting to add energy efficient lighting.

Also, as environmentally friendly lighting techniques become more popular, Jefferson City lighting businesses continue to expand as more businesses go green.

In 2012, Farmer Holding Company purchased Capital Mall and began plans to renovate the facility. One year after taking ownership of the mall, FHC undertook a project to replace every halogen light bulb in the mall's parking lot with LED bulbs.

Last year, FHC installed energy-saving LED lights in most common areas of the mall. All of the mall's chain stores like JC Penney, Ross Dress For Less and the new Dunham's Sports installed LED lighting over the past few years. In 2017, FHC also replaced the lights on its second, third and fourth floors in its Bolivar Street office with LED lighting.

"With the payback, it's a no-brainer," Neuenswander said.

Colt Phillips runs fledgling small-business Lighting Solutions, which distributes energy-efficient lighting technologies to businesses and organizations across the Jefferson City area. Phillips worked with FHC to find the appropriate lights for the 2017 projects.

Jefferson City-based lighting distributor Philips & Company worked with FHC on the parking lot project. Eric Struemph, Philips & Company general manager, said Philips & Company sells LED lighting to industrial clients, churches, schools and countless other clients around Jefferson City.

"Luckily, it's good for the consumer and good for the business owners," Struemph said. "Less money spent on lighting energy costs is more that a business can put toward their bottom line or improving their business."

LED bulbs tend to last about 50,000 hours compared to about 12,000 hours for fluorescent bulbs, Phillips, from Lighting Solutions, said. Fluorescent bulbs that produce the same amount of light as a 60-watt incandescent bulb tend to use 12-13 watts of electricity, said Mark Boyer, manager of marketing and technical services for Three Rivers Electric Cooperative. Boyer said an LED bulb that produces the same amount of light uses just 6-7 watts of electricity.

Struemph said many companies offer light bulbs for commercial and industrial use with seven-year warranties, meaning the bulbs will last seven years or customers will receive free replacements from manufacturers.

"That's pretty much unheard of in the industry, but again we're dealing with national companies that have a footprint here in the United States," Struemph said.

From 2009-16, federal tax credits offered $500 or more to companies investing in several types of energy-efficient systems. Similar state tax credits expired years ago.

Ameren Missouri and most electric cooperatives around the area offer rebates that often offset large portions of the cost of buying energy-efficient technologies. Ameren's BizSavers program offers rebates for businesses wanting to invest in lighting, new construction and water-heating devices, among others.

Rebates for products vary. Under Ameren's Small Business Direct Install program, customers can get up to 100 percent of the project cost back in the form of a rebate. Custom projects that don't qualify for Ameren's standard programs can receive up to 50 percent of the project costs.

Rich Wright, Ameren's manager of energy efficiency, said the amount of energy saved by switching to energy-efficient lighting determines how big rebates become.

Three Rivers Electric Cooperative serves parts of Cole, Osage, Miller and Gasonade counties, including southern parts of Jefferson City. Like Ameren, the co-op runs a similar rebate program for customers who can pay for up to 40 percent of energy-efficient lighting systems, Boyer said.

Wright and Boyer said the rebate programs make energy costs cheaper by reducing the need for additional power plants.

"The entire program is set up to incentivize the customer to do what they typically wouldn't do," Wright said. "Energy-efficiency is the lowest-cost energy resource."

Ameren began its program in 2008. Since March 2016, Ameren had 5,087 energy-efficiency projects take advantage of its programs, saving the amount of energy used by more than 27,000 homes in one year. During that time, Ameren saved about $500 million on energy-generation costs because of just $19.5 million spent on rebates paid back to customers.

Despite the absence of tax credit incentives, Wright said Ameren's rebates are large enough to convince customers to make the switch.

"The federal and state tax incentives offered in the past weren't really focused on what our program's designed around," he said.

Green vs. green

Environmentally friendly technologies became popular within the last decade because of concerns about high energy costs and climate change. Organizations around Jefferson City said they consider an environmental impact a benefit of the new light bulbs, but said by far their biggest concern is saving money.

Even with the rebates, energy-efficient lighting systems require large investments from any organization wanting to invest in them. FHC declined to say what it spent on the overhaul at the mall, what type of rebate it received or how much energy it saved, but Wright and others in the industry said energy savings from projects generally pay for projects in less than two years.

Struemph, from Phillips & Company, said some LED projects can pay for themselves in as fast as six months.

"You're looking at very low if any, money coming out of (customers') pockets," Struemph said.

Last spring, Helias Catholic High School replaced every fluorescent light bulb in both gyms and its main school building. A Helias addition that opened in January 2017 did not qualify for the Ameren rebates Helias used because of its newness.

Travis Reinsch, Helias director of facilities, said the school spent $50,000 on the project. Rebates of $29,420.25 cut out-of-pocket expenses to just $21,000. The bulbs save the school $18,484 per year.

Since installing the bulbs, the school hasn't changed a single light bulb, Reinsch said. Installing the bulbs was part of a broader push by the school to become better environmental stewards.

"We are becoming a lot greener school in general," Reinsch said.

At the end of last summer, the Samaritan Center installed LED lighting at its warehouse and its 1310 E. McCarty St. office. Ben DeFeo, volunteer executive director, also said the decrease in maintenance costs made the switch worthwhile.

"Those halogens that were back there in the warehouse were power suckers to get them on," DeFeo said. "But not having to replace the bulbs themselves will pay for the fixtures pretty quick."

For many customers, this plays almost as big of a role as the energy savings, said Boyer from Three Rivers Electric.

"They're a vast improvement over the fluorescent tubes because then you had to hire people to get up to the lighting and change them," Boyer said. "Not only are they more efficient and last longer, there's a lot less maintenance."

Wright, from Ameren, said most customers combine both factors when deciding if they want energy-efficient systems.

"I think it's across the board," he said. "A lot of the larger customers have sustainability plans that they want to promote, and this gives them an opportunity to move ahead with projects they wouldn't have been moving ahead with without it."

After installation, the amount of light created by incandesent and fluorescent lights slowly diminishes. LED lights create the advertised amount of light from their installation until their expiration.

"As soon as you hook up a fluorescent, the (light) that you get out of that basically start going downhill," Struemph said. "With an LED, it's going to stay standard for the life."

Growing and evolving businesses

Some green technologies, like solar power, remain much more popular in Western and Southern parts of the U.S., because they tend to be warmer and sunnier than parts of the Midwest and East Coast. Water conservation tools for businesses, like waterless urinals and drip irrigation systems, also tend to be more popular out west where water can be elusive.

Still, the inroads made by LEDs prove the market exists in Midwestern cities like Jefferson City for green technologies.

Phillips from Lighting Solutions, started his business in May of 2016. Before then, he had a 10-year career in the lighting industry. At his former employer, he worked on many things besides lights, so he wanted to focus just on lights.

As LED lighting got cheaper over the last four to five years, Phillips said, he found a niche market selling light bulbs to people around the area simply because he understood it. Phillips said the rebates play a large role in most consumers' decisions to buy LED lights for their businesses.

"That's a huge part of our business," Phillips said. "Our sole focus is on lighting and energy savings."

Occasionally, Phillips helps clients design buildings. Sometimes this involves designing a building in ways that allow more natural light in. Most times, it involves looking at what light fixtures they plan to install and changing those to similar LED lighting fixtures.

On Jan. 10, Phillips moved into Lighting Solutions' first office at 1103 Southwest Blvd., Unit F. Previously, he worked from home, and he typically works 15 hours per day.

In November, Phillips hired his first employee, Patrick Schnieders, who calls small businesses to tell them about the rebates available.

LED lights also changed an 84-year-old business. Founded in 1934, Philips & Company provides lighting to commercial and industrial customers around Mid-Missouri. Like most lighting distributors, the company built its reputation on traditional lighting technologies. Today, Philips & Company sells just a handful of incandescent and fluorescent bulbs, though.

Three or four years ago, sales of LED lights made up more than 50 percent of the company's sales for the first time, Struemph said. Now, sales of LED lights make up 95 percent of Philips & Company's sales, and the company sells hundreds of types of LED bulbs.

"Any type of new construction you do, it's all LED," he said. "Houses are all LED. A lot of your road signs are LED."

While Lighting Solutions gains traction in the Jefferson City market, Phillips finds many interested people scared by the technology. Incandescent bulbs burn a filament in a chamber filled with inert gases. Halogen light bulbs work in nearly the same way. Fluorescent light bulbs use electricity to ionize mercury vapors in glass tubes.

Light-emitting diodes contain a small chip, grown piece by piece in laboratories. These semiconductors light up when stimulated by electrons and use far less electricity than other types of light bulbs.

The diodes contain natural blue colors. To give them a white hue for lighting, manufacturers put phosphorus on the diodes.

"The more phosphorus you put on, the warmer the color is going to get," Phillips said.

Incandescent, fluorescent and halogen light bulbs use wattage as a measure of their brightness. Because LEDs operate at a lower wattage than incandescent and fluorescent bulbs, the amount of lumens on packaging attempts to show brightness compared to incandescent bulbs.

Phillips said LED light manufacturers continue to get better at creating warmer shades of white light using LEDs. A common misconception exists among business buyers, though, that all LED lights contain blue hues, Phillips said.

"Everybody's interested in it, but it's kind of intimidating," Phillips said. "There's so many options, and there's not a lot of people who can understand the terminology."

Click here to view the full February 2018 edition of #jcmo Inside Business.