How many rules, regulations, rebate programs, and product reinventions does it take to change a lightbulb? The answer, according to a new TechSurveillance report from NRECA Business & Technology Strategies, is that nobody knows. But as long as everyone keeps trying to find out, the market will keep changing.
Released in March, Key Steps to Updating Lighting Programs was written by Laura Moorefield, an energy-efficiency, renewables, and program-design consultant who’s worked with utilities, industry groups, and state and federal policy-makers for more than 10 years. She’s also a member of La Plata Electric Association (LPEA), a co-op based in Durango, Colo.
As she notes in her introduction, lighting homes, businesses, and workplaces accounts for about 15 percent of residential electricity use and almost 20 percent of commercial consumption, according to 2014 figures from the U.S. Energy Information Administration.
And that, Moorefield points out, makes replacing old incandescent lightbulbs with more efficient models like compact fluorescent lights (CFLs) a tempting target for utilities seeking to stave off construction of new generation. The economics of helping consumers switch out their bulbs makes lighting rebate programs look good too, bringing the cost of saving a kilowatt-hour down to less than half a cent in some cases, far less than the cost of generating that kWh.
But a wave of technological advances, with light-emitting diodes (LEDs) supplanting CFLs only to be threatened themselves by emerging devices like organic light-emitting diodes (OLEDs) and plasma lighting, has roiled a relatively comfortable world of utility rebates and similar light-changing incentive programs.
A raft of new federal lighting standards and efficiency requirements, accompanied by a succession of deadlines to meet them, further complicates the lighting landscape. The Energy Independence and Security Act (EISA), signed into law by President George W. Bush in 2007, set a series of New Year’s deadlines in 2012, 2013, and 2014 for replacing common household incandescents. A second tier of EISA bulb standards will take effect by 2020.
“With all the recent changes, both residential and commercial consumers need lighting education,” Moorefield says. “For evidence of this, simply observe shoppers in the lighting aisle at a big-box store. Buying lamps according to lamp wattage worked when everything was incandescent, but now wattage is no longer a proxy for how much light a lamp provides. But few consumers understand lumens.
“In addition to helping members understand new lighting technologies,” she continues, “programs should also take into account a new consumer interest in LEDs that goes beyond lighting efficiency.” That includes wireless smart home networks with lighting controls operated by mobile phones and other devices.
Such rapid, ongoing change on so many fronts, Moorefield says, means co-ops must take another look at successful lightbulb rebates and other incentives designed to help their consumers make energy-efficient lighting choices.
“Older lighting programs that promoted only CFLs were one of, if not the, least expensive utility efficiency programs,” she writes. “But these are becoming outdated with changes to technology and new lighting efficiency standards. Going forward, modern lighting programs must adapt to stay relevant and maximize savings.”
Adapting rather than scrapping these programs is the key:
Lighting incentives help members “navigate changing lighting technologies through education and outreach.”
Guiding members, residential and commercial alike, to the most efficient lighting options helps them save money, both on their electric bills and on lighting replacement costs.
Peak demand can be reduced, especially when commercial consumers choose lighting options that are compatible with motion sensors, dimmers, and other automatic controls.
Programs that promote lighting change-outs can boost a co-op’s local economy by producing new jobs in energy efficiency.
Lighting programs that improve energy efficiency can also help utilities meet “existing and forthcoming requirements to reduce greenhouse gas emissions.”
Coping with Complexity
Just because a program improves efficiency doesn’t mean it operates efficiently in its own right. It may benefit consumers in a variety of ways, help a utility meet legislative or regulatory standards, and save a co-op money by shaving peaks, but it’s still going to involve marketing campaigns, administrative paperwork, verification requirements, and cost-benefit analyses.
Complexity is a byproduct of any lighting-program, Moorefield writes.
“Electric utilities have been running demand-side management lighting programs for more than two decades. Programs have varied from free buckets of CFLs, to rebates involving partnerships with manufacturers and retailers, to incentives for retrofits at commercial and industrial facilities. All programs share the basic elements of administration, marketing and outreach, incentives, and savings verification, but given the needs of different sectors, utilities often have separate residential and commercial programs.”
Statistics on residential lighting incentive programs alone provide a glimpse of how complicated and costly they can get.
Moorefield reports, for instance, on utility efforts to get more consumers to use ENERGY STAR bulbs and fixtures under a program administered by the U.S. Environmental Protection Agency. These include retail campaigns, aimed simply at getting consumers to buy CFLs or LEDs at grocery or hardware stores, and “direct install” programs in which utility employees or contractors actually replace old bulbs with newer, more efficient ones in the course of home energy audits or upgrades.
That adds up to two programs aimed at a single consumer segment. But from there, the numbers simply mushroom.
“Based on data from 345 utilities that run a total of 1,250 ENERGY STAR lighting programs, the national budget for these programs in 2014 was nearly $450 million,” Moorefield writes. “Rebates ranged from 50 cents per bulb for CFLs up to $30 for certain LED fixtures or bulbs.”
Mail-in bulb rebates were the most popular program, and they were especially popular with smaller co-ops and municipal systems. The largest programs, serving the greatest number of consumers, provided “instant rebates or upstream buy-down/discount approaches.”
Meanwhile, she adds, LED bulb and fixture promotions are gaining ground on programs to increase CFL use—in 2014, LED programs accounted for a third of all lighting incentives.
That same trend toward LEDs applies to commercial lighting, Moorefield says, for two main reasons. For one thing, commercial lamps may burn for 10 or more hours a day, compared to an average of three hours or less in homes. Second, long-lived LEDs can run for 50,000 hours to as long as 100,000 hours, outlasting incandescents and even CFLs and slashing labor costs to replace bulbs.
“These factors contribute to very favorable economics for commercial lighting programs,” she says. “In addition to discounts for individual fixtures, utilities may also provide rebates based on total site lighting load reduction.”
The merits of rebates themselves also come in for a short discussion, as Moorefield dissects the status of lighting efficiency programs.
In a section headlined “Rebates: Upstream, Downstream, or Somewhere in Between?”, she compares “downstream” approaches, or direct incentives like coupons and reimbursement forms, to “upstream” methods in which utilities work with manufacturers and retailers to encourage sales of efficient lamps in a specific region.
“Many co-ops and other smaller utilities still choose to offer downstream programs for both residential and commercial lighting programs. They are a natural progression from lightbulb giveaways, allow the utility to interact directly with the member about the program, can be a good fit in small or fragmented service territories, and help ensure that only members receive the rebates. However, downstream programs can require significant staff time to distribute and process individual coupons or other rebate forms and sometimes suffer from low participation rates.”
Larger investor-owned utilities, Moorefield says, often go upstream with rebates to manufacturers or “midstream” by compensating retailers for sales of efficient lights.
“What the consumer sees is simply a reduced product price often accompanied by in-store education about the promoted products. Upstream and midstream programs streamline the incentive process by eliminating individual coupon and rebate form processing. They can also increase program participation by reaching a broader audience of members who may not be aware of a direct rebate or who may not take the time to submit forms, receipts, and coupons.”
Costs vs. Savings
The question in the end comes down to costs and savings. “In general,” Moorefield says, “the program cost is the amount spent on total program activities [incentives, program administration, marketing, etc.] divided by the energy or demand savings attributable to that program.”
She then plugs some figures for CFLs and LED into sample “back-of-the-envelope savings calculations” to conclude that a $2-per-bulb CFL program spends less than half a cent to save each kWh over the CFL’s eight-year life, “far less than the cost to generate electricity.”
An LED incentive program, she says, “would cost more because higher rebates are in order for LEDs. If the total program cost per bulb were $6, then the cost to save one kWh is about 1.7 cents—still a pretty good bargain compared to new generation.”
Plenty of unknowns clutter the calculations, she cautions. “Regardless of which formula is used, there are a lot of variables in the equations.”
Among the uncertainties:
The baseline lighting technology against which savings are measured. Many areas, Moorefield says, “use the EISA standard as the baseline now; it is no longer traditional incandescents.”
Assumptions about the number of hours a light is on. Some recent studies, she says, suggest the old three-hours-per-day estimate is too high.
Actual use of the more efficient bulbs. Some of the bulbs purchased under a rebate or other incentive program may end up on closet shelves.
The actual useful life of the more efficient bulb. CFLs and LEDs may be rated for eight or 10 years, but that’s no guarantee they’ll last that long.
The persuasive value of the incentive program. “How many people would have purchased efficient lighting without the program?” Moorefield asks.
Despite those questions, she says, co-ops must include some form of cost-benefit analysis in the larger mix of considerations when looking at lighting programs.
“When planning a new or updating an existing lighting program, the key factors to be aware of, in addition to state guidelines on program costs and savings calculations, are federal lighting efficiency standards, current and upcoming lighting technologies, and consumer needs and preferences.”
The Colorado Case
Moorefield’s own co-op, LPEA in Colorado, has worked with its G&T, Denver-based Tri-State Generation & Transmission Association, to put together an LED rebate program that’s been warmly embraced by LPEA’s 40,000 members.
The co-op serves farmers and ranchers, an Indian reservation, resorts, and oil and gas developers. Its residential program offers consumers a 50 percent rebate on the cost of any LED bulb or fixture up to $10 each, while commercial members receive $250 per kWh reduction in their use for lighting streets, refrigerator cases, and commercial area lighting retrofits.
In its first three years, the residential program provided rebates for the purchase of more than 17,000 LED bulbs. And since 2010, when the commercial program began, more than 470 businesses have reduced their demand by a combined total of nearly 2.5 megawatts.
“Community involvement is key to this program’s success,” Moorefield writes.
Ray Pierotti, a project specialist with LPEA, even leads free ‘Lunch & Lights’ workshops to educate residential and commercial members about lighting technologies and program requirements. He also visits each commercial site to help assess costs and benefits.
Those benefits go beyond lower consumer bills and greater energy efficiency at the co-op, Pierotti told Moorefield.
“In addition to helping members afford high-quality, energy-saving LEDs, the local economy gets a boost,” she writes. “Over the course of the program, LPEA’s members have spent $4.4 million on commercial retrofits. Many of these dollars benefit the community, a program result that all members can feel good about.”
As LPEA’s experience shows, it makes sense for co-ops and other utilities to work hard at changing those old lightbulbs.
“By offering advanced lighting programs that include outreach and education targeted to members’ needs and interests,” Moorefield concludes, “electric cooperatives can generate cost-effective, verifiable savings—especially between now and 2020, when more aggressive lightbulb standards are scheduled to take effect—and at the same time help members save money and improve lighting quality in their homes and workplaces.”
