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Hefty increases for LED lighting incentives

Ontario Power Authority offers accelerated paybacks and easier process
Monday, October 6, 2014
By Barbara Carss

Updated October 7, 2014

Proposed incentives for some LED exterior area lights — originally announced on Sept. 24, 2014 — are now on hold. Lower wattage LED replacements between 30 to 100 watts will still qualify for rebates of $98 or $119 per fixture, but the Ontario Power Authority (OPA) is taking another look at earlier promised incentives of $340 or $638 for replacement fixtures of higher wattage.

“The prescriptive incentives for LED exterior area lights of 100 watts or more are currently under review by the OPA and are not available at this time,” the OPA’s media relations specialist, John Canella, confirmed on Oct. 7, in response to the Oct 6 posting of this story. “Incentives for exterior LED area lights of over 100W can still be applied for under the engineer or custom track based on $400/kilowatt or $0.05/kilowatt-hour of electricity savings in the first year.”

A generous boost to LED lighting incentives may prompt Ontario property owners and municipal governments to reprioritize capital budgets and fast-forward replacement of outdoor lighting and streetlights. Recent updates to the Ontario Power Authority’s (OPA) energy conservation and demand management (CDM) program for the commercial and institutional sectors have increased the value of a whole range of LED incentives and made them easier to obtain.

Depending on the project and product, lighting contractors estimate that some of the new incentives could cut payback times by more than 50 per cent. Accelerated returns are most likely with exterior area lights where the incentives now range from $98 per fixture for LED fixtures less than 50 watts to as much as $638 per fixture for those greater than 250 watts. Energy management specialists are also eyeing incentives for LED troffers, which range from $38 to $59 per troffer, to replace linear (tube) fluorescents indoors.

“These rebates are going to be up to five to six times more lucrative than what had been offered before,” reports Juergen Hack, president of the lighting contracting company, Ecosolutions for tomorrow.

His clients are now happily recalculating their budgets. Among the nearly 40 LED lighting retrofits he’s currently overseeing, some payback periods could be cut to as little as 1.5 years with the new incentives.

Projects that have received approval under earlier CDM program rules could still be eligible for the new incentives if the designated products have not yet been purchased. This will entail some administrative backtracking — exchanging  applications calculated with the previously required “engineered” approach for the now permissible “prescriptive” accounting, which simply multiplies the number of fixtures by the established price — but the payout should be worth the effort.

“A $638-per-fixture rebate to replace an existing outdoor fixture greater than 250 watts is a significant incentive. A lot of outdoor lighting is going to be replaced,” predicts Michael Colligan, president of the lighting distribution and services company, Lighting Solutions.

“For the city of Hamilton, the value of this incentive to convert its next phase of its street lighting could be about $3.5 million,” concurs Geoff Lupton, Hamilton’s director of energy, fleet and traffic. “I think it’s something we’ll want to consider soon just in case it (incentive funding) dries up. The project would be subject to council approval.”

With Ontario’s municipal governments focused on the upcoming election, October 27, few councils will be ready to make capital decisions until at least later this fall. Meanwhile, private sector operators are weighing a new set of considerations.

“I’ve told all my customers there are no practical energy savings in exterior lights. They are only on at night. It’s going to be a seven to 10-year payback,” Colligan recounts. “When the OPA steps in and makes an incentive like this, now you have to re-examine everything.”

The same holds true for LED troffers.

“We haven’t looked at that because the paybacks are too long, so this could be an opportunity,” notes Rajan Balchandani, manager of energy management for the city of Mississauga, which is notably about halfway through a program to convert 49,000 high-pressure sodium streetlights to LED.

He is hopeful that the city will be able to tap into the new incentives for at least some of the remainder of the replacements, as well as for the 60 to 70 per cent of municipal parking lots and some recreational fields where other types of HID lights are still in use.

The enhanced LED incentives and revised method for allocating them in part reflect recent advancements in the technology, which has continued to drop in price and improve in performance since the CDM programs were introduced in 2011. Designating LEDs as a so-called prescriptive measure would have been problematic until the price stabilized, but this new status will make it much easier to factor them into retrofit plans.

The engineered approach requires proponents to calculate and prove energy savings with reference to the base case of energy performance prior to implementing the saving measures.

“It takes someone with expertise to calculate the base case, compare it to the system being specified and then come up with the supporting data the LDCs (local distribution companies) need. Furthermore, individual LDCs determine engineered rebate amounts on their own so you may get more from one utility than you’d get from another on the exact same project,” Colligan says. “When they make it prescriptive, it standardizes things across the board with all the LDCs, simplifies the application process and makes marketing and sales a lot smoother.”

Nevertheless, some observers sound a note of caution.

“Though increasing the number of prescriptive measures simplifies the application process and makes the program more accessible, it may end up undervaluing the savings that could be achieved through an engineered or custom approach,” says Bala Gnanam, director of sustainability and building technologies with the Building Owners and Managers Association (BOMA) of Greater Toronto. “An experienced lighting consultant could start with the required lighting level (lumens per square foot) and then determine the number of fixtures needed to achieve that level of lighting. This approach combined with proper lighting control technologies would lead to the greatest savings. Conservation programs should encourage and incent this type of retrofit behaviour”

The hefty incentives for exterior lighting — which typically consumes power only in the off-peak period — likewise raise some eyebrows among energy management specialists. However, Balchandani points to the CDM program’s twin objective to reduce overall electricity consumption.

“This will help reduce the energy load and will also reduce emissions and the carbon footprint,” he says. “This is going to help people use the new technology, which is going to be very good for the environment.”

For more information about the new incentives, see the saveONenergy web site at www.saveonenergy.ca/Business.aspx

Barbara Carss is editor-in-chief of Building Strategies & Sustainability and Canadian Property Management.

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