LED Lighting Retrofit Savings and Payback
The four numbers on every lighting proposal: the energy saved from the wattage reduction (fixtures x (W_old - W_new) x hours x rate), the demand-charge reduction if the load runs at the utility peak, the total annual saving, and the simple payback against install cost. The demand term - which a lighting proposal that ignores the demand side leaves out - often shortens the payback by a third. The burn hours are the actual operating hours; a controls retrofit is a separate credit and an air-conditioned space gains a cooling credit not included here. A simple payback, not a life-cycle analysis.
Formula and source
kw_saved = fixtures x (watts_existing - watts_new) / 1000; kwh_saved = kw_saved x annual_hours; energy_usd = kwh_saved x rate_kwh; demand_usd = kw_saved x demand_per_kw_mo x 12; annual_usd = energy_usd + demand_usd; payback_years = install_cost > 0 ? install_cost / annual_usd : null.
The standard energy-and-demand lighting-retrofit savings method (kWh_saved = fixtures x (W_old - W_new) / 1000 x hours, demand savings at the utility's $/kW-month, simple payback = cost / annual savings), by name; the relations are public.
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