Financial Benefit
Meets Human Benefit

Great advances have been made in lighting technology in the past decade. With better linear fluorescents, compact fluorescents (CFLs) and the new class of solid state light emitting diodes (LEDs), retrofitted lighting systems can be a major source of energy savings. These savings can be so significant, that we believe lighting systems should be treated like an investment.

That’s why we work with companies to learn their financial priorities and goals, and design systems that can deliver the ROI they require. But we also take pride in delivering better application-appropriate lighting where, when, and how it’s needed. As a result, our engineered systems save money and improve employee morale and productivity.

A modern lighting system makes your workplace better. An Energyficient lighting system? That’s an investment in your bottom line.

Benefitting Employees and the Bottom Line

Simple Payback (SPB)

Do we provide a simple payback calculation? Of course we do. We work with companies to ensure their SPB meets their budget and financial goals. We think it’s the least valuable measurement, however. That’s because SPB is the simple rate of return of the first year savings compared to the initial investment and does not consider the future value of money. Most importantly, SPB ignores earnings on the investment after the payback period. And that’s where an engineered lighting system shines.

Investment ÷ Savings = Years or Savings ÷ Investment = SPB ROI%

Future Value (FV)

One measure of the value of an investment is its future value. An engineered lighting system from Energyficient has an expected life of fifteen years. So when we design a system for a client, we factor in energy savings, take into account historical electric rate increases, and determine the total earnings on the investment over its lifespan. Doing this gives companies and CFOs a real glimpse into the advantages that a well-designed, efficient lighting system can provide.

Notice we aren’t bringing in other intangible savings that may be present like maintenance parts, labor or air conditioning? That’s because we firmly believe investors only want to consider tangible savings in return calculations.

FV = Investment + Earnings over the Expected Life of the Project – Cost of Money

Present Value (PV)

Another great financial tool is present value. PV equals the size of the investment you would have to make today — taking into account your hurdle rate or minimum acceptable rate of return — to equal the future value of an investment in a lighting efficiency project. The numbers are surprising. It is not unusual for an Energyficient lighting system investment to be more than two times as effective as a competitive investment.

PV = Future Value / (1 + Minimum Acceptable Rate of Return (MARR) or Hurdle Rate) x System Life (15yrs)

NPV = Investment x (1+ Competitive Investment Return)-0 + Future Value x (1+ MARR)-15

Net Present Value (NPV)

Energyficient provides a financial calculation of your investment’s net present value as well. This measurement compares your lighting system investment with a competitive investment to ascertain which will return more money to the organization. If it’s positive, the lights win. (By the way, it’s almost always positive.)


Internal Rate of Return (IRR)

The internal rate of return is very useful in the case of an energy-efficient lighting system. A lighting system saves companies money every year of its fifteen year lifespan. If the IRR is greater than your hurdle rate, the project should move ahead. We provide companies with this percentage to demonstrate the high value that an energy efficient installation can bring to the bottom line.

IRR = Investment x (1+ Hidden Rate of Return)-0 + 1st Yr Earnings x (1+HRR)-1 + 2nd Yr Earnings x (1+HRR)-2

Savings to Investment Ratio (SIR)

Calculating savings per year with a lighting system is incredibly accurate. Unlike other energy saving retrofits (windows, furnaces, hot water heaters, etc.), the only variable is how often the lights are on. In a manufacturing facility or a large institution, we can very accurately measure and then estimate this number to give companies their expected savings over five years, ten years and fifteen years. Using this data, we then calculate the savings to investment ratio to help you determine if it is a good investment.

SIR = Accumulated Savings over Life Cycle ÷ Present Value of Investment

Human Rate of Return (HRR)

A lighting system is a financial investment to improve your bottom line through electricity savings. But we pride ourselves in also making it an investment in your people. Our design doesn’t always take into account what is there now; we design to what should be there. We use lighting recommendations and best practices from the Illuminating Engineering Society (www.iesna.org) and the American Society of Heating, Refrigerating and Air-Conditioning Engineers (www.ashrae.org), who create lighting and energy standards. This focus on what light can do for people returns much more to the bottom line than just electricity savings. It can reduce absenteeism, improve production, and employee morale. Especially in manufacturing areas where detail work is important, appropriate lighting improves quality control. This all adds up to happier, more engaged team members, and an overall better working environment.

Human Rate of Return