Better lighting is one of the easiest ways to save energy. But before you can start saving you have to spend, and it isn’t always easy to convince everyone in the decision chain that a big investment in new technology with the promise of longer-term savings is a good idea.
So various organisations – including lighting manufacturers and publicly funded bodies – are offering buyers ways to spread the upfront cost, paying gradually as they save on their bills.
Although the Carbon Trust is no longer able to offer interest-free loans after government funding was withdrawn, it now runs an Energy Efficiency Financing scheme with Siemens Financial Services to offer loans and equipment leases on favourable terms for energy-efficiency projects. The idea is to invest in projects that save as much or more than the cost of repayments, meaning no capital outlay for the user. The scheme finances projects ranging from £1,000 to millions of pounds.
‘Lighting is the most common category of investment that we advise clients on,’ says Myles McCarthy of the Carbon Trust’s implementation services division. ‘It’s number one across pretty much all sectors in terms of good investment opportunities – that includes hospitality, offices, retail and manufacturing.’
‘By structuring the finance in the right way we can make sure the benefits exceed or match the repayments on the investment. That’s a really compelling sell – although you’re investing in the equipment you don’t need to spend more. Energy prices going up makes it even more compelling.’
Finance, McCarthy says, is one of the key barriers that prevents businesses from investing. Another is simply awareness of the options available to them. and confidence about what technology to invest in.
Access to finance is a ‘key enabler’ for businesses to embark on energy-efficiency projects such as lighting upgrades, McCarthy says. ‘There is competition for financial resources in businesses, and linking energy-savings to cost of their projects and delivering a way to finance that helps projects to be approved and taken forward in business.’
The Carbon Trust also offers independent energy-saving assessments of projects, allowing customers to invest with confidence. ‘It’s ensuring they’re making the right decision and not locking in inefficiency,’ says McCarthy. But with new lighting, he says, there’s a compelling business case in ‘almost all’ the proposals they see.
And lighting companies are offering financing options independently. UK manufacturer Dali Lighting (which bought the products of Lighthouse Electronics after it went into administration in 2010) is one of the companies seeking to entice customers with a ‘buy now, pay later’ option. Dali is offering to install halogen replacement LED lighting for free, allowing customers to pay over 12 or 18 months as they save money on their bills.
For customers in the public sector, interest-free government-funded loans are available from Salix Finance for energy-efficiency projects that can be shown to pay for themselves in five years or less. Lighting projects have been Salix’s largest area of investment this year, and its loans have allowed numerous public sector organisations to move to more efficient lighting schemes.
Salix provides interest-free loans and match funding to remove the upfront capital barrier faced when investing in energy-efficient technology. It has funded more than 2,500 lighting projects worth more than £50 million, and claims to have saved the taxpayer more than £188 million and prevented the emission of a million tonnes of carbon dioxide.
Salix CEO Alastair Keir says: ‘Our aim is to empower public sector organisations across the UK – from schools and universities to local councils and NHS trusts – to take the lead in tackling the various issues around climate change.’
‘Our clients generally forecast savings of 45 to 60 per cent for high-efficiency electronic ballast lighting upgrades and 60 to 90 per cent for LED installations,’ says Keir.
‘The incorporation of discrete controls such as passive infrared detectors and daylight dimming can increase these savings by a further 10 to 40 per cent. As well as the savings in energy use, clients reap huge financial benefits from reduced maintenance and longer lifespan.’