Building owners should think twice about doing a lighting-only efficiency upgrade. Here’s why: it can take away your ability to perform a more comprehensive deep efficiency retrofit of your building.

Lighting projects seem like total winners. Lighting efficiency measures have quick paybacks. New LED lights can be up to 75% more efficient than your old fluorescent tubes, and the cost of LEDs has come down dramatically over the past five years. On top of that, many utilities offer programs that subsidize the replacement of LED lights with incentives. But replacing LED lights without also doing other measures is like strip mining your building of the efficiency and cost-savings opportunities that are there.

When a building owner undertakes an efficiency project, the economics of that project have to stand on their own. Lighting measures have such a good payback that they subsidize and make practical other measures that, while important to building operations and occupant comfort, are less cost-effective. Taking on a lighting-only project strip mines the building of savings opportunities by taking away this cross-subsidization of mechanical and controls efficiency measures.

What Gridium sees on the ground is that many buildings want to revamp their outdated pneumatic HVAC controls, and replace them with direct digital controls.This pneumatic-to-DDC upgrade is expensive, but it is possible to fit a pneumatic-to-DDC measure in a retrofit project if there are lighting retrofit measures that can happen at the same time. The example project summary table below shows how this works:

Energy Conservation Measure
Measure Description
Actual energy savings ($)
Energy savings (kWh)
Energy savings (kW)
Energy savings (therms)
Capital costs ($)
Payback time (years)
ECM-1 LED Lighting Upgrade $59,000 260,000 70 -1,100 $265,000 4.5
ECM-2 Pump and Fan VFD Upgrades $3,000 15,000 3 0 $30,000 10.0
ECM-3 Central Plant and Zone Level DDC Upgrade $78,000 210,000 110 4,500 $1,050,000 13.5
Total $140,000 485,000 183 3,400 $1,345,000 9.6


In this simplified example, the short payback of lighting brings the total payback time of the project below 10 years, which is the requirement for the utility financing program in this case. Without the lighting measure, the project payback would be more than 13 years, and would not qualify for the program.

What’s the advantage of a deep retrofit that encompasses multiple measures over a retrofit that is lighting-only? First, you achieve much higher cost and energy savings with a deep retrofit. Most deep retrofits we see achieve 20 to 30% energy (and cost) savings. Second, you gain better control over the physical environment in your building. Engineers don’t love spending their days troubleshooting hot/cold calls and a new controls system makes those calls much less frequent.

It’s befuddling to us here at Gridium why utilities and state regulators continue to subsidize and incentivize lighting-only retrofits. Lighting retrofits tend to have quick payback periods, and so should pay for themselves – calling into question the need for ratepayer dollars. And lighting-only retrofits reduce the opportunity for deeper retrofits, reducing the opportunity for building decarbonization.

The California Energy Commission has issued a good, comprehensive report that shows how this has played out – with lighting accounting for most of the savings and with the state increasingly turning to code-based efficiency mandates instead of programs that give customers control of their bills.

We at Gridium want to point out that customers have control and don’t need to strip mine their buildings – they should focus on how they can do a deep retrofit, not a lighting-only project. Tell your utility that is what you want, and engage Gridum as your partner to get it done.

About Mark Shahinian

Mark works on legal, finance and operational issues at Gridium Alpha. He was at McKinsey & Co. in the Firm’s energy and cleantech practices. He has also been a product manager for software companies large and small. Mark has a BA in history from Dartmouth College, and an MS in environmental policy and a JD, both from the University of Michigan. When he’s not falling off a surfboard, he’s riding a bike on the Bay Area’s roads and trails.

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