The Economic Benefits To Green Lighting

The most common complaints we hear about green lighting are that the technology is too expensive and simply “not feasible.” In our experience, though, no lighting retrofit has ever cost more than the long-term savings it provides. Note that this isn’t necessarily true with some environmentally friendly technologies, such as some advanced alternative-energy projects. In addition to slashing energy costs, switching to greener lighting can provide numerous other benefits, including the following.

Better Overall Economic Health

It’s no surprise that an efficiently run household is often a productive and comfortable place, and the same holds true for larger organizations. This is perhaps why a 2002 analysis by Innovest Strategic Value Advisors linked improving energy efficiency of companies to better stock market performance. It seems that analysts and investors are starting to recognize that management teams that are adept at trimming energy expenses also tend to be good at steering the rest of the business. Plus, more and more businesses are being asked to disclose environmental and energy- performance data as part of their annual reports. Showing improvement can help them to win business from government agencies and other organizations that are increasingly interested in environmental responsibility.

Efficiency upgrades can help a company to get on the radar of socially responsible investing (SRI) mutual funds and analysts, thus opening up new avenues of business. SRI funds screen out companies that managers deem unsavory and invest in firms that are leading the way in sustainability and social values. Moreover, the positive karma—and publicity—organizations earn for doing better by the environment can be invaluable. Improving lighting efficiency typically is the lowest-hanging fruit and often yields the quickest payoff.

Improved Property Values

An increasing number of home builders and real estate agents are discovering that they can get a leg up in the marketplace by advertising that a property has green features—and once again, green lighting is often the easiest place to start. Walter Molony, a spokesperson for the National Association of Realtors, told The Daily Green, “People definitely value energy efficiency. As utility costs continue to rise, it becomes greater value in people’s minds. 

The number of homes that were built according to voluntary green building standards ballooned by 50 percent between 2004 and 2007, reports the National Association of Home Builders (NAHB). Al- though new home starts have dropped dramatically in the wake of the housing market crash and global recession, interest in greener features remains high. More than half the NAHB’s 235,000 members (representing about 80 percent of U.S. home builders) reported in 2007 that they were starting to use at least some green building practices.

Further, real estate professionals are starting to notice that owners of green homes tend to be happier than when they live in more conventional digs, as reported by a recent NAHB/McGraw-Hill Construction survey. It’s worth noting that almost 40 percent of Americans who recently renovated their dwellings did so with at least some green products.

In a troubled market, being able to concretely show potential buyers that they will save money on their utility bills, as well as live smarter and more comfortably, can help to make your property more attractive than the competition. When the market is hot, having green features is like icing on the cake, and it can help you to access the growing segment of consumers who are deeply concerned about environmental issues.

The same holds true on the commercial side. In fact, a study by the Institute for Market Transformation found that $1 invested in energy efficiency with a 20 percent ROI could increase commercial property value by $2.

Improved Comfort, Employee Attendance, and Tenant Retention

It is perhaps not surprising that most energy-efficiency measures also improve the comfort and attractiveness of the indoor environment. Well-designed lighting retrofits, while reducing energy consumption, also improve visual acuity—the ability to see details well. Better vision, in turn, helps workers to complete tasks faster and reduces eye and mental strain. Better mood lighting helps to foster a pleasant environment that can bring out the best in staff and visitors.

A study by the Rocky Mountain Institute, a progressive energy think tank in Colorado, found that high-efficiency lighting with improved light quality, intensity, and color dramatically reduced worker eye strain, vision-related errors, and even absenteeism.

A number of occupational analysts have pointed out that workers who get fatigued less quickly are less likely to call in sick or get in on-site accidents. And those who are more comfortable in their workplace are more likely to stay with the company (Figure 1-8).

For income-generating properties, better lighting can help improve tenant recruitment and retention. For home owners, better lighting means more personal comfort and better utility from being inside, which is significant because studies show that we are indoors for up to 90 percent of our time these days. Don’t underestimate how much interior lighting affects the way we feel and the way we work and live.

Lockheed Martin Space Systems recently built 33,000 square feet of facilities in Sunnyvale, California, that meet the rigorous LEED standards maintained by the U.S. Green Building Council (USGBC). The many green features include efficient lighting, full-cutoff fixtures to reduce light pollution outside, and promotion of daylighting through windows and sloped ceilings. Managers told the USGBC that after they moved into the new site, they saw a 15 percent drop in employee absenteeism. This resulted in savings that they said made up for the building’s green cost premium in the first year alone. Incidentally, that additional cost for installing green features was only 1.5 percent above conventional construction, according to Lockheed, further dispelling the belief that going green has to cost a lot of money.

“When they’re designed well, green buildings are very competitive on initial cost, and they have lower operating costs by using less energy and water,” Kaushik Amruthur, a Lockheed senior facilities engineer, explained.

Increased Productivity

A number of studies from the Rocky Mountain Institute and others have correlated increased worker productivity with better and more efficient lighting. Nationally, improvements to indoor environmental conditions are estimated to have generated $20 billion to $160 billion from greater workforce productivity, according to a report in the July-August 2002 Annual Review of Energy and the Environment. 

In a 1986 effort that is often cited by supporters of green building, the Main Post Office in Reno, Nevada, installed an efficient lighting system and lowered the ceiling, which made the room easier to heat and cool. Harsh direct downlighting was replaced with indirect lighting using long-lasting bulbs. After 40 weeks, worker productivity reportedly had increased by more than eight percent.

In some cases, improving the lighting of physical work environments also may help to attract the best and the brightest workers. This can lead to significant increases in business, and it is money up for grabs. As Kaushik Amruthur of Lockheed put it, today’s employees are more discriminating about the environmental qualities of the buildings in which they work. If workers slave away in dark and dingy conditions, they are more likely to feel undervalued by their employers and therefore less interested in going the extra mile.

These benefits also extend to schools, although an estimated 40 percent of American schools suffer from poor environmental conditions that can compromise the health and learning of students, ac- cording to the USGBC. However, a 2005 study in Washington State by Paladino & Company found a 15 percent reduction in student absenteeism at green schools (Figure 1-9). A 2006 Capital E review of 30 green schools across the country concluded that “based on a very substantial data set on productivity and test performance of healthier, more comfortable study and learning environments, a three to five percent improvement in learning ability and test scores in green schools appears reasonable and conservative.”

Boosting Sales

It is perhaps common sense that well-lit stores see more foot traffic and better sales than dim shops. Lighting makes a difference. At a recent visit to the Consumers Union Laboratories in New York state, the tech reviewers for Consumer Reports magazine explained that TV showrooms jack up the brightness and contrast on sets in order to catch the eyes of shoppers and move more units. Better news for greens is that daylighting can also raise sales. In 1999, the Heschong Mahone Group surveyed 108 outlet stores operated by the same chain, and found that sales increased by 40 percent in stores that had installed skylights.

Michael A. Steele, chief operating officer (COO) of Equity Office Properties, told Innovest Strategic Value Advisors that “having an energy-efficient building gives the owner an opportunity to win over the customer, especially when that is the difference between otherwise similar buildings.”

This is an excerpt from my book Green Lighting.