LED retro-fits will always save on Energy Costs when replacing fluorescents and incandescents, but why stop there. If you are going for a LED upgrade, be sure you get full value. There is no good reason to leave any money on the table.

Here are some value add-ons for your LED retro-fit project:

Tax Benefits – EP Act 179D Tax Deduction. This benefit allows a building owner to take up to $1.80 per square foot as a tax deduction, provided the building meets certain energy efficiency targets. Charles Goulding of Energy Tax Savers, Inc. advises that “LEDs are so efficient that a LED retro-fit will usually trigger some level of incentive. With warehouses and manufacturing buildings, a LED retro-fit will almost ALWAYS trigger the Maximum Tax Benefit of $1.80 per square foot. If the tax benefit exceeds the cost of your LED retro-fit, then you should add other upgrades to your “179D Deduction Fund.” Qualifying upgrades can include HVAC, roof, windows and insulation projects. These add-ons to your “deduction fund” can either be completed projects within the past ten years or planned upgrades for near-term implementation”.

Take a 100,000 sf warehouse as an example. The LED retrofit triggers the $1.80 per square foot tax benefit or in this example $180,000 in potential tax deductions.

However, the LED retro-fit that triggered the benefit
cost only $50,000. So you now have a balance of $130,000 remaining in your “deduction fund”. You can go back ten years and use past projects or plan new project(s) in order to benefit from this remaining balance. Many building owners plan their building projects around a LED retro-fit “trigger” to take full advantage of these 179D tax benefits.    

LED Product – With recent advancements, the “one for one” lamp replacement – an incandescent A19 lamp for a LED A19 lamp of lower wattage is old news.  “The smart move is to utilize the latest LED “engines”.  An example of this approach is retro-fitting an existing ceiling fixture with four traditional lamps. However, instead of replacing the four lamps with four LEDs, you replace it with one LED “engine” designed to perform in the existing housing. Result – more value added to your retro-fit with the additional energy saved and a longer operating life with the new LED engine.”

Strategy – If your retrofit will include the replacement of both incandescents and fluorescents, you can expect a payback in the one to two-year range from the accumulated utility bill savings from your LED upgrade. If the retrofit involves just the replacement of fluorescents, then the payback from the accumulated utility bill savings will be in the two to three-year range. Note that the financial underpinning for this strategy is based on the lower level of electric consumption of LED products. But the viability of this strategy is based not only on lower levels of consumption, but product longevity as well. Make sure that LED products for your retrofit are not only high quality but come with a five-year warranty. With five years of useful life from your LED products, you will have recovered the cost of your LED installation and still have a comfortable margin of error. A quick heads up – if you buy discounted LED products for what may seem like a can’t be beat price, you will put the financial side of your project on quicksand. Low priced products are low priced for a reason – among them -questionable quality. Don’t go there. Lock in your five-year useful life with a warranty from a reliable manufacturer and know that your project payback is “guaranteed”. Bad surprises can easily be avoided by taking this seemingly simple step – a 5-year warranty which is readily available for quality LED products.