Economics


Table of Contents


Overview
There is More to Lighting Quality Than What Meets the Eye
Initial Costs
Operating Costs
Maintenance Costs
Comparisons

Why MH Systems Cost More Than HPS Systems

Overview

The economics of lighting are sometimes quite complex and indistinct, because of the many elements that can each have its own cost. Costs vary over time and place and interest rates, and therefore the results of comparisons can change as well. Costs can also include site, project or time features - such as ornamental elements, special conditions or secondary functions - that can distort the results in particular situations. Furthermore, not all of the requirements or effects of a lighting system can be evaluated in monetary terms, such as pollution of the night sky or landfills. For these reasons, using money as the basis for evaluating the costs of lighting systems is not the only or best method. However, monetary information can be important or even critical in some situations, and so monetary analyses and comparisons will continue to be made, even though the results are known to be somewhat incomplete and inaccurate, as well as limited to the specific situation.

In order to transcend these limits of monetary evaluation, different metrics have been developed to evaluate and compare lighting systems. These are also somewhat incomplete and inaccurate, but they are significantly less limited to the specific situation and not subject to the variations inherent in monetary evaluations. The most useful of these metrics for outdoor lighting is the energy metric Unit Power Density (UPD) that reports the energy used by the lighting system per unit of area covered by the lighting system. When lighting systems are designed to meet the same criteria for the same project, then UPD can be used to compare between alternatives. The more similar the lighting systems being compared, the more significant the comparisons of UPD become.

The most basic concept for evaluaitng costs is the trade-off between initial and operating or maintenance costs. For example, a particular feature of a lighting system - such as brighter lamps, taller poles or longer arms - may mean that less luminaires are required to provide the same illumination. This may result in higher or lower initial costs depending - but the operating and maintenance costs will probably drop since the number of luminaires is reduced - unless the brighter lamps are so much more expensive than the other savings in maintenance costs. Evaluating such trade-offs is the principal objective of economic evaluations of lighting systems.

The following discussion includes recognizing and evaluating the costs associated in particular with outdoor lighting systems in both monetary and UPD terms. The discussion is general and introductory, but important reading for anyone making decisions about outdoor lighting systems.

The first article is a general discussion of the many ways ligthting systems can be evaluated, and a good introduction to the following sections. Those sections deal with the different costs associated with outdoor lighting systems grouped as initial, operating and maintenance costs. At the end is a discussion about comparisons and the relevant information that can be discovered about what outdoor lighting systems cost.

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Initial Costs

Initial costs of lighting systems are considered to include everything it takes to go from empty ground to a complete operating system, as equipment, installation or additional costs. Equipment includes all of the lighting system components, from wire through to photosensor controls and switches, as well as lamps, luminaires with ballasts, and possibly ignitors and photocontrols, poles with foundations and possibly mounting arms or brackets or lowering devices, and the complete electrical distribution system of wires in conduit with pullboxes and overload protection. Even additional guardrail, video cameras and displays, remote control systems, electrical tape and wire nuts can be part of the equipment costs. Installation costs cover everything it takes to put the equipment together, including equipment used during construction such as cranes, traffic barriers and concrete forms. Trenching and restoring the ground surface are part of installation costs, as are insurance and bonding and financing costs. Installation costs can even be considered to include the preparation of "as-built" drawings. Additional costs address special situations, such as relocating wildlife or costs associated with road closure during construction, although such costs can instead be included in the installation costs.

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Operating Costs

Operating costs are associated with the continual on-going use of the lighting system. The principal operating cost for outdoor lighting systems is electricity, used at every moment of the system's operation. The costs of electricity can often be found through the local utility, which may be publishing the information for the public. Rates for electricity outdoor lighting vary significantly, from franchise agreements between a municipality and the utility to the cost as part of secondary service to a small business. While electricity rates for outdoor lighting are usually based only on energy use - cost per kiloWatt-hour - in some situations the electricity for outdoor lighting may be part of a facility which pays for its electricty through a combination of service charge, energy charge and demand charge. In such cases the effect of the outdoor lighting system on the demand charges should be carefully determined, because the cost of demand charges can sometimes exceed the cost of energy used. Operating costs for some large systems can also include the costs of a system supervisor and control center.

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Maintenance Costs

Maintenance costs are related to the occasional or periodic servicing of the lighting system equipment. This includes replacing lamps, cleaning luminaires, refinishing poles, arms or brackets, replacing electrical components such as ignitors or photocontrols and anything else that is a periodic event. If the lighting system includes a control center, then changing the light bulbs in that facility is part of the maintenance of the lighting system. Certainly any costs associated with recycling or disposal of lamps is part of maintenance costs. The distinction between operating and maintenance costs can be unclear. For example, the costs of replacing damaged equipment can be associated with either category depending on the situation: if the pole is knocked down by a vehicle, the costs may be considered operating (because at every moment the same probability exists that this could happen) whereas if the wind damages the pole the costs may be considered part of maintenance. Of course it really doesn't matter as long as the costs are properly included somewhere.

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Comparisons

For making informed decisions about lighting systems, it is helpful to be able to compare alternatives. As discussed above, evaluations can be made in monetary terms, and then comparisons seem to have real financial implications, but they are only relevant to the specific situation. For making broader evaluations, UPD may be more relevant.

Monetary evaluations can be made using simple or complex techniques. Simple payback provides a quick result that estimates how long it takes for an investment to return its initial cost due to reduced operation and maintenance costs. The simplicity is appealing but may ignore some significant issue or cost. More complex techniques include such elements as the "time cost of money" (interest rates) and the possible return on alternative investments. The most comprehensive monetary evaluation is called Life Cycle Costing. This technique tries to combine every system cost - intial, operating and maintenance - into a single value by assigning to each individual cost a time along the system's life and then applying economic arithmatic to make them all "occur" at the same time. This method can be very robust as long as the values used in building it are reliable and comprehensive. However a small change in predicted interest rates can change the relationship between intial and operating or maintenance costs. For more information on Life Cycle Costing, see the IESNA's Lighting Handbook, lighting courses and publications

Evaluations of systems using UPD can be more general and less sensitive to elements outside the lighting system. For example, when comparing between two systems that use the same wattage lamps - even if different sources - UPD comparisons will indicate the differences in lamps, poles, foundations, arms or brackets - for intial, operating and maintenance costs. Therefore a 10% difference in UPD will correspond to a 10% difference in: intial costs of lighting equipment, initial costs of part of the wiring and electrical system but not all, operating costs for the lighting equipment, and maintenance osts for the lighting equipment. This capability to provide broad and comprehensive comparisons is what makes UPD such a valuable metric. When systems are less similar - for example different wattage lamps - the applicability of UPD is reduced, since the systems may have different numbers of lamps, luminaires and poles of each type, and UPD does not reveal that difference at all. However UPD will always report the difference in energy use, which is the predominant part of operting costs.

So when comparing two systems using say 100W HPS or MH sources, the UPD comparison would be applicable to almost all costs. Typically HPS systems can provide the same illumination for a roadway with about one-half to two-thirds of the UPD of a MH system (Keith, "Evaluating lighting system components through comparison of roadway UPD values", Journal of the IESNA, v32n1pp14-28) so this would mean that HPS systems could have one-half to two-thirds of the lamps, poles, foundations, energy use, maintenance costs, knockdowns and associated pollution as comparable MH systems - but about the same amount of wiring. However, when comparing say 100W HPS with 150W MH, the UPD comparison is only rigourously valid only for evaluating energy use and some associated pollution. Even so, differences in UPD do indicate relative performance, and even when exact proportional differences can not be applied to certain costs based on UPD, the trends and relative magnitudes are always informative.

To be as informative as possible, economic evaluations should include both general metrics like UPD and specific metrics such as Life Cycle Costing.

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