A1 Energy

9 Benefits of LED Lighting Financing

12.21.20 04:15 PM By Jon
Financing energy retrofit

Lighting accounts for as much as 40% of electricity usage in commercial and industrial facilities. This is especially true when businesses operate using inefficient lighting technologies such as HID or fluorescent bulbs. In many cases, switching to all-LED lighting (whether you purchase up front or through LED financing) can trim that electricity usage metric in half.

From first glance, a full LED lighting retrofit sounds like a no-brainer. However, the up-front cost doesn't always align with your budgetary goals. What if you can't support the initial costs of lighting upgrades?

That's where LED lighting financing comes into play, and LED lighting consultants can help you reap the benefits.

“While companies may decide not to execute projects for a variety of reasons, lack of financing should not be one of them."  John Costlow, President, Sustainable Energy Fund.

​1. $0 Upfront Cost

LED financing breaks down a major barrier for reaping the ongoing benefits of LED lighting. Since you don't have to lay out a large investment for equipment, you can allocate funds elsewhere in your business. This means you can prioritize other initiatives—like improving your workplace ergonomics, or investing in solar energy, or whatever other goals you have on your mind—all while your LED retrofit is underway.


Experts suggest that it's better to finance a purchase rather than pay up front for larger investments like LED retrofits. Of course, it depends on the deal you get—but presuming it's a good one from a reputable financier and quality LED lighting consultants, this decision is a smart one.

​​2. Stay Net Cash-flow Positive - Starting on Day 1 

Because LED lighting almost always generates energy savings, an upgrade could help you generate monthly savings that exceed your monthly loan payment.  This practically makes the cost of LED financing a moot point.

Consider the scale at which industrial and commercial facilities operate. It can be sweepingly large. Because of this, commercial building owners can see their utility costs related to lighting shrink by as much as 75% over a 20-year period—all thanks to the efficiency and durability of LED lighting. 

When balanced out with a financing plan, you're actually staying net cash-flow positive as soon as you begin operating in the new system. How's that for profitability?"

​​3. No Payment Until Project Completion

Sometimes, you can score a financing plan that doesn't require any payments until your project has been completed. This means you won't pay anything for your LED lighting equipment until you officially start saving money with your new lighting.

 

This gives you a solid opportunity to prepare your fiscal year budgets ahead of time—ultimately increasing your chances of keeping spending below the threshold and maximizing your earnings. Plus, you won't have to worry about the adequacy of the installation since you're not paying until the work is done to the contract's standards.

​​4. An opportunity to Improve Resilience

LED lighting may be energy-efficient, but that's not the only tactical benefit. These systems are also more resilient, particularly when compared to their older and inefficient counterparts. Fixtures are shock resistant and built more firmly than the alternatives, which makes them last longer. 


LEDs also dim over time rather than burning out. This, too, increases their lifespan. In some instances, an LED light may see upwards of 50,000 additional lifetime hours. Not only does this mean you won't have to worry about replacement until well down the line, but it also means you're keeping service and labor costs down in the meantime.

​​5. Reach Your Sustainability Goals with LED Lighting Financing

Sustainability may not be your primary goal when switching to an energy-efficient lighting solution. But regardless of your prerogative, your facility will inherently become more efficient. Using LED lighting financing can be a streamlined route toward reducing your impact.


Why's this matter so much? Policymakers are becoming increasingly vigilant about corporate environmental impact. You may only have a certain level of emissions you can put out before you've reached the acceptable limit. 


Pennsylvania is well behind California, a state with strict greenhouse gas emission caps. However, that doesn't mean things aren't changing. Companies will be required to comply with these limitations, and LED lighting is a solution to help you tackle both problems at once.

​​6. Get In On Backed Financing Programs

In Pennsylvania, NEIF recently launched their most attractive commercial financing program to date. They partnered with the SEF to launch the Pennsylvania Small Business Energy Financing Program. The program offers special, market-beating rates and terms out to 10 years for energy efficiency projects under $100,000.


Whether or not you live in Pennsylvania, you can speak with financing experts to learn about local programs for you to take advantage of. For small businesses in particular, programs like these can be a saving grace to help you grow and keep up with the competition.

​​7. Stay Flexible and Preserve Capital

Unfortunately, the COVID-19 pandemic has made all of us shift gears in some way. This remains true for industrial and commercial facilities, many of which have had to define practical steps for crisis response. Some of these steps require liquidity. 


In a National Association of Manufacturers survey, 71% of respondents were worried about the pandemic's financial impact, including effects on operations, liquidity, and capital resources. Even in a post-pandemic society, preserving capital will be a priority across the commercial and industrial industry.


This concern doesn't mean you can't proceed with your sought-after LED lighting upgrade. However, it may mean that going all in with a full payment may not be your preferred method. That's okay, because financing can help you stay flexible amidst all the uncertainty.

​​8. Sign Off On LED Financing Terms Before Retrofit Demand Affects Cost

Industrial and commercial facility leaders can expect the demand for financing solutions to escalate. According to DLL Account Executive John Ceschan, “Finance solutions for energy efficiency retrofit projects will be even more important as the desire for energy efficient retrofits continues to rise, in spite of declining utility incentives.”


Experts expect the global LED lighting industry to grow at a compound annual growth rate of 9% through 2024. Historically throughout the market (even beyond the energy sector), increased demand means heightened costs. Financing allows you to set terms early on, well before the project reaches completion. In the end, this will save you money on top of what energy-efficient lighting already conserves.

9. Take Advantage of More Than One Way to Finance

Some financing options let you pay in installments for an LED lighting retrofit throughout your industrial building. However, there are other financing options that follow a subscription-based model. Lighting-as-a-Service (LaaS) is an emerging market that's set to grow at a compound annual growth rate of 50.4% from 2020–2025


LaaS goes beyond initial installation and includes regular service and maintenance. As a client, you're charged for your subscription rather than paying a one-time bill. This differs from dealing with a traditional financier as you're committing to additional service—which means that Lighting-as-a-Service may not be necessary for all businesses.

A1 Energy LED Lighting Consultants Are Partnering with NEIF

According to Jensen Handwork of the National Energy Improvement Fund (NEIF), the benefits of financing your LED lighting truly start immediately. 


Handwork says, "The money you save each month on your utility bills from a lighting upgrade often exceeds your monthly finance payment—this means savings starting on Day 1. National Energy Improvement Fund is excited to partner with A1 Energy to deliver financing solutions that are affordable and accessible for all its customers."


For Pennsylvania industrial and commercial facilities, LED lighting financing may be the ideal solution—whatever benefits you may be after. At A1 Energy, we don’t believe you should have to incur upfront expenses if you don't want to. If you want to make your building more energy efficient, contact us today to learn more about a lighting retrofit—and the budget-friendly LED financing options at your beck and call.