Karaglen shopping mall: Lighting

Executive summary
Lights contribute to a large amount of your current electricity bill. It is difficult to know exactly without having a sub-metering system installed and monitored We have made some simple, explicit and realistic assumptions about the current usage on your (and your tenants) lights alone. These are around hours of use, current and future electricity costs. The total cost of replacing all the lights is approx. R 379,000. This is R 358,000 for the shops and R 21,000 for the common areas. All prices are excluding vat. If the all the lights are replaced, the total savings (direct on electricity alone) will be more than R 809,000 over 3 years. This is R 785,000 for the shops and R 24,000 for the common areas. The payback period is 1.4 years and equates to a return on investment of 64%. There are other benefits from replacing your lights with energy efficient LEDs. These include tax benefits, reduced maintenance and longer lasting lights. We advice that you do not change all the lights at once, but consider installing LED and other energy saving lights as and when you replace your lights. This will give you an opportunity to test the lights and also reduce upfront capital requirements. This document provides a succinct breakdown of the assumptions used to calculate the savings we estimate.

Current lighting
We have taken a look at the current use of lights in all the shops and the common areas of the shopping centre. There are over 2,400 lights in total (including existing energy saver lights), predominantly in the shops with a few lights in the common areas. We do not consider your energy saver lights in this document. You have 2,200 lights which can be effectively replaced with LED energy saving lights. Most of the lights are on for the entire day (12 hours) and some are on during night time. We can see from the table below that the most common lights are the 4 foot fluorescents and the downlights. These make up 1,145 and 599 respectively, totalling 1,744 lights. Note: We can save approximately 35% on the fluorescents consumption and 90% on the Downlights consumption. This is discussed further down.
Table 1: Number of lights by type and shopping centre side

Light type 2 foot fluorescent 3 foot fluorescent 4 foot fluorescent 5 foot fluorescent Candlelights Downlights Spot 150 w Spot 250 w Spot 500 w Spot 400 w Bulbs High Bay Grand Total
Assumptions

Spar side Virgin side Total Total (both Common Shops Common Shops Common Shops sides) 20 20 20 24 24 24 618 16 511 16 1 129 1 145 295 60 355 355 7 7 7 15 144 440 15 584 599 5 5 5 1 4 5 5 7 7 7 4 4 4 25 25 25 7 7 7 15 1 121 23 1 044 38 2 165 2 203

We estimate the savings you will earn by changing your lights to more energy efficient LED equivalents. We include your current usage and electricity rates in our calculations. We also take consideration of future electricity increases that will be imposed by Eskom and the Ekurhuleni municipality. The following two tables (Table 2 and Table 3) show our assumptions and the estimated savings per light type over a 3 year period. We also include the payback period and Return on investment (from 1 light).
Table 2: Assumptions and increases) Daily consumption by light Light type All fluorescents (2 to 4 ft) Downlights, candlelights and bulbs Spot lights and high bay Electricity tariffs Consumption & demand kWh used in calculations (consumption by light type, electricity rates

Number of hours used per day 12 hours per day 12 hours per day 4 hours per day

Wattage per light type 2 ft = 35 w; 3 ft = 40 w; 4 ft = 45 w; 5 ft = 50 w 60 w High bay = 300 w; spot lights between 150 w and 500 w depending on type Estimated increases Electricity increases of 26% in both year 1 and year 2. This is the approved increases that Eskom will implement. Ekurhuleni may impose a higher or lower increase.

Ekurhuleni rate Peak demand > R 1.98 in high season and R 0.74 in low season Standard demand > R 0.69 in high season and R 0.48 in low season Off-peak demand > R 0.42 in high season and R 0.38 in low season

Average = 64 c
kVa Demand charge of R32.48 Same as for kWh increases

Table 3: Financial savings per light fitting (over 3 year) Usage (watts)
35 40 45 50

Current

Hours per day

12 12 12 12

Replacement

Cost per light (ex vat)

R 145

% savin gs
34% 33% 33% 34%

Kwh savings per year

52 56 65 74

Total savings rands (3 years)

140 151 175 198

kVa demand reduction

0.01 0.01 0.02 0.02

Total savings rands (3 years)

19 21 24 27

Total savings (rands)

159 172 199 225

payback period (years)

2.73 2.52 2.18 1.93

ROI

2 foot 3 foot 4 foot 5 foot

1 1 1 1

28.9% 31.7% 37.4% 43.3%

T5 conversion

R 145 R 145 R 145

Candlelights

60

12

LED candle 6w

R 160

88%

232

618

0.05

86

704

0.68

176.5%

Downlights

60

12

LED down 6w

R 150

88%

232

618

0.05

86

704

0.64

195.9%

Bulbs

60

12

HP LED bulbs 6w

R 145

88%

232

618

0.05

86

704

0.62

206.1%

Highbay

300

Highbay 30 w

R 5 300

87%

379

1 011

0.09

140

1 151

13.80

5.1%

Spot 150 w Spot 250 w Spot 400 w Spot 500 w

1 1 1 1

150 250 400 500

4 4 4 4

LED Spot 10 w LED Spot 30 w LED Spot 40 w LED Spot 50 w

R 830 R 2 000 R 2 500 R 2 900

84% 86% 86% 86%

183 313 503 627

490 836 1 341 1 672

0.04 0.07 0.12 0.14

68 116 186 232

558 952 1 528 1 904

4.46 6.30 4.91 4.57

16.8% 11.6% 15.2% 16.4%

Calculations
Using the assumptions listed above, we calculate the total capital expenditure as well as the total savings (over a 3 year period). We also include the payback period as well as return on investments. These are all based on the prudent assumptions listed above. The average kWh rate (R 0.64 for year 1) is used to calculate the rand savings. This is to avoid spurious accuracy, which will not make a material difference to the calculations below. Note: The savings will be better through tax benefits, Eskom Standard Offer programmes and reduced maintenance.
Table 4: Total replacement costs of all lights (ex vat)

Light type 2 foot fluorescent 3 foot fluorescent 4 foot fluorescent 5 foot fluorescent Candlelights Downlights Spot 150 w Spot 250 w Spot 500 w Spot 400 w Bulbs High bay Grand Total

Spar side Virgin side Total Total (both Common Shops Common Shops Common Shops sides) R0 R 2 900 R0 R0 R0 R 2 900 R 2 900 R0 R 3 480 R0 R0 R0 R 3 480 R 3 480 R0 R 89 610 R 2 320 R 74 095 R 2 320 R 163 705 R 166 025 R0 R 42 775 R0 R 8 700 R0 R 51 475 R 51 475 R0 R 1 120 R0 R0 R0 R 1 120 R 1 120 R 2 250 R 21 600 R0 R 66 000 R 2 250 R 87 600 R 89 850 R0 R 4 150 R0 R0 R0 R 4 150 R 4 150 R0 R 2 000 R0 R 8 000 R0 R 10 000 R 10 000 R0 R 20 300 R0 R0 R0 R 20 300 R 20 300 R0 R0 R0 R 10 000 R0 R 10 000 R 10 000 R0 R0 R0 R 3 637 R0 R 3 637 R 3 637 R0 R 0 R 16 100 R0 R 16 100 R0 R 16 100 R 2 250 R 187 935 R 18 420 R 170 432 R 20 670 R 358 367 R 379 037

Table 5: Total savings over 3 years by light type (direct electricity savings only)
Light type 2 foot fluorescent 3 foot fluorescent 4 foot fluorescent 5 foot fluorescent Candlelights Downlights Spot 150 w Spot 250 w Spot 500 w Spot 400 w Bulbs High bay Grand Total Spar side Virgin side Total Total (both Payback Common Shops Common Shops Common Shops sides) R0 R 2 930 R0 R0 R0 R 2 930 R 2 930 2.97 R0 R 4 155 R0 R0 R0 R 4 155 R 4 155 2.51 R 0 R 123 464 R 3 196 R 102 087 R 3 196 R 225 551 R 228 747 2.18 R0 R 62 864 R0 R 12 786 R0 R 75 650 R 75 650 2.04 R0 R 5 034 R0 R0 R0 R 5 034 R 5 034 0.67 R 10 788 R 103 566 R 0 R 316 450 R 10 788 R 420 016 R 430 804 0.63 R0 R 3 478 R0 R0 R0 R 3 478 R 3 478 3.58 R0 R 1 187 R0 R 4 748 R0 R 5 935 R 5 935 5.05 R0 R 16 618 R0 R0 R0 R 16 618 R 16 618 3.66 R0 R0 R0 R 7 619 R0 R 7 619 R 7 619 3.94 R0 R0 R0 R 17 980 R0 R 17 980 R 17 980 0.61 R0 R 0 R 10 435 R0 R 10 435 R0 R 10 435 4.63 R 10 788 R 323 297 R 13 631 R 461 671 R 24 419 R 784 967 R 809 387 1.40 ROI 26.3% 31.8% 37.5% 40.4% 182.5% 202.8% 21.4% 14.7% 20.8% 19.2% 213.4% 16.2% 63.8%

The savings on the LED downlights is extremely attractive. This is because they use only 1 tenth of the power consumed by normal downlights. The high usage of existing downlights (of 12 hours per day) also makes the savings more attractive. LED downlights will pay themselves off in approximately 200 days. The savings on the fluorescents and Spots is not as good as on the LED downlights. This is because the Fluorescent converters save 33% and the spots are not used as intensively as the downlights. These lights are still very attractive and have very good ROIs. There are some additional benefits to consider, which are discussed on the following page.

The detailed breakdown of replacements and financial figures per store is provided in table 5, on the following page.

Additional savings and points to consider: You can earn even more savings by benefiting from tax advantages and the Eskom Standard offer programme which they are piloting. The tax benefit is easy to claim, as you will treat the investment on lights as a capital expenditure and depreciate the investment over a 5 year period. Eskom is also running a Standard Offer programme where they will give you a portion of your capital expenditure back upfront and then also a portion of the savings over a 3 year period. Thre are other benefits of the LED lights and T5 conversions: > LED lights last longer (between 30,000 and 50,000 hours) than normal lights. > T5 conversions on fluorescents increase lifetime to 20,000 hours (from 15,000 hours) > LED have built-in transformers > Less maintanence on LED lights

Table 6: Number of lights, replacement costs (ex vat) savings, payback period and ROI per store
Flourescent tubes Candlelights Downlights 7 7 159 20 15 17 28 33 7 19 20 Spot lights and high bays 13 3 2 8 Bulbs Total replacement R 190 185 R 18 630 R 5 220 R 4 495 R 2 250 R 22 620 R 4 290 R 5 505 R 7 995 R 4 350 R 4 640 R 10 910 R 11 115 R 12 850 R 2 175 R 7 210 R 55 100 R 6 770 R 870 R 1 015 R 2 175 Total savings (3 years) R 334 085 R 31 107 R 7 192 R 6 193 R 10 788 R 31 166 R 14 624 R 21 936 R 27 929 R 5 993 R 6 393 R 18 619 R 21 809 R 10 600 R 2 997 R 13 425 R 78 047 R 19 578 R 1 199 R 1 492 R 2 997 Payback 1.71 1.80 2.18 2.18 0.63 2.18 0.88 0.75 0.86 2.18 2.18 1.76 1.53 3.64 2.18 1.61 2.12 1.04 2.18 2.04 2.18 1.19 4.05 0.63 0.63 0.63 1.75 1.08 1.66 2.18 3.45 2.14 0.81 0.63 0.74 0.63 0.63 0.61 ROI 50.06% 47.08% 37.48% 37.48% 202.77% 37.48% 119.81% 151.09% 124.15% 37.48% 37.48% 48.34% 57.36% 21.00% 37.48% 53.76% 38.72% 95.07% 37.48% 40.43% 37.48% 78.87% 18.65% 202.77% 202.77% 202.77% 48.57% 89.76% 51.90% 37.48% 22.26% 38.35% 134.10% 202.77% 155.48% 202.77% 202.77% 209.86%

Spar side
Caltex Canin China shop Common Find Foto first Jeweller Kara optics Kitchen things Liquor store More stationary Neo com Outside Party box Sathies spice Spar Steers Tangerine Video store Visas and passports

957 54 36 31 156 12 9 21 30 32 68 17 15 42 380 26 6 7 15

Virgin Side
Common Mugg & Bean Hair Salon Wimpy Clicks Boujoux Bakers Pharmacy Doctors JVL Virgin News Cafe Tong Lok Ocean Basket Francos Cosmic Curries Il Capo

587
16 171 6 93 96 30 120 36 19 -

440
50 8 100 18 4 13 12 72 36 67 14 34 12

15
7 4 4 -

32
7 25

R 188 852
R 18 420 R 7 500 R 1 200 R 15 000 R 27 495 R 1 470 R 15 435 R 13 920 R 12 350 R 29 200 R 16 020 R 5 400 R 12 805 R 2 100 R 5 100 R 5 437

R 475 302
R 13 631 R 35 960 R 5 754 R 71 921 R 47 108 R 4 075 R 27 929 R 19 179 R 10 741 R 41 022 R 58 975 R 25 891 R 51 983 R 10 069 R 24 453 R 26 611

Grand Total

1 544

599

28

25 R 379 037

R 809 387

1.40 63.78%