Saving Costs and Improving Comfort

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1 Saving Costs and Improving Comfort through Energy-efficient Lighting Procurement in Public Buildings

2 2 Energy-efficient Lighting Procurement in Public Administrations Improving your lighting procurement pays off If you would like to: achieve further energy and budget savings in your public organisation by cost-effective lighting upgrades, improve lighting procurement routines in your public organisation have better lighting conditions for your employees and clients and you are: working in a public administration, a consultant to public administrations, or a policy-maker then we recommend you to read this brochure. It presents the results of the European project PICOLight, carried out with financial support from the European Commission and national co-financiers. PICOLight has been testing and disseminating Public Internal Performance Commitment (PICO) schemes, with pilot projects on energy-efficient lighting in seven public administrations in six countries. While another brochure of this project concentrates on the PICO scheme itself (cf. this brochure focuses on how to improve current procedures of public procurement and building management with respect to investments in lighting systems. Contents Potentials and net benefits 3 Cost-effective solutions in practice - Examples 4 Current procedures of public procurement and building management: key hurdles & obstacles 8 Optimising procurement and building management routines 9 How to evaluate the cost-effectiveness of energy-efficient lighting measures 10 Policies that support energy-efficient lighting procurement 11 Further information / Links 13

3 Energy-efficient Lighting Procurement in Public Administrations 3 Potentials and net benefits Improvements in current procedures of public procurement and building management in public administrations can achieve significant economic rewards from the implementation of cost-effective and at the same time energy-efficient solutions in public buildings. And indeed the returns have the potential to be huge. The European study on Public Procurement of Energy Saving Technologies (PROST) indicated that compared to a business as usual scenario public administrations in EU Member States can save up to 20% of their energy use (heat and electricity) by 2020, if a stronger emphasis is placed on energy efficiency aspects in procurement, investment, and energy management routines. The related GHG emissions reductions are in the same order or magnitude, and it is clear that active strategies for energy efficiency in the public sector could contribute significantly to Europe meeting its commitments under the Kyoto protocol. Potential economic savings add up to 12 billion Euros per year in the former EU-15 by undertaking additional annual investments in energy efficiency of only 80 million Euro per year over a period of 20 years. The share of energy use by indoor artificial lighting systems varies significantly from public administration to public administration. It can account for up to 40% of electricity used. Examples from practice have shown, that between 30% and 60% of electricity used for lighting could be saved investing in energyefficient lighting systems. All in all, more efficient lighting and better lighting design during building renovation or in new buildings may drop the total building electricity consumption by 5 to 20%. In most cases, such investments are not only profitable but they also maintain or improve lighting quality and secure that the European standard for illumination of work places (EN ) is fulfilled.

4 Energy-efficient Lighting Procurement in Public Administrations Cost-effective solutions in practice - Examples Hospital Niguarda Ca Granda, Italy In the hospital Niguarda Ca Granda in Italy,

The high efficiency lighting plant of Block 4 consists of: 335 high efficiency luminaires with electronic ballasts 34 ultrasonic sensors 25 photocells for daylight integration (matched to 25 dimmable

4 4 Energy-efficient Lighting Procurement in Public Administrations Cost-effective solutions in practice - Examples Hospital Niguarda Ca Granda, Italy In the hospital Niguarda Ca Granda in Italy, energy-efficient lighting measures were part of an almost complete refurbishment of the Block 4 Laboratory. The high efficiency lighting plant of Block 4 consists of: 335 high efficiency luminaires with electronic ballasts 34 ultrasonic sensors 25 photocells for daylight integration (matched to 25 dimmable ballasts) Situation in Niguarda before the retrofit 91 pull chord switches for local control The cost-benefit analysis reported below considers the marginal costs and savings that these measures will provide. They are compared to the standard lighting system composed of luminaires with electromagnetic ballasts and manual on-off control, which in the absence of the PICOlight project would have otherwise been installed in the laboratory. Lighting electricity savings: 57 MWh/year (37%) Power reduction: 6 kw Additional installation costs of energyefficient solution: 17,907 Euros (including design and transaction costs) Energy cost savings: 5,700 Euros/year Total running cost savings: 7,708 Euros/year Internal Rate of Return of the investment: 33% (including design and transaction costs) Improved system layout to assist use of natural daylight

Energy-efficient Lighting Procurement in Public Administrations 5 Cost-effective solutions in practice - Examples University of Bordeaux 1, France In France, the University of Bordeaux 1 rethought

5 Energy-efficient Lighting Procurement in Public Administrations 5 Cost-effective solutions in practice - Examples University of Bordeaux 1, France In France, the University of Bordeaux 1 rethought their lighting concept following a 3-week measurement campaign, which compared the energy consumptions of a non-renovated classroom, a standard renovated classroom and an energy-efficiently renovated classroom with each other. The campus of the University Bordeaux 1 comprises 34 buildings corresponding to 200,000 m 2. Electricity consumption due to lighting was around 2,3 GWh/year in 2002 (17% of total electricity consumption). Even if it will take time, because in the next years only parts of the buildings will be renovated step-by-step, the potential reductions expected by the installation of energy-efficient lighting systems are 50% of this consumption, i. e. 1,1 GWh/year. The results below were reported for one part of building A 22 of the university. The comparison is made for the installation of luminaires for T8 tubes with electronic ballasts and a presence detector versus a standard new installation (luminaires for T 8 tubes with electromagnetic ballasts) in the classrooms, and the installation of luminaires with 1 x 58 W versus a standard new installation (2 x 36 W) in the floors. The retrofit achieved an increase in the lighting level from 180 Lux in the non-renovated classrooms to 500 Lux in the renovated ones. Lighting electricity savings: 828 kwh/year Reduction of electricity use for lighting: 44% in the classrooms, 60% in the floors Power reduction: 474 W Additional installation costs of energy-efficient solution: 973 Euro Energy cost savings: 55 Euro/year Maintenance cost savings: 6 Euro/year Internal Rate of Return of the investment: 4% (with electricity prices of 3 ceuro/kwh off-peak and 8 ceuro/kwh per peak unit; and with annual use of 800 hours/year in the classrooms) It should be noticed, that prices for electronic ballasts were very high at the time of the PICOLight project (120 Euro). One hope lies in the continuing fall in prices for these ballasts as they become more widespread in France.

6 Energy-efficient Lighting Procurement in Public Administrations Cost-effective solutions in practice - Examples BLB NRW: Police headquarter in Wuppertal, Germany In Germany, the analysis of the

6 6 Energy-efficient Lighting Procurement in Public Administrations Cost-effective solutions in practice - Examples BLB NRW: Police headquarter in Wuppertal, Germany In Germany, the analysis of the lighting systems in a police headquarter in Wuppertal was part of a comprehensive on-site energy audit. Lighting accounts for about 30% of the electricity consumption of the building, which belongs to the Bau- und Liegenschaftsbetrieb NRW (BLB NRW). The BLB NRW was founded in 2001 and functions as a proprietor of public buildings on behalf of the State of North Rhine-Westphalia. As a result of the audit, several energy efficiency measures in offices, floors, prison cells, basement, hall, cafeteria, garage and area outside of the police headquarter building were proposed. Offices account for about 47% of electricity consumption for lighting purposes. In two model office rooms, two different lighting systems were tested leading to an increased lighting comfort (500 lx according to DIN-EN ). Both consist of luminaires for T5 tubes with dimmable electronic ballast and integrated day-light sensor. Furthermore, an occupancy sensor was installed for each room. However, in the end, luminaires without the integrated day-light sensor turned out to be more profitable. The overall results reported below are from a comparison made versus a new installation that would have used the standard lighting layout of the BLB NRW. Lighting electricity savings: 180,6 MWh/year (60%) Power reduction: 127 kw Additional installation costs of energy-efficient solution: 92,854 Euro (including design and transaction costs) Energy cost savings: 9,168 Euro/year Power cost savings: 2,723 Euro/year Internal Rate of Return of the investment: 9% (including design and transaction costs; with electricity price of 8,5 ceuro/kwh)

Energy-efficient Lighting Procurement in Public Administrations 7 Cost-effective solutions in practice Examples Free and Hanseatic City of Hamburg, Germany: Luminaire Exchange - 2:1 The following

7 Energy-efficient Lighting Procurement in Public Administrations 7 Cost-effective solutions in practice Examples Free and Hanseatic City of Hamburg, Germany: Luminaire Exchange - 2:1 The following German example is not from the PICOLight project. However, it demonstrates a very successful and comprehensive change in lighting procurement practice. In the Free and Hanseatic City of Hamburg, winner of the GreenLight Awards 2004, the State s environmental office offers a unique service to all public buildings or institutions in Hamburg as schools, universities, sanitary arrangements, tunnelling, theatres, museums, etc. The service is called "Leuchtentausch 2:1 fürs Klima" ("exchanging lamps 2 to 1 for saving the climate"), reflecting the idea of exchanging 2 old lamps in the typical 70ies luminaires with opal covers by 1 new lamp in specular louver luminaire with HF ballast. Entrance of the Wallringtunnel Source: GL_Catalogue/GL_catalog_12.pdf The service offered by the environmental office covers the whole refurbishing process plus a third party financing scheme for the new lighting installations. This financing scheme was already established in 1991 by an agreement between the State/City of Hamburg and its electric utility, HEW. In the preparation phase (ca. 1993/94), an EU-wide tendering procedure for the procurement was carried out for the engineering, the installation, the logistics (delivery of components and removal plus recycling/ disposal of old lighting equipment), luminaries, ballasts and lamps. Framework contracts were made between the environmental office and the providers realising substantial economies of scale. Overall results: Lighting electricity savings: 22.5 Mio. kwh/year Number of lighting refurbishments: 450 Total investment: 22.7 Mio. Euro Energy cost savings: 3.4 Mio. Euro/year

8 Energy-efficient Lighting Procurement in Public Administrations Current procedures of public procurement and building management: key hurdles & obstacles Experience from practice shows, that in

8 8 Energy-efficient Lighting Procurement in Public Administrations Current procedures of public procurement and building management: key hurdles & obstacles Experience from practice shows, that in many public authorities and comparable institutions, significant opportunities to save energy costs exist, e. g., by investing in energy-efficient lighting systems. However, often these profitable potentials are not realised for various reasons: In many administrations, there are split incentives for managers to invest in energy efficiency due to a division of investment and management budgets across different departments. Furthermore, investments aimed at yielding direct future economic returns are not a natural part of the investment culture in public administrations. Third, public (procurement and building) management routines are complex and decentralised. The complexity tends to favour relying on past practices, avoiding risks, which consequentially stifles innovation. There often is a lack of financial means and personnel even for profitable investments. Finally, decisions on energy-efficient investments are sometimes difficult to take and need detailed preparation, because information about energy consumption and costs of public buildings are insufficient. The implementation of energy-efficient lighting often faces further specific problems: There is only insufficient or uncertain data available on electricity use by end-uses (e.g. on electricity use by lighting). There is a lack of technical knowledge and benchmarks for lighting. Lighting installations in a building vary in age and type. Lighting levels are below what is demanded by new European regulations (EN ). Although mostly profitable, energy-efficiency investments often have long payback times, if they focus on lighting only. There are lost opportunities for price reductions, because installations are procured on a one-by-one basis (cf. e.g. the Hamburg example on page 7 of this brochure for savings possible through aggregated purchase).

9 Energy-efficient Lighting Procurement in Public Administrations 9 Optimising procurement and building management routines For larger investments, energy efficiency services often provide a solution to this situation, and during the last decade the related market for third party financing schemes such as energy performance contracting or contract energy management has grown. However, although generally cost effective, refurbishments of indoor lighting systems often involve relatively high transaction costs and generally lower returns (or longer pay-back times) compared to several alternative energy efficiency investments and thus far have usually been avoided by energy service companies unless bundled together with other measures. They are therefore often more suitable for in-house solutions: Public Internal Performance Commitment (PICO) covers a spectrum of organisational concepts, enabling a continuous management and financing of energy efficiency measures in public buildings by the use of own capacities and know-how of the public administration. Public Internal Performance Contracting schemes are the most comprehensive PICO form. Very similar to external contracting, they represent a way to enable energy efficiency investments by internal energy performance contracts between different units of the same administration. Both internal as well as external solutions benefit from the following improvements. Moreover, these are partly even a precondition for an effective initiation and implementation of internal or external performance contracts: Try to secure political-administrative backing to start energy efficiency improvements by addressing the most relevant decision makers with the right information and motivation at the time needed. Introduce a systematic energy management for daily operation, maintenance, and investment in your buildings. As a first step, meter and monitor energy consumption of your buildings or departments. Implement a system of budgeted energy use, with rewards for those parts of the administration that keep their energy use below the budget. Where appropriate (daily procurement, call for tender), use product purchase specifications based on typical life-cycle cost calculations, which make the efficient and cost-effective product the simplest and most acceptable choice to buy and not the one with the lowest first costs (cf. page 13 for related further information and links). Use individual life-cycle cost calculations (cf. page 10) for a big value of a procurement or building investment in indoor lighting, and for outdoor, street lighting and traffic signals.

10 10 Energy-efficient Lighting Procurement in Public Administrations How to evaluate the cost-effectiveness of energyefficient lighting measures The profitability of lighting measures can differ very much, depending on the types of rooms, in which the measures have been implemented, on the baseline chosen, the time of use assumed and further framework conditions. Experienced practitioners have found solutions for the steps needed in carrying out life-cycle benefit-cost calculations, which have to consider all the relevant benefits and costs over the lifetime of the lighting system. In particular, it is often necessary to define the baseline towards which the energy-efficiency case is calculated, particularly when the existing lighting system is very old and lighting levels need to be increased due to new regulations (EN ). Solution: Compare the energy-efficient solution with a standard new installation fulfilling EN , not with the existing equipment (count additional costs instead of full costs, but also only count additional savings). define the annual time of use in some types of buildings. Solution: A measurement campaign like it has been reported for the University of Bordeaux on page 5 can help to identify the right numbers. define the general assumptions for the cost-benefit calculations, e. g. regarding the future development of energy prices and labour costs. Solution: An average of recent energy prices and labour costs can be taken and assumed to be stable in the future, along with using a real interest rate (i.e., net of inflation). find rules of thumb for typical buildings in different countries, which reduce transaction costs of identifying cost-effective solutions. Solution: It will probably not be possible to develop a general recommendation for a minimum performance standard for (indoor) lighting. However, future projects could develop and verify country- and building-specific rules of thumb like the following put up by the Swedish PICOLight project partners: If the average installed power can be reduced by approx 5-8 W/m 2 (e.g., from W/m 2 to 10 W/m 2 ) and the average operating time is around 1800 hours/year, a lighting refurbishment could be profitable. The PROST study (cf. page 11ff.) also provides some guidance on technical specifications for components as well as on minimum performance standards. bundle an attractive energy efficiency package including not only lighting measures for achieving a lower payback time and a higher rate of return.

Energy-efficient Lighting Procurement in Public Administrations 11 Policies that support energy-efficient lighting procurement Energy efficiency is a strategy to make the most of scarce public funds

11 Energy-efficient Lighting Procurement in Public Administrations 11 Policies that support energy-efficient lighting procurement Energy efficiency is a strategy to make the most of scarce public funds while addressing today s energy and climate challenges. In order to exploit these winwin potentials, a larger package of policy and management instruments should be used. The importance of leadership Higher levels of government, such as the European Commission and national governments, should start improving their procurement and building investment routines for lighting and other fields of application. Central administrations should not only introduce schemes supporting energy-efficiency acitivities in their own administrations. National support for disseminating these schemes and marketing their benefits is necessary to make good practice well known to public decision makers on all levels. To make the leadership role effective, improvements of the procurement and building management routines should be part of a broad energy efficiency initiative in the public sector. Create national support functions Support functions to help those who are willing to go forward must be created. Rules of thumb, model contracts, technology guidelines, spreadsheets, and education are all important factors to get improvements of the procurement and building management routines started. On the national level, it is most important that energy management capacities and technical expertise of medium to large public organisations or of joint agencies of small public administrations are secured and further developed. Provide smart financing Public administrations should be able to finance energy-efficiency activities from their savings, but revolving funds can provide seed money to get the process rolling.

12 12 Energy-efficient Lighting Procurement in Public Administrations Solutions where a certain budget (a percentage of the energy bill) is earmarked for small energy efficiency investments will help to keep future energy bills lower. On the national level, revolving funds may also be considered. But the most important is that central administrations provide resources for powerful support functions. Make sure legislation supports sound investments In some countries, there are still legal barriers towards revolving funds or other PICO schemes. It is therefore necessary to review existing regulations in a comprehensive way to ensure legal compatibility with such schemes. Set targets and tell apples from pears Concrete minimum energy efficiency targets should be set for public administrations. In countries where it is difficult to set binding targets for local entities, they can be voluntary. But in such cases, there should be a very strong support system to help public administrations fulfil the targets. Benchmarking can help authorities compare how they perform against others and inspire them to take action. Today, many public administrations are setting goals for saving energy, but often it is not clear what these goals mean in practice and what is required from managers to fulfil them. National guidelines for how goals are set, monitored and evaluated can be an important tool for benchmarking savings. Energy efficiency should be the norm Make life cycle cost assessments in public building management the normal routine. Simplified purchasing where only low first cost is asked for should have to be justified, not the other way round. Technical design guidelines should prescribe a specific minimum energy efficiency standard for new investments For more information about how policy decisions can support the implementation process, please see the European study on Public Procurement of Energy Saving Technologies PROST; Download: (look for procurement )

13 Energy-efficient Lighting Procurement in Public Administrations 13 Further information / Links The GreenLight Programme is a voluntary pollution prevention initiative launched in February 2000 encouraging non-residential electricity consumers (public and private) to commit towards the European Commission to install energy-efficient lighting technologies in their facilities. Further information: The International Association for Energy-Efficient Lighting (IAEEL) was a global contact network and an information resource for high-quality, energyefficient lighting. However, the organisational status of IAEEL is pending a decision to form an Annex on advanced lighting programmes within the International Energy Agency s DSM programme. Information from the 1-4 International conferences on energy Efficient Lighting (right Light 1-4) are kept on the site and can be downloaded free of charge: Proceedings from right Light 5 are available for members at Proceedings from Right Light 6 are available at (free of charge). The European study on Public Procurement of Energy Saving Technologies PROST does not only give recommendations regarding economically advantageous energy-efficient public procurement in general, but also specific purchase recommendations for outdoor and street lighting as well as for indoor lighting (lamps, ballasts, luminaries, light control/sensors) based on life-cycle cost analysis. Further information: See Procurement. Further information on Public Internal Performance Commitments (PICO), Public Internal Performance Contracting, and on the European PICOLight project with seven case studies in six countries:

Co-ordinator of the PICOLight Project Project Partners and

Commission Directorate-General for Energy and Transport Wolfgang Irrek

Wuppertal, Germany Phone +49-202-2492-164; Fax +49-202-2492-198 Email:

15 Co-ordinator of the PICOLight Project Project Partners and subcontractors of the Wuppertal Institute Financial Support European Commission Directorate-General for Energy and Transport Wolfgang Irrek Wuppertal Institute for Climate Environment Energy Döppersberg 19, Wuppertal, Germany Phone ; Fax PICOLight project website:

SAVE 2002 Project PICOLight. Documentation of the Pilot Projects (Phase 2.3) FRANCE University of Bordeaux 1 - Pilot Project

SAVE 2002 Project PICOLight. Documentation of the Pilot Projects (Phase 2.3) FRANCE University of Bordeaux 1 - Pilot Project SAVE 2002 Project PICOLight Documentation of the Pilot Projects (Phase 2.3) FRANCE University of Bordeaux 1 - Pilot Project. Patrick Faucher Université of Bordeaux 1, Sophie Attali ICE, Thérèse Kreitz