Text-Alternative Version: Municipal Solid-State Street Lighting Consortium Retrofit Financial Analysis Tool Webcast
Below is the text-alternative version of the "Municipal Solid-State Street Lighting Consortium Retrofit Financial Analysis Tool" webcast, held April 3, 2012.
Theresa Shoemaker: Welcome, ladies and gentleman. I'm Terry Shoemaker with the Pacific Northwest National Laboratory, and I'd like to welcome you to today's webcast: Municipal Solid-State Street Lighting Consortium's Retrofit Financial Analysis Tool. Today's webinar is brought to you by the U.S. Department of Energy Solid-State Lighting Program.
We're very happy today to have us our speakers Edward Smalley of Seattle City Light and Doug Elliott of the Pacific Northwest National Laboratory. Edward Smalley is the Director of the Municipal Solid State Street Lighting Consortium and has more than 20 years experience in the design, construction, and operation of public outdoor lighting systems. For the past 11 years, he has worked at Seattle City Light where he has been the Street Lighting Engineering Manager responsible for that cities' LED Streetlight Conversion Program. Edward is also the Vice Chair of the IES Street and Area Lighting Committee. Doug Elliott is a senior research economist for the Pacific Northwest National Laboratory. Since joining the Lab in 1991, he has participated in a variety of projects focused mainly in the areas of energy policy, resource efficiency, cost-benefit and regulatory analysis, plus software development. He received a B.A. in Economics from Whitman College and an M.A. in Economics from the University of Virginia.
We will go ahead and begin.
Edward Smalley: Good morning, everybody, and welcome to the U.S. Department of Energy's Municipal Solid-State Street Lighting Consortium's Retrofit Financial Analysis Tool Webcast, and thank you for joining us. We hope that you will find this program useful and that it will help you get the most out of your use of the tool as you plan and prepare budgets for your LED programs. Many of you are members of the Consortium, a volunteer group of street and area lighting owners, professionals across the U.S., comprised of utilities, municipalities, and other users. As you look at the map that is now on the page, you'll see that it represents about 340 such organizations across the U.S. If you are not a member at this time, you might want to consider joining. Benefits include first hand access to tools, like the one we'll discuss today.
As has been noted, this original Excel-based spreadsheet was developed by the Clinton Climate Initiative to assist some of the largest cities count the cost of undertaking large scale efficiency conversion projects. Working with CCI, we've modified the program so that large and small size cities and utilities can get similar results with minimal support. Some of you will be joining us in Los Angeles on April 19 and 20 for the Consortium's workshop where we will discuss other topics like today's discussion in depth and in detail. We've teamed up with the City of Los Angeles to provide details on many of the user aspects of an LED program of any size. If you haven't planned to already, please join us. You can find details on our website or contact us directly.
In the meantime, for the next 30 minutes, please give your attention to Doug Elliott as he walks us through the financial tool and points out details that may help you get the best use from it. Doug.
Doug Elliott: Thanks, Ed. Okay, I'm going to start out by talking a little bit about what the tool is and what it isn't. We've had a few questions that make us think there's a little bit of confusion as to the capabilities of the tool.
First off, as to what it is, it's an analytical tool that we designed to evaluate both the cost and the benefits of conversions or retrofits from existing street lighting to LED street lighting and, in actuality, it can be used to analyze any street lighting technology, but our primary focus to date has been on LED street lighting and continued development will also focus on LED street lighting. Now what it won't do for you is provide design assistance. It's not going to help you figure out what the appropriate fixture is for a given location or a given application and it's also not a database of lighting technologies, cost, and performance characteristics. Now design and cost and performance data, those are all very important items and they essentially serve as inputs to the tool we've developed, but they're externals of the tool and the tool won't provide that information for you.
So once the input data has been incorporated, what can this tool provide you as output? It provides the common financial metrics. Net present value is probably the most important one. It's typically associated with lifecycle cost analysis. It also provides internal rate or return and simple payback, and it also provides quite an array of detailed annual cash flow data from energy and energy cost savings, maintenance savings, as well as greenhouse gas reductions. Now as Edward mentioned, this tool was developed as a collaborative effort with CCI and the Consortium.
So I'm going to start off by providing sort of a verbal and visual orientation of the tool. There's some of the sheets in the tool are fairly large and it can be potentially intimidating or confusing initially when you look at it. Where does everything go? So hopefully this will shed some light on that. There are four primary sheets you're likely to interact with on the tool. There is actually a couple more included in the tool. There's an introduction page and a definition's page, which is essentially a glossary. But as far as inputs and results, it's all focused on the input page, the maintenance page, the results summary, and the finance page. Now the maintenance page and the finance page are actually optional pages. They aren't necessary to get basic results. As you can see on this diagram here, there are actually four other sheets. They're four calculations' worksheets that are essential to producing the results, but we've - - in the release that we've currently distributed, we've hidden those sheets in the file, and we aren't trying to hide anything from - - keep anything from anybody or keep any information from anybody, it was mainly just a effort to simplify what could be perceived as a fairly complex tool. We just wanted to make the tool a little bit easier to navigate for people.
Now as per the input page. The input page is the primary, that you might expect given the name, the primary place where you're going to input data to relate it to the project and individual fixtures. There are four sections to the input page. There's a global or project-level input section that the data entered there affect all analyzed fixtures and examples of such data points include electricity rate, greenhouse gas omissions factor, overhead costs, and labor and vehicle rates. Down below that, I'm actually going to switch over to the next slide here to provide you a sort of a visual orientation of that. I just described the section labeled one. Now section two is technology-specific inputs or fixture level inputs or fixture-specific inputs where data for each existing and new fixture are entered, so basically all fixtures that potentially will be analyzed by the tool need to be entered here, whether they be existing fixtures or potential new fixtures; and data entered in this section include lamp watts, fixture costs, maintenance cost, disposal cost, rebates per fixture. Then down below that in Section 3 is where a user specifies which fixtures are going to be removed and which fixtures are going to go in place of the removed fixtures and how many fixtures will be installed. Now this is a retrofit-only tool. We assume one-for-one retrofits. The tool doesn't deal with pole cost or pole spacing issues and so the user can enter how many fixtures will be removed and the tool automatically sets fixtures installed to be equal to that number. It's a one-for-one replacement. Now up in Section 4 there is a user enterable area. I call it a "User notes and scratchpad" that's simply a place where users can enter notes or use Excel's formulas to perform calculations necessary to derive inputs for other cells. That's all that is there.
Now on to the maintenance page, which as I mentioned before is optional but may be useful to many users. One can enter maintenance cost on the input page, but if and only if those costs are known on a dollar per unit per month basis for each fixture. If those aren't known, then it's necessary to visit the maintenance page. What the maintenance page does is it provides the ability to obtain a very detailed estimate of maintenance cost at the fixture level, so the maintenance costs are very specific to each fixture involved in the analysis; and it captures all cost associated with maintenance - labor, vehicle, and any equipment cost that may be involved. There are three sections to the maintenance page. I'm actually going to talk about number two first. Scheduled maintenance page handles lamp replacements, controls replacements, fixture replacements, as well as any scheduled cleaning, and the third section there we've labeled it "Emergency Maintenance." It might be better labeled unplanned maintenance. That is largely similar to the scheduled maintenance section with the exception of lacking cleaning. We assume that no unplanned cleaning goes on. Now Section 1 is a section we added to provide some additional flexibility in the tool such that it might handle some alternative or different purchasing or installation or maintenance scenarios. In that section, there are user overrides for labor vehicle and fixture cost. By default, the tool is going to use on the maintenance page the labor, vehicle, and fixture costs that were entered on the input page. If that's somehow not appropriate, there are dropdown lists that allow one to manually enter those costs on the maintenance page such that there're maintenance-specific costs for those measures.
Now on to the output. The result summary page provides a variety of outputs once you've completed entering the input data. It provides a number of summary statistics, as I mentioned previously, net present value, internal rate of return, and simple payback. It also provides savings values for energy use, energy cost, and greenhouse gases associated with full implementation of the project. Now many projects may not be implemented in one year. They might take two or more years to implement, and so the savings values reported on this page are associated with full implementation of the project. The result summary also shows quite an array of cash flow data from capital expenditures to before and after O&M and energy costs, components of the capital expenditure such as labor, vehicle, overhead costs. And then there are also three charts provided at the bottom of the page, and here's what the zoom - - if you zoomed out on the results summary page, this is what it would look like. The section labeled one is where the summary statistics are found and the section labeled two is the cash flow section and then down in section three you can see the charts.
Now on to the finance page, which is another optional page. The results summary page, the financial metrics reported there essentially assume that cash is on hand or budgets have been allocated to fund that project. Now these projects aren't cheap by any means. That very well may not be realistic. And so the finance page, if necessary, allows one to examine debt instruments that may be used, and it's a fairly flexible page in it allows up to eight loans to be examined and the loans can vary in length, interest rates, start years, end amounts. And then once one has determined what loans might work for the project, if you scroll down on the finance page, you'll find some summary statistics that compare the net present values and internal rates of return associated with the project, both with and without the debt service costs.
So Section 1 labeled on this slide with all the peach colored input cells there, that's where the allocations of debt and equity can be examined by the user. Then Section 2 is where the summary statistics, the comparisons of with and without debt, NPVs, and internal rate of returns are reported. Then Section 3 down below, and as the arrow indicates, it actually extends quite a ways further down on that worksheet, that provides detailed cash flow data associated with up to the eight loans.
Now I want to step through a couple of examples now that we have a little bit better idea hopefully of how the tool is organized. Now in this first example here, we're going to assume that the city owns 41,000 street lights and it potentially wants to retrofit those with LEDs and the city is going to purchase the replacement fixtures at a per unit cost and these fixtures are going to be installed using the cities own labor and vehicle resources at an hourly rate, and one final detail is that this particular city employs a maintenance program that includes plan group re-lamping rather than spot re-lamping upon failure of lamps. Now I'm going to highlight a few key variables here. They aren't really important values in and of themselves, but in the second scenario I'm going to tweak these variables, so I wanted to mention the initial values for them. I'm going to assume an installation vehicle rate of $150 an hour, an installation labor rate of $400 an hour, and a per fixture installation time of 16 minutes; and if these costs potentially seem high to you, keep in mind that this isn't a per person labor rate, this is a per crew labor rate. And I also want to emphasize that the data that I'm showing you here, some of the data's real, some of it I've just made up to fit my example. The goal here is to illustrate the capabilities and the flexibility of the tool, not to provide an appropriate data set.
So here we've zoomed on in the project level or global input section on the input page and, as I mentioned before, you'll see things like electricity rate, installation vehicle rate. There's a nominal discount rate, a missions factor overhead costs. And in the red oval, you'll see that I've highlighted the installation vehicle rate of $150 an hour I mentioned and the installation labor rate of $400 an hour.
Now I'm moving down to the fixture level or fixture-specific input section of the input page. You can see that we've entered two HPS fixtures there, those are the existing fixtures, and two LED fixtures as potential replacements for those fixtures. Now remember in this section, it needs to include all existing fixtures and any potential new fixtures that might be used to replace the existing fixtures. So you can see, and to the right here, data entry required here includes lamp watts, systems watts, and annual operating hours.
Now I'm essentially going to scroll to the right in Excel here when I click to the next slide. So we're still in the same input section, just to the right in Excel, and I've highlighted there the install time and I filled in 16 minutes per unit as I mentioned in the assumptions for this city's program. Now further to the right there, you'll see in the second red oval that there's a maintenance cost section there. Now where it says user entered in those various cells, it's actually a dropdown list and you can specify there either user entered or maintenance page. And in this particular situation, I've chosen user entered and I've entered $6 per unit per month for the HPS fixtures and $1 per unit per month for the LEDs.
But, in reality, I'm not quite certain about those costs and so scrolling to the - - hitting the next page, I've decided to change the entry in that dropdown from user entered to maintenance page for each of the fixtures and that will acquire us to go to the optional maintenance page to determine our maintenance cost.
One final input section on the input page. This is a section in which we specify which fixtures we're going to remove and which fixtures are going to replace the existing fixtures and also how many fixtures are going to be removed. You can see we're removing just under 40,000 of the 100 watt HPS units and a little over a thousand of the 150 watt units. And again, this is - - this tool only provides one analysis of one-for-one retrofits, so the number of fixtures of install - - number of fixtures installed is set equal to the number of fixtures removed.
Now on to the maintenance page. As I mentioned in the assumptions for this scenario here, we - - the city's using internal labor and vehicle resources for the installation, and we're also going to assume they're going to use those same resources, same crews for their maintenance program. So in this section of the maintenance page, this is where the user may specify either user entered or input page for vehicle rates, labor rates, and fixture costs, and I'm comfortable with going ahead and using the values for labor and vehicle and fixture costs that I specified on the input page, so I'm going to leave those set at input page.
So this is essentially scrolled to the right a little bit here on the maintenance page and this is the scheduled maintenance section. I'm not going to into too much detail about these various columns here. There are a number of comments embedded in the Excel file that help explain some potentially confusing items. A couple of things I did want to mention here though, for example, up here where the laser pointer's pointing - lamp repair labor time and lamp repair labor cost next to it. In reality those are a bit of a mislabel. I should've actually… Well those columns actually capture both labor and vehicle cost, so I just wanted to point that out so people aren't concerned that we're somehow forgetting or eliminating vehicle cost from our maintenance cost depravation [sic]. The other thing I wanted to mention was that in setting up the scenario, we assumed that this city performs scheduled group re-lamping rather than waiting until lamp failure. Well up here in the lamp rated lights where the laser pointer's pointing to, in that case, in the case of group re-lamping, scheduled re-lamping, instead of entering the actual rated life in that cell, you'd want to enter the number of hours until the scheduled re-lamping would occur, and it'd be a similar situation over here for the controls rated life. Again, you'd enter the hours until the scheduled replacement rather than hours until failure.
Okay, sorry, I'm just having problems moving to the next page there. There we go. Okay, emergency maintenance. The emergency maintenance section is largely parallel to the scheduled maintenance and, again, this is just unplanned maintenance in this section, while the scheduled maintenance section contains planned maintenance and, as I mentioned before, the only real difference in structure in the unplanned maintenance section here is that it lacks cleaning because we - - I think it's safe to assume that cleaning doesn't happen on an unplanned basis.
Now that we've entered the inputs on the input page and the maintenance page, we can move on to the results page to see what kind of bang for the buck this project is going to provide us. And as you can see, I've highlighted here that the project is estimated to provide just under $21 billion - - 21 million net present value and a simple payback of six years, and that's for a 15-year analysis period. In the peach colored analysis period cell, that can be set to any imager from one to 15. So if you had a shorter time horizon or otherwise wanted to examine say what the net present value was after eight years or five years, you could change that cell and that would recalculate all of the financial metrics in this section here that are currently labeled 15-year. It would calculate them for whatever year you designate in the analysis period dropdown. Now in the next section below that here, that provides full implementation savings - energy, energy cost savings, and greenhouse gas reductions. So in this particular projects' case, it has a four-year implementation period, so this new annual baseline kilowatt hour use and energy costs that I'm highlighting right here with the laser pointer is associated with after all four years of installation have occurred. Then down at the bottom here, you can see this just provides first-year average capital expenditures per unit installed and then also the subcomponents of those capital expenditures, labor cost, vehicle cost, overhead, et cetera.
Moving on to charts. Result summary also provides three charts; here are two of example charts. And for this particular project, you can see on the energy impacts' chart that the installation of the LEDs resulted in energy savings of just over 50%. The new baseline annual kilowatt hour use is just under 50% of the baseline. Now that's a pretty impressive number, but, if you look down in the cash flow here, the purple bars or bar components, that's the maintenance savings while the light blue or teal bars above those are the energy savings. So in this particular example, the maintenance savings of the LED fixtures dominated the energy savings. They were both substantial, but the maintenance really provided the large share of the positive cash flows. Now on the far left of that cash flow chart, you can see four dark blue bars that are large negative numbers. Those represent the capital expenditures that occurred over the four-year installation period.
Now onto the finance page, so this is not a cheap project. We may not have the budget allocated for it, so we need to examine debt options. Now up here where I'm highlighting with the laser pointer, you can see the total funding needed for this project is $19 million, and we're spreading it out over four years and so each year we need roughly just under five - - well between $4.5- and 5 million for each year to implement the project. Now in the equity section, you can see that fixture rebates that have been received are entered as equity and so that reduces the amount of the funding needed and so now there's a total debt financing need of 15 million, $15.6 million roughly. Now in the red oval there, I've entered four loans that would meet our needs here, and I've started one in year one, another one in year two. Essentially I've created a loan for each year of the installation period, but it's entirely up to the user. The tool's happy to have different interest rates, different terms, different amounts, and different start years. It's pretty flexible on that front.
So, as I mentioned previously, the result summary is showing net present values and internal rate - - rates of return associated not taking into account any cost of servicing debt. And so on the finance page, once we've entered our desired debt instruments, you can scroll down and there's a financial stat summary section that provides MPVs and internal rates of return both with and without the debt service included, so you can see the impacts. And in this case, our original and net present value of just under $21 million has declined to $18.2 million once we took into account the cost of servicing the debt necessary to undertake the project.
Now onto scenario two. Scenario two's going to be largely the same as scenario one with one exception. The city's decided to examine a different method of installing the fixtures. Rather than using its own resources, it's going to - - it's received a bid from a third-party to install the fixtures on - - at a fixed per unit cost of $119.17 per fixture, so you might ask: "Wait a second here, the tool has vehicle rate input and an installation labor rate input, how I'm going to fit a fixed per unit cost into the tool? It doesn't really seem to accept that." Well, it actually can with not too much problem here. If we learn from the contractor that the crew can install six fixtures per hour, we then multiple the roughly $119 cost by six and that yields an effective labor rate of $715 an hour. Now in reality, that's not just a labor rate, that's a combined vehicle and labor rate, but what we're really after here is the total cost. We could enter this in vehicles - - under the vehicle rate or under the labor rate. It wouldn't really matter. It would still impact the bottom line exactly the same way. So in this particular example, I'm going to set the installation vehicle rate to zero and the installation labor rate to $715 an hour and the per fixture installation time associated with this third-party crew is ten minutes per fixture, which is a fair bit faster than the 16 minutes per fixture in the first scenario we examined. So we've got here a higher combined labor and vehicle rates, but reduced installation time. And again, as I mentioned in the first scenario, the data I'm using here are just for example only, just illustrate the capabilities and flexibility that the tool provides.
So revisiting the input page here. In the red oval there you can see that I've deleted the original vehicle rate of $150 an hour and left it blank or zero and have changed the installation labor rate to $715.
Now moving down to the fixture level or technology-specific section, I've changed the install time from 16 minutes to 10 minutes, but one thing catches my eye here. I see that my maintenance costs seem to have increased. Originally the maintenance cost per HPS fixtures, if I recall correctly, were somewhere between $5-and-6, now they're over $6 per unit per month, so we need to revisit the maintenance page to see what might be causing a problem there.
So now I'm on the maintenance page here. This is the section that allows user overrides of vehicle, labor, and fixture costs that had been entered on the input page. And if you'll recall on the first example, in this section, I was - - I used - - I specified input page in the dropdown list indicating that the maintenance section should use the same vehicle and labor rates as we did for original installation. But now, we've entered the $715 cost for labor, and that's fine for our installation, but, in this case, the cities going to continue to use its own crews for maintenance and so we need to use - - we need to override this and change the dropdowns up here in the top red oval to user entered and reenter the original values of $115 an hour for vehicles and $400 an hour for labor; and that will now lower, as you can see in the smaller oval, the maintenance costs are now recalculated down to the $5.39 they originally were for HPS and $0.77 for the LEDs.
So now we've changed the inputs for scenario two. Let's take a look at the results and see how they impact to the bottom line. As you can see in this, the red oval I'm highlighting right now with the laser pointer, the MPV for a 15-year analysis period is increased from 21 million roughly in the original case to just under 22 million now and the simple payback has fallen from six years to 5.7 years. And all we've done here is change capital expenditures. The capital expenditures in the second scenario on a per fixture basis and on a total basis were somewhat lower, and here's the results associated with scenario one. I'll just switch back and forth, hopefully it'll refresh quickly enough. You can see that the capital expenditures are slightly higher under the scenario one, using the scenario one data.
Now to look at charts associated with scenario two. Given that we've reduced the capital expenditures a little bit with scenario two, you'd expect that the dark blue bars on the left of the chart there that show the negative cash flows, which were the outflows for paying for the installation, you do expect those to be slightly smaller in magnitude than under scenario one, which had larger capital expenditures. And sure enough, when you look at a chart for scenario one, the bars are slightly more negative.
So that concludes my overview of the tool. I wanted to provide you some links and additional information and resources available to help you with the tool. The first link here provides you with the MSSLC Home page and the second link if you haven't visited it already, that's where you can download the tool, and there's also a couple of other files there that can be really helpful. There's what we call a "Tips Document," it's essentially a frequently asked questions document, and that'll be a living document that we'll continue to add to as we receive more questions and provide more answers, and there's also an explanatory video of Emma Berndt of CCI demoing the tool several months ago. And if those documents and resources don't answer all of your questions, please feel free to email us at firstname.lastname@example.org with further questions, and I also wanted to mention that we're certainly interested in comments and suggestions for the tool. We do intend to continue development of the tool. One feature that we would like to add is the ability to handle control systems. That probably won't happen for several months, but it is on our radar. Any future additions to the tool will generally need to have broad appeal to a wide user basis and also be focused primarily on LEDs, since that's our focus.
Well that concludes the presentation portion of the webinar, and I think we're going to move on now to questions and answers.
Theresa Shoemaker: Thank you, Edward and Doug. We have received several questions during your presentation. I would like to turn the Q&A moderation over to Bruce Kinzey. Bruce is the Municipal Solid-State Street Lighting Consortium Project Manager at Pacific Northwest National Lab. Go ahead, Bruce.
Bruce Kinzey: Thank you, Terry. As Terry mentioned, we've had a number of questions come in. We'll try to get through as many of these as we can in the remaining time, and we may - - these will be posted afterwards and we will try to answer some of the others that we feel are particularly relevant and maybe didn't have time to get to here, we'll post those in the coming weeks.
First question, this is for Doug: Is this analysis tool available to the general public, like lighting contractors, or only available to Consortium members?
Doug Elliott: It's actually available to the general public. Anyone can go to the link that I just provided and download the file. There's no membership requirement.
Bruce Kinzey: Okay. Actually most of these are for Doug and I will, Doug, just assume these are for you, and then I'll point out when one has come in for Edward.
Doug Elliott: Okay.
Bruce Kinzey: Is there a password to protect the Excel file for data entry?
Doug Elliott: We aren't… We're… In an effort to avoid potential problems with editing of formulas that… Well basically we've locked it down such that we know what the formulas are. If we allowed broad editing of the tool, we could no longer guarantee the results.
Bruce Kinzey: This is just for data entry; the question specifically pertains to, just for putting in data.
Doug Elliott: Oh well, the data entry cells are all unlocked, so they're fully available for user editing.
Bruce Kinzey: Is there an opportunity to evaluate bi-level lighting and/or occupancy based lighting?
Doug Elliott: I might defer to Edward on that one.
Edward Smalley: Well I would think that we're looking at what are the different - - someone had earlier… I saw one of the questions that asked about ballasts and so really talking about additional components that may require maintenance and so if those are grouped in, then some of those things can be compared, but you really need to keep track of the apples-to-apples comparisons because you're really… If your old system doesn't have those features, is it truly a comparison or is there value added with these additional features? So I would say that the tool is pretty flexible if you really track the different components that you're trying to have the tool to do calculations on, if that made any sense.
Bruce Kinzey: Okay, let me to add to that a little bit. As Doug mentioned, we are planning to add some controls' capabilities, some capability to evaluate controls down the road; and so right now, for example, adaptive lighting and dimming and other things like that, those are not included in the tool at the moment, but we do plan to add those going forward.
Okay, next question, here's one for Edward. What other kinds of tools are available from the consortium?
Edward Smalley: So one of the tools that we released back in November, actually we had a webcast in November, we released on the 15th of October, was the model specification for LED luminaires that was developed by the Consortium. We also enlisted the help of the manufacturers. But basically that tool allows an end user to really compare and evaluate luminaires for roadway and some area applications, but it really has been very useful and we've used that tool in many different areas to put out RFPs or RFIs to request information additional fixtures. So that tools designed to be modified by the end-user and so that along with some of the other things that we're working on, we're working on a national survey to see actually an inventory rather than a survey to really see what different types of benchmarks that are out there as far as number of lights, types, and qualities our technologies use, so tools like that, and then a lot of peer-to-peer involvement to find out, for instance the workshop in L.A., really get to some hands on experience with other cities and municipalities and utilities that are working with these technologies to find out how these - - how they are getting results and the best results they're getting from these different experiences. So that plus a number of other modifications, for instance on the model fixture tool, we're looking at doing additional tools for area lighting and maybe parking lot or garage lighting as far as specification for those areas.
Bruce Kinzey: Okay. Here's a question, and actually I can answer this one: Is there a version of the software for the Mac or is this only Windows' based? At the present time, the software is only Windows-based, and we don't have any current plans to produce a Mac version.
Doug Elliott: Well actually, Bruce, I want to jump in there. The tool should work. I haven't tested this, but if the Mac user is using Office for Mac 2011, I believe the tool should be fully compatible with Mac's in that case. They're… At the least, there'd be some formatting problems if an older version of Office for Mac is used. But on the Windows' front if Office 2007 or 2010 are used and on Mac Office 2011 are used, I think the tool will work fine in all those circumstances.
Edward Smalley: Yeah, and conversely, on the iPad, the keynote is - - doesn't have the functionality to process that level of data as well, the keynote per ram on iPad.
Bruce Kinzey: Okay. Here's a good question, and I don't think we've actually thought of this one, but there's probably a way, so I'll toss this one out to either of you: Is there a provision for early termination costs from the utility that currently owns the luminaire in bulb? And I assume that means if you are having them pull down their lights and replacing them with LEDs and you're being charged an early termination cost.
Edward Smalley: That's a good question, Doug. Had you put any thought into that?
Doug Elliott: As to where we would enter that?
Edward Smalley: Possibly yes.
Doug Elliott: I believe that could be handled via the disposal cost column. I believe that any early termination fee like that could essentially be - - that value could be entered in the disposal cost.
Edward Smalley: And then possibly track the - - track that note on the input page and that user inputs area, just to make sure we know where - - what those - - what's in that area? Does that make sense?
Doug Elliott: Sure.
Edward Smalley: Because I definitely recommend that a person as they start to aggregate multiple values in a field, that they really track what's in those fields so the next guy using this will understand what they've done. So I would almost call that a workaround for now.
Bruce Kinzey: Yeah, I was just going to mention that we've included another file up on the website that has some tips and things and workarounds and things like this, recognizing that we particularly in the first version of this tool, we haven't necessarily addressed all possible permutations, all possible situations. In some cases, there are ways to achieve workarounds where you can basically get the numbers into the analysis, but maybe not with something that's in this case specifically called early termination, but maybe, as Doug said, this could be entered as a disposal cost or something. So there's another - - there's a file up on the website that has some other ideas like that, suggestions and tips and so on.
Edward Smalley: Good point.
Bruce Kinzey: Okay, for Doug: Does saving… Do savings results take into account electric rate increases?
Doug Elliott: Yes, there is a section on the input page where a user can enter an assumption for annual change and electricity cost; and if you need help in developing an escalation rate for that, the input page also provides a link that to an energy escalation rate calculator that's based on EIAs, annual energy outlook data as packaged by NIST. So in short, the answer is: Yes, it does take into account changes in electricity cost assuming the user has entered an assumption for that escalation.
Bruce Kinzey: Okay, this is one that I will take. When will the presentation be posted online? Can it be please be posted quickly so that we can share it with colleagues? Please give us a URL where it can be downloaded. The URL will be the same as the tools that you can see there that are currently up on the screen right now. We will try to get it out there as soon as we can. It'll probably take a week or two. Hopefully that's sufficient. We will try to get posted as quickly as possible.
Here's another one for Doug: How is a rebate calculated? Is that… Is the rebate based on state guidelines?
Doug Elliott: I think that actually might be more appropriate for Edward because I think he probably has more direct experience with rebates.
Edward Smalley: Yeah, I was just looking at… I mean there's two ways that rebates are calculated, sometimes they're per fixture. And, Doug is this based on kilowatt hour? I had thought it was kilowatt hour and I'm just trying to get to that page. But basically I think the end user needs to understand what their rebate is based on and the program is not looking at any particular state or regulations or guideline or utility for that matter because these items are going to differ from utility to utility, even in California there are three different large utilities offering rebates on this, but in different ways and so I'm… In the… Maybe we'll go onto the next question. What I'll do is open up another page here to see if I can look at that… Doug, is that readily available if you're on this screen - - on these screens?
Doug Elliott: The rebate value entry?
Edward Smalley: Yeah.
Doug Elliott: I don't know that that's shown. It's probably shown on one of the slides that covers the input page, probably on the same slide that where I changed installed time, but the rebate value…
Edward Smalley: Yeah, I'll go to that offline here and see if I can get that answer within the next minute or so.
Doug Elliott: Okay.
Bruce Kinzey: Okay, Doug: Please explain the net present value, meaning for a set of lights or cost associated with them?
Doug Elliott: Well the net present value, what that does is given the discount rate you've entered, and in my example I used a 5% nominal discount rate, that's talking the entire stream of costs and… Well okay, let me back up a little bit. I'm sorry. It's comparing the lifecycle costs of a base case situation with lifecycle costs of the potential new situation. So in the examples I provided today, we were comparing the lifecycle cost of HPS fixtures versus lifecycle cost of LEDs. And by lifecycle costs, that's taking into account, that's the discounting the future stream of costs to present value to establish in today's dollars lifecycle costs for the HPS fixtures and subtracting from that the lifecycle cost associated with the new fixtures, and the difference between those two lifecycle costs is a net present value. I hope that was getting at the intent of the question.
Bruce Kinzey: Okay. On the input page for fixtures, how does the spreadsheet differentiate existing versus retrofit and is there room for say 15 different existing with 15 different retrofits?
Doug Elliott: There is room for 15 different existent. Well let me back… To answer the first part of the question, in that section there's no differentiating between existing and retrofit fixtures. That's specified down in the next section below that where the user specifies which fixtures are going to be removed and which fixtures will be installed. That's how existing and retrofit are defined down in that section. But in the fix section where all the fixture data's entered, they're all just mixed together, and that doesn't cause any problem; and there is room for, let's see here, yeah, there should be no problem to enter 15 of each kind in that data entry section.
Edward Smalley: And, Bruce, if I could just jump back in on the previous question, there are two ways to handle a rebate. A lot of times utilities will handle it on kilowatt hours saved. In this program on the input page in cell Q58, rebate value, it's asking for a dollar value per unit and then what one would do if the utility offers a per unit, they would enter that dollar value there, but likely they would have to calculate the kilowatt hours saved per unit over the incumbent technology and then multiply that out. Say for instance if it's $0.22 per kilowatt hour times X number of kilowatt hours saved, the net value would go there. And then on the finance page, there at section C13, you'll start to see where you'll see it calculated out as total number of units multiplied by the rebate and then it'll show you there what that total savings would be and then that is subtracted from the project cost I think - - let's see, in the result summary. I believe there is a result summary, on the result summary page, there's a rebate value as well, and I don't see that offhand.
Doug Elliott: Yeah, there is. There's… In column J, there shows the rebate cash flows.
Edward Smalley: Okay, there we have it.
Bruce Kinzey: Doug, can you please review where the energy price is entered and if an inflator/escalator adjustment to the price per kilowatt hour can be entered as well?
Doug Elliott: Okay, that's similar to a previous question. On the input page… Well I could just call out the cell. In cell D16 or D15 is where the electricity rate is entered on a dollar per kilowatt hour basis. Then right below that there's an annual change in electricity cost percentage that can be entered there and both those values are - - the user needs to drive those values, but, as I mentioned before, there's a link to an energy escalation rate calculator that's region-specific that can help come up with the escalation rate if better information isn't available.
Bruce Kinzey: Okay. Here's one I can answer. Can you share a sample spreadsheet with dummy numbers in it? There is actually - - I believe it's downloaded at the same time. I believe both those two come together as a zip file. Correct me if I'm wrong, Doug,
Doug Elliott: That is correct.
Bruce Kinzey: Yeah, so there is - - there's a blank version and a version with the sample numbers in it when you download it.
Why did you chose a 15-year period? That would be about 65,000 hours of burn time. Is there any residual value for time periods shorter than LED rated life?
Doug Elliott: Let's see here. We chose the analysis period in that example of 15 years because the - - we assumed that the life of the LEDs would be 15 years. I guess I don't see a reason to see use an analysis period shorter than the anticipated life of the fixtures because you're not going to capture all the benefits of the fixtures that they provide.
Bruce Kinzey: Okay.
Doug Elliott: I'd have… On the residual values, I'd have to put some further thought into how we're currently handling that. I don't recall off the top of my head.
Edward Smalley: And I just might add that while the analysis period just shows how far out do you want to look at these values, it's really relatively inconsequential when you're starting to look at your financial analysis in the end because you're really concerned with the payback period and so an end user is going to look at that. In this example, I believe it was 7-point something years which one might use for their financial and grant purposes.
Bruce Kinzey: Okay, we have time for one more question. This one's for Doug. Can this tool be adapted for other types of energy efficiency investments or does - - do we have other tools for these?
Doug Elliott: Well as far as lighting, we haven't used it, tried to use it for other lighting types, but we think it's probably quite adaptable to - - at least to things such as parking lots and possibly parking garages. Some of the labeling used in the tool might not be perfect for those circumstances, but essentially the same data would be required. As for… I mean this tool is fairly specific to lighting, so I think it's most applicable to other lighting technologies. As for performing a lifecycle cost analysis or cost benefit analysis for other technologies, other non-lighting technologies, I think other tools that DoE provides would probably be a better fit. BLCC is one tool that's available on the FEMP website that provides fairly generic lifecycle costs and capabilities, and it's a fairly powerful and relatively simple to use tool. That's one that comes to mind.
Bruce Kinzey: Okay, thanks very much. Terry.
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