Cost-benefit analysis of Light Emitting Diode (LED) Lamp Conversion in TUP-Taguig / Danilo M. Gacusan

Year : 2012

Number of Pages : 73 leaves

Adviser : Prof. Nestor O. Rañeses

Executive Summary

This paper evaluates and analyzes the cost of not using LED lamps. It also likewise studies the benefit of using this kind of technology and the cost it entails in the target institution. TUP-Taguid is the subject of this study where the author is one of its faculty members pursuing the Master in Technology Management in the University of the Philippines-Diliman through the DOST scholarship. Would it be beneficial for the University to use LED as its lighting system? Would replacing the fluorescent lighting system with LED lighting solve the University's problem of high maintenance cost of fluorescent bulb and high cost of electric bill? These are some issues that need some special attention and should be addressed by this research study. Light Emitting Diode, which is conveniently called as LED lights in electronic term, is a semi conductor light that emits light as soon as an electric current is applied to it. They are extensively used as indicator lights on electronic devices and also in higher power applications as in case of flashlights and area lighting. LED technology has taken the world to an innovative stage of development as it is very useful in conservation of energy and pollution. Some of the important advantages of the bulb are- 1. LED lights are more efficient when compared to the conventional bulbs and tube lights. They produce more light per watt against an incandescent bulb and this facet makes it very useful when used in battery powered or energy-saving devices. 2. This technology has the capacity of emitting various colors of light without the use of colors filters that traditional lighting methods require, thus saving initial costs. 3. Due to their small size, they can be easily placed and they also light up very quickly and achieve full brightness in microseconds. 4. These LED light have a better cycling life as compare to glowing bulbs and also radiate much less heat in the process of switching on and off. 5. They have a better life span around 25,000 to 50,000 hours of useful life and LEDs mostly fail by dimming over time, rather than the abrupt burn-out of incandescent bulbs as in comparison to incandescent lights. 6. These lights are shock resistant and the solid package of the LED can be designed to focus its light. The fact that they are non toxic (do not complain mercury) also favors the application of these bulbs. However, withstanding all the advantages, there are certain short comings faced by these LED lights as well. They are listed below - 1. As compared to bright bulbs the LEDs are much more expensive and its execution largely depends on the ambient temperature of the operating environment. They require sufficient heat sinking in order to make it stronger. 2. These LEDs are also voltage sensitive and one needs to be vigilant as they involve series of resistors or current-regulated power supplies. As they work on the mechanism of area light source, it becomes difficult for them to operate in spherical light field. 3. Of recent it is being observed by the scientists that blue and cool white LEDs emit blue light hazard that is unsafe for eyes. The cool white LED lights should not be used for outdoor lighting near astronomical observatories. Together these lights have certain limitations that are termed as blue pollution. This study compares the LED technology to the CFL technology in terms of the financial benefits as well as other benefits that concern the care of environment. A typical LED bulb can last up to 15 years without needing to be changed. They are not as versatile in traditional light fixtures, however, and are generally more expensive than compact fluorescents. Converting to LED lighting allows consumers to conserve energy and save a huge amount of money on maintenance and energy costs. LED light bulbs will eventually be what we use to replace incandescent bulbs - CFLs are a temporary solution to energy-efficient lighting. The reason LEDs have not yet displaced CFLs from the market are twofold : the first generation LED bulbs had a narrow and focused light beam, and the cost of the LED bulbs was too high. Recent developments in LED technology, however, have been addressing these issues. LEDs have been 'clustered' to provide more light, and mounted within diffuser lenses which spread the light across a wider area. And advancements in manufacturing technology have driven the prices down to a level where LED bulbs are most cost-effective than CFLs or incandescent bulbs. This trend is continuing, with LED bulbs being designed for more applications while the prices are going down over time. Table 1 up to Table 4 show the comparison charts between the LED, CFL and Fluorescent lamps in terms of energy efficiency and energy cost, light output and the environmental impact and some important facts about these three types of lamps. This study also includes national laws governing the disposal of busted fluorescent bulbs, RA 6069 or the Toxic substances, Hazardous and Nuclear Waste Control Act of 1990 and RA 2003, The Ecological Solid Waste Management Act. The ultimate goal of RA 6069 or the Toxic substances, Hazardous and Nuclear Waste Control Act of 1990 is to protect people and the environment from risks that are coming from industrial chemicals and chemical substances. The law sets the framework for the country to manage and control the importation, manufacture, processing, distribution, use, transport, treatment, and disposal of toxic, hazardous and nuclear wastes. RA 2003, The Ecological Solid Waste Management Act is the law which assigns the task of different stakeholders in disposing of wastes. Apart from that, it also contains provisions about recycling. There is no explicit mention of lamp wastes in the law's provision and implementing rules and regulations. It is classified, however, in special wastes including paint thinners, household batteries, lead-acid batteries, spray canisters, including consumer electronic goods like radios, stereos and television sets.

Under this Act, it is required to segregate the different kinds of wastes-compostable, non-biodegradable, recyclables, special wastes and hazardous wastes. Mercury can also be classified as hazardous waste as the law defines hazardous waste as solid, liquid, contained gaseous or semisolid wastes which may cause or contribute to the increase in mortality, or in serious or incapacitating reversible illness, or acute/chronic effect on the health of people and other organisms. Guidelines for Energy Conserving Design of Buildings is also included in this study, the purposes of which are : 1. To encourage and promote energy conserving design of buildings and their services to reduce the use of energy with regards to the cost effectiveness, building function and comfort, health, safety and productivity of the occupants. 2. To prescribe guidelines and minimum requirements for the energy conserving design of new buildings and provide methods for determining compliance with the same to make them always energy-efficient. These guidelines are applicable to the design of new buildings and their systems and any expansion and/or modification of buildings/systems. These guidelines shall not be used to circumvent any applicable safety, health or environmental requirements and with the exemptions of residential dwelling units and areas with industrial/manufacturing processes. This Guideline sets out the minimum requirements for achieving energy efficient lighting installations in which measure is generally expressed in terms of : a. illumination level, b. luminous efficacy, c. lighting power density. Project testing was conducted to compare the illuminance produced by each type of lamp, the fluorescent an the LED. This is to evaluate through test the number of LED lamps to be used to equal the amount of illumination produced by the existing fluorescent lights. The project testing has shown that LED lamps can actually replace the existing lighting system and the study can show that the University could really save in the cost of electrical energy. 1. Using the data gathered as to number of fluorescent lamps, CFLs currently installed in the University, TUP-T is using 661 fluorescent lamps. This is the target number of lamps to be converted to LED lamps. The cost of not using the LED can be computed using this value. Considering the total number of existing lamps, 661 lamps, as shown in the presentation of data Table 12, and assuming the total number of hours of operation per school year of 4032 hours and the rate from Meralco (P15.00/kWh), the cost is computed using the simple formula, Cost of kWh=kWh per year x hrs in a year x rate kWh. The total annual cost of using 661 40-W fluorescent lamps is P1,599,091.20 and for 661 12-W LED lamps, P479,727.36. The savings per year is the difference of the cost of using fluorescent lamps and the LED lamps. The difference is computed as Php1,119,363.84. The cost benefit analysis is applied using this data gathered. First, the costs are identified as follows : a. The capital cost on the purchase of 661 LED lamps amounts to Php793,200.00. This equals the cost per bulb x the cost per bulb. The average cost of a 12-W dimmable lamp, with a 25,000 hrs lifespan is considered at P1200.00 based on the lighting retailers' price. Computations are shown in Chapter 4. The Installation cost for the conversion of 661 fluorescent lamps into LED lamps is 460,800.00. This is also the labor cost for installing the LED lamps. These two items were added to give the total cost of Php1,254,000.00. Second, the benefits were identified. a. Savings in the energy cost amounts to Php1,119,363.84. This is the difference between the energy consumption using the LED lamps and the energy consumption using the existing FLB. The LED lamp used in the computation is a 12-W lamp which is equivalent to a 60-W incandescent lamp which is comparable to a 40-W fluorescent bulb in terms of illumination. b. The cost of replacement of fluorescent bulb which is assumed to happen yearly for maintenance with the replacement period of 5 yrs which is the lifespan for a LED lamp. This also includes the labor cost of maintenance and replacement. The total benefits amount to Php1,580,163.84. These do not include other non-monetary benefits offered by this LED technology. The difference of the total benefits minus the total cost of the conversion amounts to Php326,163.84 per year. And since the initial cost of capital in the purchase and installation of LED lamps costs P1,254,000, the University could easily be getting back what it has invested through the savings in this LED lamp conversion. In addition to this, it has been proven that it could really save in kWh consumption per year by 70 percent (savings/kwH of fluorescent). Issues on the high maintenance cost of fluorescent lighting system and high cost of energy consumption have now been resolved by this LED lamp conversion. A better option for the conversion is to consider a phase conversion of the 661 fluorescent lamps. The first phase of the conversion covers only an initial conversion of 200 lamps. This option could save the University on the initial cost. The conversion of 200 Fluorescent lamps entails the University an initial cost of Php528,000.00. The University could save an amount of Php338,688.00 on the cost of energy consumption per year. Since the LED lamps do not require frequent replacement, the University could save from the replacement cost P230,400.00 per year. This saving can be used as the initial capital for the second phase conversion of another 200 lamps by the next year and for the last stage implementation of the conversion of the remaining lamps. The objectives of the study have been achieved using the cost benefit analysis. The positive (+) result of the cost benefit analysis even if there are other non-monetary benefits that are not considered in the analysis only means that the conversion to LED lighting system is a good project and is very recommendable for future action plan. The benefit-cost ratio greater than 1 is a good indication of a good project. Though the conversion needs higher investment capital, the project will surely entail more savings in the cost of kWh consumption thus assuring a higher rate of return. Issues on the high maintenance cost of the current lighting system and high cost of kWh consumption have been addressed by this study. The conclusion is that based on life-cycle assessments, LEDs are about as energy efficient as CFLs when you take into account their whole life-cycle. But that seems likely to change since LED lighting technology is still maturing and improving quite fast and fluorescent technology is unlikely to improve enough to catch up. LEDs are currently used for a wide variety of different applications such as : residential lighting, aerospace industry, architectural, automotive, broadcasting, electronic instrumentation, entertainment and gaming, the military, traffic and transportation. Since LEDs are focused lights they prove best at specific lighting tasks such as desk lamps, reading lights, night lights, security lights, spot lights, accent lights and lighting for signage. Based on the cost benefit analysis, Light Emitting Diode (LED) lamp conversion in TUP-Taguig is concluded to be a good project and is recommended to be implemented in the near future to save more on the energy consumption and the maintenance cost and to help in the promotion of "green" project of the government.