The first step in financing a street lighting retrofit is a detailed financial analysis. Because street lighting systems are designed to last ten or twenty years, or even longer, all aspects of first costs, ongoing expenses, and long-term savings are important. While a preliminary or first-level analysis can be used to determine such things as simple payback, rate of return, and cost of light, the results may neglect a number of important economic considerations, such as the time value of money, additional savings and expenses and their relative timing, and future energy price escalations. Hence a first-level analysis does not typically provide the end user with sufficient details to make a fully informed decision. For this reason, the Illuminating Engineering Society (IES) recommends a full life cycle cost/benefit analysis (LCCBA).

Retrofit Financial Analysis Tool

DOE tool assists with the detailed financial analysis of retrofitting street and parking facility lighting with more-efficient alternatives. Use this tool to compute annualized energy and energy-cost savings, maintenance savings, greenhouse gas reductions

DOE tool assists with the detailed financial analysis of retrofitting street and parking facility lighting with more-efficient alternatives.

A thorough LCCBA should include:

  • Operations and maintenance (O&M) costs – relamping, cleaning, and fixture mortality
  • Energy usage – fixture wattages and operating hours
  • Cost of energy ($/kWh)
  • An appropriate discount rate to reflect the time value of money. This may be approximated by the cost of capital (i.e., interest rates on debt).  

The LCCBA method allows the designer to make detailed examinations of every aspect of the lighting project, swapping out variables to easily compare multiple system alternatives in order to find the best combination of energy efficiency and economic savings. These savings can then be weighed against the less-tangible benefits (i.e., glare control, color rendering, color temperature, and luminaire aesthetic appeal) of each alternative.

While the information provided in this section assumes that all system alternatives meet design requirements, it is not assumed that all alternatives offer equal benefits. (For help selecting appropriate luminaires for a specific project, see the MSSLC Model Specification for LED Roadway Luminaires).