Shedding Light - Part 2

At a national level, fingers often point toward healthcare as being among the worst offenders in energy usage. However, oftentimes within the walls of those facilities doing the most damage, it’s difficult to pinpoint places where immediate solutions can be implemented or to initiate a culture change among decision-makers whose buy-in must first be gained.

Karl Williams, vice president of energy solutions for electrical distributor Rexel Inc., spoke with Jennifer Kovacs Silvis, Editor-in-Chief of Healthcare Building Ideas, about some of the areas where hospitals are making the biggest mistakes, how to identify and launch energy-savings programs, and where the rubber will meet the road in terms of no longer avoiding change.

Here, please find the second part of this two-part discussion in which Williams touches upon the impending T12 phaseout, how to explore rebate programs, and ways to present sustainability programs to your facility's finance department.

We have a T12 phase-out deadline of July 2012 approaching. What are the basics hospitals need to know about this?

There still will be rebates from T8 to T8, from less efficient to more efficient. Moving from the T12s, the worst thing hospitals can do is not make a decision. 

If you have significant T12s in your facility, you can make a decision to start stockpiling multiple T12s, in other words the 5,000 or 10,000 pieces in your basement. Hospitals can make that decision and then that covers them until they can afford a budget to go and change out the lights. 

My position is this: T12s are going away, so the decision whether you’re going to change or not is now moot. We estimate 40% of facilities in the country still have T12s in them, so the energy efficiency story hasn’t resounded with these people to make a change. With that, the government has now legislated that they’re going to have to make a change. 

The reason you want to do this for energy savings, clearly they haven’t bitten off on that, so now they just need to make a decision on when they’re going to do it, not whether they will or not. My advice would be do it before July 14, 2012, because then you can get rebates from the utility. Do it now. 

Even if they’re slow to move, then I would still say do it as quickly as you can. In the energy game, we generally measure upgrades in payback—if you invest a dollar, how quickly can you get the dollar back? And so most changes from T12s to T8s, the payback is less than two years. That’s fantastic—it’s basically an over 50% return on investment. And if somebody were to try to get that money some other way, there’s very little in the facility you can do. 

Even if they’re caught short on finances, the budget’s not there, there are financing options where you can lease the materials or you get it paid for through tax deductions. It really is a financial discussion.
 

What kind of savings can facilities see from rebate programs?

I’ll give you an example: a Rexel facility in Maryland. This is a clear example of why it’s so hard to get a decision made because we couldn’t even make a decision in our own organization until we pinned the CFO down. 

To get the installation done for labor and material, for a warehouse, was essentially $100,000. The energy savings produced in that one facility was $85,000 a year. We got a check from the utility for a rebate that was $40,000 a year. So the net cost was $60,000 and the energy savings was $85,000. In that particular equation, the payback math appears to be around nine months. So whatever we spent, we got back in around nine months. 

In terms of the light bulbs, the new technology in fluorescent lighting can come with between three- and five-year warranties, so you can essentially remove replacement costs moving forward, whereas with older technology—T12 technology—some of those lamps would not last, and they would also dim over a period of time, which cause lighting legal issues.
 

How do you recommend communicating the value in replacement programs like this to a hospital CFO?