HomeMy WebLinkAboutStaff Report 376-10TO: HONORABLE CITY COUNCIL
FROM: CITY MANAGER DEPARTMENT: UTILITIES
DATE: OCTOBER 18, 2010 CMR: 376:10
REPORT TYPE: INFORMATIONAL
SUBJECT: Report on Residential Indoor Light Emitting Diode (LED) Program
This is an informational report and no Council action is required.
EXECUTIVE SUMMARY
This update is to provide information to the City Council on the results of the research project in
Spring 20 lOon Light Emitting Diode (LED) lights. The City purchased the LED lights at
wholesale cost for $38 each and discounted them to a retail price of $4 each. Residents were
able to purchase two bulbs-one each of two different styles. They were asked to provide
feedback on lighting quality, preference between two styles of lamps, and amount they were
willing to pay for future lights. The program was enormously successful, with the first delivery
selling out in less than two days. The entire order of 1,000 of each style of lamp (2,000 total) was
purchased by residents at the three participating local hardware/lighting stores. Feedback was
received from 713 residents. Preference between lamp styles was nearly equal, and residents are
generally interested in purchasing lamps again. However, the average price that residents
expressed a willingness to pay was about $11, which is far less than the current price for this
style of light. In addition, many residents were concerned about the quality of the lights, both the
color and the brightness, with many residents stating that the lights are too blue and/or too dim.
The result of this study will assist staff in developing future lighting programs.
BACKGROUND
The City of Palo Alto Utilities (CPAU) has conducted special lighting programs for customers
each year around Earth Day and at the end of the calendar year for at least four years. The first
two years, the spring lighting program focused on Compact Fluorescent Lights (CFL's), and
customers were able to purchase five CFL's for $1 at local hardware stores. These programs
were extremely effective, with over 8,000 CFL's rebated in each of the two years this program
was held. Energy savings for these lights were calculated to be 1,456,000 kWh annually, making
the lifetime cost of this program to CPAU to be less than I cent per kWh.
The third year, staff worked with stores to sell an LED light and a particular flood-style CFL for
use in canister lights indoors and outdoors. Customers paid $2 each for LED "puck" lights
(round lights with a sticky back and a push on or off feature for an LED light) or for CFL flood
style lights. Between March and May 2009,303 customers purchased 832 LED puck lights and
325 customers purchased 1,622 CFL flood-style lights. Both the puck lights and CFLs were
CMR: 376:10 Page 1 of5
rebated down to $2 each for customers. The energy savings for the CFL flood-style lights sold
are estimated to be 51,904 kWh annually, making the lifetime cost of conserved energy for this
program 4 cents per kWh. No savings estimates were made for the LED puck lights, as they
were assumed to be additional niche lighting and not replacement for current fixtures or bulbs.
In 2010, due to the increased community awareness of the CPAU-initiated LED streetlight
demonstration project, staff determined that it is important to make the public more aware of
residential applications for LED lighting and create a positive "buzz" about this emerging
technology. Research indicated the home LED market (bulbs for table lamps, can reflectors etc.)
was still in its infancy-no ENERGY STAR-rated products existed, many products were
prohibitively expensive and the variety of products and performance claims made it difficult to
identify the highest quality brands. After much internal discussion and product review, staff
selected the two LED A-base bulbs having the highest lighting quality test results utilizing City
Hall staff. These bulbs were provided to customers at a highly discounted price. The bulbs were
purchased wholesale for $38 each, and customers were able to purchase two bulbs at retail, one
of each type, for $4 each.
DISCUSSION:
Beginning AprilS, 20 I 0, CP AU mailed flyers promoting energy efficient LED lighting to all
Palo Alto customers. The flyers included a discount coupon of $8 for the purchase of two
different style LED bulbs, at Palo Alto Hardware, Peninsula Hardware, or Stanford Electric
Works. Customers who purchased the bulbs were asked to test them and provide feedback either
on a postage pre-paid postcard or through an online survey on the City's website (at
www.cityofpaloalto.org/LEDSurvey).This effort was part of a short-term research project to
understand what customers think about LED bulbs as CPAU considers new energy efficiency
programs for the future. CPAU purchased 2,000 of these bulbs (1,000 of each type), and the
inventory was completely sold out within two days. This was an unprecedented response by
customers, who were no doubt influenced both by curiosity about the new technology and the
highly attractive purchase price resulting from the CP AU subsidies.
This response was startling. In 2009 Utilities offered two programs with the following results:
Compact Fluorescent Light Bulb (CFL) flood lights, where only 325 customers purchased the
lights during the two month program, along with the LED "puck lights" which only 303
customers purchased. In the LED holiday light exchange program that ran from December 2009
through January 2010, 800 customers exchanged a working strand of holiday lights for a free
LED strand.
Due to the unprecedented customer demand for the bulbs, CP AU opted to purchase an additional
3,000 dimmable LED bulbs (1,500 of each type) which were sold for the earlier advertised price.
The additional shipment took about six weeks to arrive. About 1,200 customers who had asked
to be notified when stocks were replenished in the local stores were emailed or called when the
bulbs arrived. The remainder of the new shipment was marketed without use of direct mail, and
posters were placed in the stores letting customers know that LED bulbs were still available
should they wish to purchase them. A few bulbs remain in each of the three stores, but most are
sold at this point.
Both products performed well in staff demonstrations and only a few customers returned
nonworking lights. Of interest is the fact that all of the nonworking bulbs were the same
Novicomm brand.
CMR: 376:10 Page 2 of5
The high demand for the LED dimmable bulbs shows both the community's interest in the
technology and its benefits and a good awareness of the value provided through the program.
The City's Utilities Department is currently developing plans for a second type of limited time
offer for LED lights later this fiscal year. Using information gained from the recent trial, the
product discount will be much less than offered in thc initial pilot program.
Results of LED Program Feedback
As of September 1,2010
LED ONLINE SURVEY SUMMARY
Preferred Novicom
Preferred Pharox
Average price willing to pay
Will use again?
Novicom average rating
Pharox average rating
Total received=277
LED MAILED-IN SURVEY
Preferred Novicom
Preferred Pharox
Average price willing to pay
Will use again?
Novicom average rating
Pharox average rating
Total reccived=436
Bulb Specifications
Novicomm
Pharox
Equivalent CFL
Equivalent Incandescent
48%
52%
$12
92%
3
3
40%
42%
$10
95%
3
3
Watts
9
6
12
60
outof5
out of5
Lifetime
1,000
There is still a small inventory remalllmg of unsold LED light bulbs. The current sales
information shows that residents should save about 160,000 kWh per year in the first year by
using the LEDs compared to what they would have used with incandescent lights, or 19,000
kWh in savings per year compared to CFLs. With an expected lifetime of at least 20 years for
the LED bulbs, when compared to incandescents, lifetime savings is esiimated at about 3,200
MWh. However, if the LEDs are to be compared with CFLs, lifetime electricity savings would
be only 380 MWh. Note that since incandescents will only be purchasable under federal law for
a few more years, the entire savings based on incandescent replacement is only for information
and not used in evaluating program success.
LEDs are not cost-effective for most lighting applications. As the charts below show, CFLs are
still significantly less expensive than are LEDs, but when comparing firsi year electric
requirements for the bulbs with what customers might have seen in a similar quality CFL, energy
reductions are not significant. This difference is stark in comparison to the very large reduction
CMR: 376:10 Page 3 of5
in electric usage achieved by CFLs compared to incandescents and the much lower cost
difference between these two types of bulbs.
$40.00
$35.00
$30.00
$25.00
$20.00
$15.00
$10.00
$5.00
$-
160,000
140,000
120,000
100,000
..c::
~ 80,000
60,000
40,000
20,000
Bulb Cost
LED Total CFL Incandescent
Energy Saved Compared to Incandescents
Incandescents are Baseline at Zero Saved
Energy Saved Annually
IIi!I Bulb Cost I
Currently, LED lighting for residential use is not cost-effective when compared to the cost of
electric supply; however, it is anticipated that future programs are expected to become more
cost-effective over time for the following reasons: . LED availability will increase, prices will
corne down and operating performance will improve. Additionally, as LEDs become more cost
effective, the CP AU rebate amounts can be funded from the Public Benefits program at a lower
cost. LED lights will continue to be evaluated for cost-effectiveness and performance as
conditions change.
CMR: 376:10 Page 4 of5
RESOURCE IMPACT
None.
POLICY IMPLICATIONS
None.
ENVIRONMENTAL REVIEW
The actions summarized in this report do not meet the definition of a "project" pursuant to
California Public Resources Code section 21065, thus no California Environmental Quality Act
(CEQA) review is required.
ATTACHMENT
None
PREPARED BY:
REVIEWED BY:
APPROVED BY:
CITY MANAGER APPROVAL:
CMR:376:10
n~ 1/ JOYCE KINNEAR
~~servic:
~
Assistant Director, Utilities Customer Support Svs.
Director, Util . s Department ,--.... • Jt: /~
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