Outsourced Innovation, LLC

Sustainable Lighting Technologies for SWD Inc. 910 S. Stiles Drive, Addison, Illinois 60101

MJC 1/1/2012

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Table of Contents

Page

Introduction and Background 3

Executive Summary 3

Implications and Recommendations 4

Competitive Technology Review 5

RightLumen™ Lighting System Comparisons 8

Financial Assumptions 10

Appendix – Product Spec Sheets 12

A. Lusio (E3 Building Solutions) B. Digital Lumens (Groom Energy) C. Albeo Technology D. Neptun Lighting E. EPS Energy Services

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Introduction & Background

The SWD Company based in Addison, Illinois is a metal finishing, coating and sorting company with a mission that includes environmentally responsible manufacturing. The company has strategically positioned itself of that by achieving ISO Certification to meet stringent environmental standards that demonstrate their stewardship to business and the local community.

The rise of emerging solid state lighting (SSL) is driving a significant transformation of the lighting industry. SWD expects to leverage new technologies to lower energy costs within their existing manufacturing facility and integrate SSL into plans for facility expansion in 2012.

The market has been recently flooded by a vast number of new and unproven lighting manufacturers. Some make dubious claims about performance that are too good to be true or not supported on a technical basis. As things stand, it can be difficult to know who to trust or what to believe. As part of this, SWD has commissioned Outsourced Innovation, LLC to help guide a transition to more sustainable lighting technologies, including light emitting diodes (LEDs) and induction technologies.

Although the current SWD facility represents about 100,000 square feet, a 25,000 square foot section of the manufacturing facility was identified as the first place to begin this transition with the goal of achieving 20 footcandles in the 24/6 operation, and ideally as a one-for-one retrofit. SWD is interested in collaborating with Illinois-based lighting manufacturers for economic development reasons if possible.

Executive Summary

The SWD fastener company based in Addison, Ill will commence with a more sustainable lighting conversion starting with manufacturing operations through a replacement of 400 watt metal halide, high-bay lighting.

A vendor-neutral comparison of 4 different and more energy efficient lighting solutions suggests a conversion to induction technology will be the least risky alternative with a projected 35% energy savings and a good return on investment compared to the metal halides they replace. Induction technology is anticipated to deliver the shortest payback at 2.7 years and with the lowest 20-year NPV cost compared to other competitive LED lighting systems evaluated for this project and with strong assurance of long-term performance.

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An investment in a solid state lighting (SSL) technology will position SWD as an early technology adopter, but is more risky. Long-term reliability projections are extrapolations so working with high-quality LED manufacturers that meet standards and show proof of field experience is critical. From a lifecycle cost analysis, a solid state lighting system could deliver a somewhat higher energy savings of about 48%, a longer 4 year payback compared to induction and shows a 20-year NPV cost of $85,000 compared to $112,000 to operate the metal halide system.

It is important to understand that long-term SSL reliability is unclear with this immature technology making strong 5-7 year full product warranties and manufacturer support essential to your procurement.

A higher first cost of SSL could be viewed as part of SWDs continued investment in environmental stewardship and begin to understand how intelligent lighting can be integrated into your strategic marketing message and future energy-management systems.

Implications and Recommendations

Both LED and induction solutions can provide a significant energy savings in the range of 35%-48%. Fixture efficiencies today of about 70-80 lumens per watt make both technologies relatively equal in terms of energy savings. Efficiency improvements with induction have reached maximum potential. Whereas, LEDs continue to advance rapidly and is expected to surpass induction efficiencies, with 120-140 lumens per watt fixtures that should be market ready in about 2 years.

The upfront cost for induction is much lower. Their capabilities are not as effective as LED but still provides an excellent energy efficient device with a faster payback.

Because LEDs are emerging and induction is considered a more proven technology, the following recommendations are offered for consideration.

1. Understand your tolerance for risk. The least risky, energy saving lighting conversion today can be achieved with induction technology provided by Neptun. This technology can be expected to provide a 35% energy savings with comparable footcandles to the 400 watt metal halide fixtures they replace and with a strong assurance of a maintenance free, and long lasting service life.

2. LEDs could provide a viable solution with the Digital Lumens product projected to deliver a 48% energy savings and relatively close to meeting 20 footcandles as a one-for one-replacement. Thermal management with LED is crucial to performance so this vendor must understand the maximum and minimum operating temperature environment of SWD, especially if heat or humidity might be a concern.

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3. It may not be feasible to achieve 20 footcandles as a one-for-one retrofit with some LEDs or even induction technology within your existing manufacturing space. The facility may require about 2-5 more fixtures to achieve that level of light output, and with good uniformity.

4. If LEDs are of interest, work with vendors who support full product warranties (not limited) and demonstrate confidence in product performance. Five-year warranties are norm, seven-year is best). Further, LED purchase orders might include legal verbiage that addresses things such inclusion of drivers and power supply, or protection on other important issues such as color shift or droop that is reported to occur with LEDs.

5. The most ideal time to spec a new lighting system rather than shoehorn or retrofit into an existing space is with a new build out. That might be a more ideal time to specify an LED or intelligent lighting system so it is integrated into building design or energy management system.

6. Advanced lighting control strategies have a tremendous capacity for saving energy and money within commercial buildings. Occupancy sensing could be leveraged with either induction or LED with pre-selected fixtures (storage, warehouse) but generally does not appear to be an option in the production area.

7. The cost of LED luminaires continue to drop about 10-20% each year, making that investment more palatable each year. If SWD begins to convert to LED today, make certain that LED fixture modularity is addressed so that lamps can be easily upgraded as greater efficiency hurdles become market ready.

8. Consider using a vendor-neutral purchaser of energy. SWD might consider bidding their electricity supply requirements out to several different suppliers in a formal RFQ process. Companies that do not ask for competing proposals typically pay higher prices than companies that bid out requirements. Further, consider fixing the price for the next available time frame due to the recent downturn in futures pricing (see appendix).

Integration of LEDs will be determined by SWD’s tolerance for risk, future interest in advanced lighting control strategies and ability to fund a lighting conversion that is more costly upfront. ComEd incentives of about $100-$150 will help make the investment of LEDs more palatable but SSL is more than twice the cost of an induction lighting system.

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Competitive Technology Review (Induction versus LED)

Solid state lighting is a more expensive technology upfront but offers great promise for reducing energy use and operating expense. However, it is important to remember that aspects of the technology are still emerging and under development whereas the need for businesses to cut energy and maintenance costs is more immediate.

Induction could provide a good transition for those seeking more efficient options than traditional fluorescent technology. Induction does away with electrodes that are lifespan- limiting in a fluorescent design. A specially designed heat conduction rod and coil creates an electromagnetic field to energize gases, promoting the same phosphor reaction as fluorescent. The elimination of electrodes gives induction a useful and more proven track record to deliver a 100,000 useful life.

Intelligent-based lighting using semiconductor chips can be equipped with adaptive lighting and/or wireless controls to leverage daylight harvesting or occupancy sensing to achieve even further energy savings. Today’s induction can include bi-level switching to lower energy usage as well, but is not conductive to occupancy sensing as LED.

Table 1 below provides a general comparison of HID fluorescent technology, induction and LEDs.

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In conclusion, LEDs are considered emerging technology with performance promises that are extrapolations. Conversely, induction is a more mature technology with recent market resurgence due to improved electronic ballasts.

LEDs are a System

LEDs are more complex than traditional lighting. It is an electromechanical system that includes semi-conductor light sources, provisions for heat transfer, electrical control, optical conditioning, mechanical support, and protection, as well as aesthetic design elements. Because the LEDs themselves are expected to have long life, all of these other components, adhesives, sealants, solder joints and other materials must be equally long‐lived. To the extent they are not, they will limit useful life1.

While LEDs do not radiate forward heat, half or more of the input energy may be converted to heat that must be conducted away from the diodes (or the back side of the chip). This requires

1 SSL Product Quality Lighting Initiative, May 2010; Next Generation Lighting Alliance and US Department of Energy

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a reliable, heat‐conducting assembly, in addition to a heat sink component or means for further conduction.

For proper operation, the power supply and electronics must provide a well‐controlled DC drive current and possibly other control features, and must not fail for the life of the product. Any optical components must be able to withstand years of exposure to intense light and possibly heat without yellowing, cracking, or other significant degradation. Reflecting materials need to stay in place and maintain their optical efficiencies. Even if the design itself has addressed all of these issues, questions of Was the epoxy properly mixed? Was an essential heat‐transmitting paste omitted? Were the wire bonds properly made? Any of the failure mechanisms inherent in electronic assemblies, and many others, may apply to an LED luminaire.

The following visualizes all the system components of an LED lighting system.

An important message is that these mechanisms must be accounted for by LED vendors when discussing product life to ensure a long-lasting and reliable light source.

LED Fixture

Thermal

Mechanical

Optical

LED Chips Electronics

Adheasives

Finish/paint

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RightLumen™ Lighting System Comparisons for SWD, Inc.

Lusio

Digital Lumens

Albeo

Neptun Induction

Delivered Lumens 23,950 18,000 20,310 (3 Modules*) 20,000 Wattage 239 210 238 262 Lumens/watt 103 85 85 80 Chip supplier Lumileds Rebel ES CreeXMC Nichia N/A Driver supplier Advanced Driver mfg by Digital

Lumens** Universal/Advanced (1 for each module)

Ballast designed & mfg by Neptune**

Drive current 700 mA 900 mA 1 Amp N/A Dimming/Occupancy Sensing Yes, separate 1-10V,

agnostic? Yes Yes, 0-10V;on/off Bi-level dimming

Active/passive heat management

Passive Passive Passive

Temperature range -31˚F – 122˚F -40˚ - 122˚F -30˚ - Max 131˚F Kelvin 5,148 5,000 – 6,000 5,000 5,000 CRI 68.1 70 74 83 Rated Life* 70,000 hours 50,000@77˚F 60,000 hours 100,000 Power Factor .996 .90 .98 .98 THD 6.93% <20% <.10% <10% Do you have factors for ambient temperatures above and below your test? If so, please provide

Probably, will provide Yes, from LM-80 Below -36˚C (tested in Federal Center in Boulder

Can you provide technical support/troubleshooting

Yes - Yes Yes, from Boulder Yes

LM-79 test data Provided (attached) Yes, but not only 15,000 lumen fixture

Yes N/A

LM-80 test data Provided w-TM-21 projections of 54,000 hr life

Yes, provided on 15,000 lumen fixture

Yes, copies provided N/A

What is your case temperature per LM-80 (junction point)

At ambient of 70˚ was 132˚F

74˚

Yes, 55˚C or 133˚F

Maximum Operating Temp?

Does mfg own IP? Yes, on design Yes Yes Yes How long have you been supplying LED fixtures

8 years; Division of LightWild (control company)

3 years- 6 years 10 years

What is the longest burn hours in actual field installation

Since 2009

12,000 fixtures 2 years, 2 years

How many installed in US?/globally

6,000

12,000 fixtures

90,000 fixtures deployed

>100,000

Share some problems you’ve have? Resolved?

None shared; no experience; chip only 1/10 of 1%

Yes, ½% failure rate, moisture damage, resolved by manufacturer

Published failure rate .62% and under 1% ; driver failure but accessible from bottom of fixture

1.5% failure rate (combined fixture and ballast)

IES files Yes, provided Yes, provided Yes, provided Yes provided Warranty (driver and power supply)

7 years, limited and includes driver and power supply

5 year full (power supply/driver; not color shift)

5 years, limited and includes power supply/driver (does not cover labor)

10 years, full; fixture and ballast

Interchangeability; modular Modular; with serial and version #’s to upgrade

Everything is modular (fixture and power supply)

Yes, easily add or remove modules; more robust to accommodate upgrades

N/A

UL rated/listed Still going through process

UL Listed No, but CSA listed UL Rated 1598

IP Rating IP65; ProOptics Enclosed; IP20 Pro Optics & Essentials

IP-30 and IP-65 No, but damp locations under CSA

No IP, but sealed fixtures

Buy America Certification? Mfg. in Kansas City Mfg in China Mfg. in Boulder, CO Lake Bluff, IL Lighting Facts™ Label Yes Yes Yes DNA Shielding for glare Yes No Yes, diffuser sleeve

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Financial Assumptions and Projections

The following assumptions support the financial analysis. A sharpened pencil will create a more exact analysis of SWD rates and understanding whether fixtures will be purchased with cash or borrowed funds. Financial projections shown below make relatively confident comparisons of each lighting system and will be fine tuned going forward.

Hours of operation

6,912

Labor Rates $20/hr

Hours to provide maintenance per lamp

15 minutes*

k/Wh rates .083* time of use rate, separate consumption that is lights; calculate rates with old vs new, that would get you something lower in terms of electricity costs. On-peak and off-peak buckets (summer/winter?). Need to isolate energy use of lighting versus on-peak/off peak rates.

Demand charge Captured in varying energy charge/none;

Ballast or driver replacement

5 years

Cost of capital 10%*

Inflation rate 3%

Discount Rate 5%

ComEd Incentive $100 for LED; $50 for induction

Lusio

Digital Lumens

Albeo

Neptun Induction

Adaptive to different sizes and configurations

Yes: 2x2; 2x4, 1x4 20x16 inches Yes, add or remove (6,000 lumens each)

No

Wireless control? No, not in today’s fixtures Yes, available today(Zigbee protocol)

Yes, available today (zigbee) No

RoHS Compliant Yes Yes No No, trace mercury

AC or DC based LED DC based DC based DC based AC based Cost per fixture $714 $737 ($80 install) $1,086 (includes shipping) $374 (includes

shipping) Cost per lumen .02 .04 .05 .02 Average footcandles 19 fcs 21 fcs 19.8 – 24.3 fcs 14 fcs Minimum footcandles 2 fcs 12 fcs 3 fcs 10 fcs Projected Energy Savings (%) 40% 48% 40% 35% NPV Costs (20 years) $86,499 $85,628 $99,042 $73,768 Projected Payback (yrs) 4.22 3.88 9.21 2.75

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Lighting System Net Present Value (20 year, costs) Payback (yrs) Internal Rate of Return (IRR)

Lusio $86,499.91 4.22 28%

Digital Lumens $85,628.65 3.88 30%

Albeo $99,042.99 9.21 12%

Neptun $73,768.47 2.75 69%

METAL HALIDE $112,012.81 N/A N/A

In conclusion, a conversion to either LEDs or an induction lighting system will make good business sense compared to the existing metal halide system in place. A 20-year net present value (cost) of operating the existing metal halide system is projected at $112,012 and exceeds that of any of new lighting systems proposed above.

Induction appears to be overall, the best lighting system investment for this application but deserves careful consideration of future energy management and sustainability plans for SWD in the future.