A
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
B
C
D
Luminaire Prices
Typical
Alternate
LED
$
$
$
# of Poles
23 $
33 $
33 $
Total Electricity Costs
Typical
Alternate
LED
Annual
kWh
233,000
161,000
98,000
Annual Maintenance Costs
Typical
Alternate
LED
G
H
I
J
K
L
M
N
O
$
$
$
Total
Costs
77,800
103,800
146,800
0
$
77,800
$
77,800
1
$ 20,970.00
$ 3,476.00
$
24,446
2
$ 20,970.00
$ 3,476.00
$
24,446
3
$ 20,970.00
$ 3,476.00
$
24,446
4
$ 20,970.00
$ 3,476.00
$
24,446
5
$ 20,970.00
$ 3,476.00
$
24,446
6
$ 20,970.00
$ 3,476.00
$
24,446
7
$ 20,970.00
$ 3,476.00
$
24,446
8
$ 20,970.00
$ 3,476.00
$
24,446
9
$ 20,970.00
$ 3,476.00
$
24,446
10
$ 20,970.00
$ 3,476.00
$
24,446
$ 257,724.69 =NPV(D3,F35:O35)+E35
t
Alternate
Total Installation costs
Annual electricity costs
Annual maintenance costs
Total Life Cycle costs
0
$
$
1
2
3
4
5
6
7
8
9
10
103,800
103,800
$ 14,490.00
$ 5,476.00
$
19,966
$ 14,490.00
$ 5,476.00
$
19,966
$ 14,490.00
$ 5,476.00
$
19,966
$ 14,490.00
$ 5,476.00
$
19,966
$ 14,490.00
$ 5,476.00
$
19,966
$ 14,490.00
$ 5,476.00
$
19,966
$ 14,490.00
$ 5,476.00
$
19,966
$ 14,490.00
$ 5,476.00
$
19,966
$ 14,490.00
$ 5,476.00
$
19,966
$ 14,490.00
$ 5,476.00
$
19,966
$ 250,751.50 =NPV(D3,F45:O45)+E45
t
56
57 NPV (LED)
Luminaire
Prices
41,000
51,000
94,000
$
$
$
Annual
$/kWh
Costs
0.09 $ 20,970.00
0.09 $ 14,490.00
0.09 $ 8,820.00
t
Typical
Total Installation costs
Annual electricity costs
Annual maintenance costs
Total Life Cycle costs
LED
Total Installation costs
Annual electricity costs
Annual maintenance costs
Total Life Cycle costs
Total Pole
Per Pole
Cost
1,600 $
36,800
1,600 $
52,800
1,600 $
52,800
Annual
Costs
$ 3,476.00
$ 5,476.00
$ 1,840.00
46
47 NPV (Alternate)
48
49
50
51
52
53
54
55
F
41,000
51,000
94,000
Total Installation Costs (including Luminaire costs)
Typical
Alternate
LED
36
37 NPV (Typical)
38
39
40
41
42
43
44
45
E
GoGreen Supercenter - Energy Savings and Parking Lot Lighiting System Case
LED Lighting Cost Analysis
Cost of capital
6%
0
$
146,800
$
146,800
1
$ 8,820.00
$ 1,840.00
$
10,660
2
$ 8,820.00
$ 1,840.00
$
10,660
$ 225,258.53 =NPV(D3,F55:O55)+E55
3
$ 8,820.00
$ 1,840.00
$
10,660
4
$ 8,820.00
$ 1,840.00
$
10,660
5
$ 8,820.00
$ 1,840.00
$
10,660
6
$ 8,820.00
$ 1,840.00
$
10,660
7
$ 8,820.00
$ 1,840.00
$
10,660
8
$ 8,820.00
$ 1,840.00
$
10,660
9
$ 8,820.00
$ 1,840.00
$
10,660
10
$ 8,820.00
$ 1,840.00
$
10,660
ISSN 1940-204X
GoGreen Supercenter: Energy Savings and
Parking Lot Lighting System Case
Donald Gribbin
Professor of Accountancy
Haworth College of Business
Western Michigan University
Jagjit S. Saini
Associate Professor of Accountancy
Haworth College of Business
Western Michigan University
INTRODUCTION
GoGreen Inc. has supercenters worldwide. Lee Smith, chief executive officer (CEO), was troubled
because of the recent negative coverage of the company by media and activists. Specific criticisms
included GoGreen’s connections to human rights abuses associated with working conditions at their
stores. During this period of criticism, a hurricane struck the Gulf Coast. One store manager of a
GoGreen branch in the Gulf Coast went out of her way to help the community in need and provided
people with essential supplies from the GoGreen store. The media and activists took notice of this
incident and praised the company for its efforts. This brought in some positive media coverage for
GoGreen.
After this incident, Lee decided to change the company’s focus to improve the brand image of
GoGreen in the eyes of public. The company decided to focus on three Ps— profit, people, and
planet. Lee believes that including people and planet along with profit will also justify the company
name. Specifically, GoGreen decided to include sustainability as a part of the company’s strategy and
established four new goals—minimizing waste, using renewable energy, enhancing customer safety,
and selling sustainable environmentally friendly products. With these goals, the CEO launched one
of the company’s biggest sustainability initiatives. One of the several initiatives focused on energy
savings. The company plans to overhaul its refrigeration and lighting systems and use more renewable
energy to lower the energy usage at various store locations.
In this regard, GoGreen is interested in any cost savings that might be generated by using a lightemitting diode (LED)-type lighting system in its parking lots. LED systems have greater installation
costs but use less energy and require less maintenance over their life. Thus, an important question is,
can the LED systems pay for themselves over their life due to lifecycle cost savings? In addition to
being concerned about cost-related issues, GoGreen also wants to be recognized as an environmentally
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friendly company and be able to promote this project as one sustainability-related initiative to enhance
its image. GoGreen is also concerned about customer safety and wants to have enough light in its
parking lots for customers to feel safe at night. Additionally, GoGreen wants to be recognized as a good
neighbor and doesn’t want its parking lot lights to be a distraction to its residential neighbors.
GoGreen’s management has identified three parking lot lighting systems as viable options. The
following briefly describes the three parking lot lighting (design) systems for a supercenter branch in
Oregon that was chosen to analyze the effect of this initiative.
System I—Typical Design
The Typical Design is the system currently used by GoGreen. This luminaire design uses 1000W rated
lamps, which provides sufficient illumination, but consume excess energy.1 Retailers typically use
higher levels of illumination than specifications to attract customers or to provide customers enhanced
personal security. Since the power density of the Typical Design exceeds the design requirement
specifications, another system, which is referred to as the Alternate Design that consumes less energy
was selected for comparison purposes.
System II—Alternate Design
The Alternate Design uses less energy than the Typical Design and uses 400W rated lamps. The
Alternate Design meets the parking lot requirement specifications but does not provide the high level
of illumination as provided by the Typical Design. The Alternate Design uses less energy than the
Typical Design but more energy than the LED Design (System III).
System III—LED Design
The LED Design is the most energy-efficient system but has the highest installation cost of all the
systems. The high installation cost of the LED Design system is partly because of the lower level
of illumination that results in more light poles required for the same size parking lot. Also, LED
luminaires are costlier than the luminaires for the other two designs.
COST INFORMATION
Management conducted research on the costs associated with the three types of lighting systems.
These costs are discussed next.
Luminaire Costs
Luminaires are the light fixtures attached to the top of the poles. The light fixtures include the costs
of the bulbs. Below are the luminaire costs for each type of parking lot design system. These are “one
time” costs and will not be incurred annually.
Design System
1
Luminaire Costs
Typical
$41,000
Alternate
$51,000
LED
$94,000
Luminaires are the light fixtures attached to the top of the poles.
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Other Installation Costs
The only installation costs, other than the luminaire costs, are material and labor costs for the poles.
Since the illumination of the Alternate Design and LED Design systems is not as bright as the Typical
Design, they require more poles resulting in greater pole costs. Details of material and labor costs for
installation of poles for each type of parking lot design system are as follows.
# of Poles
Material & Labor
Cost per Pole
Typical
23
$1,600
Alternate
33
$1,600
LED
33
$1,600
Design System
Energy Usage and Electricity Costs
Energy usage for each type of light design system has been accumulated by company management.
The estimated electricity cost to be used in the analysis is $0.09/kWh. This is a conservative estimate
as the average energy cost in the United States is more than $0.10/kWh.
Design System
Annual kWh
Typical
233,000
Alternate
161,000
LED
98,000
Maintenance Costs
The LED bulbs last longer than the conventional bulbs and, therefore, result in lower maintenance
costs for the LED Design. Below are the annual maintenance costs of each design system.
Design System
Annual Maintenance Costs
Typical
$3,476
Alternate
$5,476
LED
$1,840
YOUR ASSIGNMENT
You have been engaged as a cost consultant to help GoGreen Supercenter analyze the three different
types of lighting systems for its parking lots. For the initial analysis, assume GoGreen Supercenter’s
cost of capital is 6%. Also, for the purpose of the cost comparison use a 10-year life for the parking lot
light design system. For the purpose of brevity, ignore income taxes.
Acronyms and Abbreviations
kWh kilowatt-hour(s)
LED light-emitting diode
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