Bright ideas
When it comes to identifying warehouse or distribution centre property to lease or buy outright, would-be occupiers must pay special attention to a unit’s lighting system if they want to ensure that their day-to-day operating costs will be minimised, says Martin Needham
As they strive to cut costs from their operating processes, warehouse companies dedicate time and resources to ensuring that their materials handling equipment (MHE) fleets perform as energy efficiently as possible, yet they often overlook the one thing that does most to run up their energy bill: lighting.
It is estimated, that within any warehouse distribution centre, recharging the fuel cells of battery-powered forklifts and other MHE accounts for around 25 per cent of a company’s annual energy expenditure. The cost of lighting the building with old fashioned sodium luminaires meanwhile, makes up 70 per cent of the bill!
Savvy companies have realised this and more and more are introducing energy efficient LED luminaires throughout their stores and DCs and they’re enjoying an almost instant return on their investment. “The ROI numbers are staggering,” says Martin Needham, managing director of Leicestershire-based luminaire specialist, Ecolighting.
For example a move to energy efficient lighting has allowed warehousing and transport specialist, Paul Ponsonby Ltd, to cut annual lighting costs from £15,035 to £3,030 – an annual saving of over £12,00 or 80 per cent. This means that the company will achieve payback in under three years.
Another third party logistics specialist, Great Bear, was able to slash its yearly lighting bill from £146,207 to £23,844 – a saving of £122,363 (83 per cent) in 12 months. The company’s annual CO2 emissions were also cut from 799,265 kg to 130,348 kg.
The tax breaks that are available to companies who install energysaving lighting make the case for investment even more compelling. “The Enhanced Capital Allowances (ECA) scheme encourages businesses to invest in energy saving lighting equipment that meets the performance standards set out in the Energy Technology List (ETL),” explains Martin.
He continues: “Lighting products that meet the ETL standards may be eligible for first year tax relief – meaning that you can write off the whole cost of the equipment against your taxable profits in the year that you buy it.
“This can be very helpful for cashflow purposes – although, of course, it makes sense to get confirmation from your supplier that the equipment meets the ETL criteria before you invest in it.”
And, Martin says, when it comes to identifying new-build or old stock warehouse or distribution centre property to lease or buy outright, would-be occupiers must pay special attention to a unit’s lighting system if they want to ensure that their day-to-day operating costs will be minimised.
“The cost of energy is one of any warehouse operator’s biggest overheads, and inefficient lighting burns more energy than most things. So, it is surprising how few occupiers consider the energy consumption of a building’s lighting system when looking for a property,” he explains.
“Occupiers, landlords and developers tend to focus their attention on other important factors such as a building’s proximity to the motorway network, its number of goodsin and out bays etc, but energy usage should really be top of the agenda,” he adds.
“I would strongly recommend that any company seeking new warehouse or distribution centre property asks questions about the building’s energy efficiency and in particular it’s lighting,” says Martin.
“I would also advise any landlord that hopes to achieve the highest rental yield for an industrial property to ensure that the building is fitted with energy saving luminaires because going forward it will be something that is demanded by tenants.”
From April 2018 a new legal standard for minimum energy efficiency will apply to rented commercial buildings. At the moment commercial buildings have an energy efficiency rating that goes from A – G. F and G are the worst performing. What the new law will do is introduce a minimum standard of E and that means that buildings cannot be rented out unless they meet that standard. Industrial buildings are exempt from the new standard and Martin feels that this has to change.
“As things stand there is no accepted means of measuring an industrial building’s energy efficiency. As a result, occupiers have no way of telling if the building is efficient, inefficient or somewhere in between,” says Martin.
He continues: “A system that gives industrial property an energy efficiency rating would be hugely beneficial to both existing occupiers and those looking to rent or lease a new unit.
“For example, it would allow tenants and prospective tenants to negotiate better rental fees with landlords if the building was clearly not as energy efficient as it might be.
“Equally, it would enable those landlords that have invested in the energy efficiency of their units to charge premium rents if they had a credible system of measuring and demonstrating the building’s performance.”
It seems that the rather depressing reality is that, despite the great strides taken in recent years to run businesses in a more environmentally-friendly way, companies are still failing to cut their energy burn and its costing their shareholders – and the planet – dearly.
“Firms across all industry sectors like to play the ‘green card’ by being seen to add solar panels to their buildings, put up wind turbines in the car park and plant flowers on roundabouts, but a plan to reduce energy consumption has to be the starting point for any realistic energy efficiency policy,” says Martin.
“Introducing energy efficient lighting will reduce any company’s CO2 emissions and save a sizable chunk of the money they are spending on energy. Any company that is serious about its environmental credibility and minimising operating costs, simply has to review its lighting policy.”
Martin Needham is managing director of Ecolighting. Based in Leicestershire, Ecolighting has been providing energy efficient luminaires for more than 40 years. The company’s experienced project managers, qualified electricians and office-based staff ensure that Ecolighting’s customers benefit from a true full turnkey service – whatever their requirements.
For more information, please see www.ecolightinguk.com