IAEEL newsletter 1/93

Massive programs get the Dutch market moving

Managers in Dutch firms often claim that decisions regarding energy-efficient lighting systems are made strictly on an economic basis. In reality, however, non-economic factors also play a very important role, notes guest writer Wim Sliepenbeek, who describes how the massive utility and government lighting programs influence the Dutch market.

Since 1992, Dutch utilities have had an annual budget of NLG 56 million (appr. US$ 30 million) for commercial-sector energy-efficient lighting programs, targeting a lighting market with an annual turnover of appr. NLG 250-300 million (appr. US$ 135-160 million) The ultimate goal of the programs is to reduce CO_2 and NOx emissions, and an environmental fee of 0.5-2% is levied on the electricity bills of virtually all customers to raise funds exclusively for lighting programs. (Very large industrial customers are exempt from the levy, and thus cannot benefit from the lighting programs. However, there are other government-sponsored programs tending to their special needs.)

Utility customers have basically two types of incentives to choose from:

A fixed cash rebate received when purchasing advanced luminaires with specular reflectors and electronic ballasts. Luminaires can be chosen from a national list updated every 3 months. In order to be entitled to a rebate, a luminaire on the list must use fluorescent lamps that, with an electronic ballast, have an efficiency of more than 90 lumens/watt (plus or minus10%).
A performance-based incentive that depends on the achieved power reduction. Any lighting technology may be used.

Virtually all of the 42 Dutch distributing utilities have implemented these two incentive models, developed by the Dutch Utility Association. Incentive levels typically amount to 20-25% of the total investment.

MANUFACTURERS' INITIATIVES
In general, the incentive programs have stimulated luminaire manufacturers and importers to develop better products and new services. For instance, the national list of luminaires entitled to rebates was first issued in summer 1992, and by the beginning of 1993, the number of luminaires on the list had grown by 20%.

New materials and components. Manufacturers are testing better reflector materials, and electronic ballasts and advanced control systems are more often integrated into lighting systems offered by the manufacturers.
Special luminaires. Manufacturers have started to develop better luminaires for use in schools, sports facilities, etc, to be able to place these types of luminaires on the cash-rebate list.
New concepts. A very promising advance from ergonomic and energy-efficiency viewpoints is pendant fluorescent luminaires, for lighting the walls and ceiling, that also include two additional reflectors with CFLs for illuminating the workplace. The luminaire has a built-in control system that allows an occupant to independently adjust the light level from each source. With luminaires based on these concepts, installed power in offices can be reduced from the quite low 9-16 W/m^2 to 5-10 W/m^2.
New software packages are being developed.
Alternative financing. Several suppliers of equipment have developed leasing schemes where the payment is based on the electricity savings. Lease arrangements generally are more expensive than direct cash purchase, owing to interest, profit, and financial risks for the leasing company; thus companies generally choose direct cash purchase. However, public organizations who work on a one-year-budget basis are very attracted by the leasing arrangements, because their budgets generally don't allow large one-time expenses.

MARKETING THE PROGRAMS
Market researchers from the utility sector report that 70% of all managers only consider an investment in energy-efficient lighting in terms of payback time. Only 17% say that non-economic factors, such as concern for the environment, motivate their decisions. However, my experience as a manufacturer is that non-economic factors are more important than the market research indicates: In reality, economics is often used to justify previous decisions.

When marketing the programmes, utilities tend to stress factors that are hard to quantify. (Of course, payback time still must be acceptable - in our experiece a maximum of 5 to 7 years). The utilities tell companies that investing in energy-efficient lighting will not only improve their corporate image, but also improve employee comfort and increase their productivity. Furthermore, utilities can show building contractors that energy-efficient lighting systems make their offices more attractive. This is sure to get their attention in the rapidly shrinking market for rental offices.

Environmental concern is also used as an important argument. The current National Environmental Plan calls for a 20% reduction in energy use by industry and the commercial sector by the year 2000. Finally, the utilities add that no one knows how long the budgets for incentives will last and that energy-efficient lighting systems might become compulsory in the near future.

SOME EXAMPLES
I'd like to give two examples showing that economic mechanisms alone don't do the job: First, our company Etap is of Belgian origin, and we sell on both the Belgian and Dutch markets. Middle-sized Belgian companies pay up to 60% more for their electricity compared with their Dutch counterparts. It is thus much more profitable to retrofit a lighting system in Belgium than in the Netherlands, even when taking the Dutch incentives into account. However, in Belgium very few lighting systems are replaced by energy-efficient ones. By contrast, in the Netherlands Etap alone completed hundreds of projects in 1992.

The same point can be made by comparing the use of electronic ballasts: In the Belgian market they are seldom used, whereas the percentage of luminaires from Etap in the Netherlands that were equipped with electronic ballasts increased from 8% in 1988 and 1989 to 13% in 1990, 17% in 1991, and 32% in 1992. Total numbers for the Netherlands are not available, but market researchers at Philips confirm that the development described here reflects the overall national trend.

Second, in a number of cases we calculated that it would be more profitalbe for the investor to choose the performance-based incentive. Nevertheless, some companies still prefer the cash rebate model because "it is so simple". Of course, it could be argued that this is economic behavior (time-saving), but it should be noted that we do the comparisons between the two incentives assuming no cost to the investor.

My conclusion is that although companies claim that economic considerations are given overwhelming priority, non-economic factors should not be underestimated when marketing energy-efficient lighting systems.

Wim Sliepenbeek

Wim Sliepenbeek is the director of the Dutch subsidiary of the Belgian luminaire manufacturer Etap, founded in 1948. Etap manufactures luminaire components such as reflectors, but does not make ballasts, lamps, or control systems.

(See also Holland Turns the Tide, 1/92) For more information, contact the author:

Etap, Tinstraat 7
4823 AA Breda, The Netherlands
Tel: +31 76 48 34 00
Fax: +31 76 42 09 62

Research following the programs

Several research projects have been sponsored by the utilities and by Novem, the Dutch Agency for Energy and the Environment. One main objective of these programs is to develop norms and standardization methods and to develop planning and evaluation methods. Some of the activities are described below:

Standardization of luminaire efficiency measurement procedures (utility-sponsored): Manufacturers and importers can place their luminaires on the cash rebate list by submitting data showing that their luminaries meet certain technical specifications. However, submitted information has not been based on standardized measurement methods. A standardized CIE procedure is now being adopted.
Studying the relationship between efficiency and shielding angles (utility-sponsored): In the rebate model, criteria for incentives are defined in a matrix. The minimum threshold level of efficiency is based on the shielding angles across and along the fluorescent tube. Shielding angles range from 10° to 40°, and are measured in intervals of 10°. Thus the norm has a discontinuous character. A new mathematical function has been defined to calcualte iso-efficiency curves for different shielding angles. The curves are compared with measured values from the most energy-efficient luminaires on the market today. It has been proposed that these curves replace the existing matrix.
Defining new recommendations for the "compensation factor for lumen maintenace" (Novem-sponsored): When new lighting installations are planned in the Netherlands, the standards NEN 1890 (functional requirements for interior lighting) and NEN 3087 (visual ergonomics) are applicable. Lighting levels in these standards are maintained levels. Lumen depreciation during the life of the installation is compensated for by oversizing the installation by a so-called "compensation factor" in combination with a defined maintenance cycle.

Few practical figures are available to support the present value in the standards. Lower values for this factor should be realistic since new luminaire and (HF) ballast technology cause less lumen depreciation. In combination with the higher efficiency of this equipment, this can lead to much lower levels of required installed power.
Implementing the 1986 "Energy-Efficient Appliances Act" on lighting. The Ministry of Economic Affairs has asked Novem to investigate the possibilities to use this law to abolish inefficient lighting equipment. Novem is now working to establish minimum efficiency requirements for fluorescent and CFL equipment.
Furthermore, Novem is also investigating other policies to promote energy-efficient technologies and to restrict the use of inefficient technologies. A first report has pointed out policy areas that should be studied further. They include labelling; financial incentives; standards, (both component and systems oriented); stimulation of R&D; information campaigns; and mandatory efficiency upgrades when buildings are sold.
Research (utility-sponsored) to establish criteria for choosing interior lighting control equipment and equipment for public lighting to be included on the cash-rebate list (presently not included); as for control equipment, the following types are considered: occupancy sensors, automatic compensation gear for lumen depreciation, daylighting control systems, and general control systems (e.g., to provide general switch-off pulses).
Testing different criteria for incentives. For example, the cash rebate offered by one utility exceeds the nationally recommended amount. Another utility is testing a performance variant where incentives for very profitable investments are less than those offered for measures that wouldn't be economical without incentives. Yet another utility is testing a performance-type incentive based on a theoretical "reference original demand" of 4W/100 lux/m^2, to avoid the labor-intensive process of measuring the actual pre-retrofit demand.

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