Leasing the light in Germany
Leasing the light in Germany
The concept of leasing programs has reached Germany, marketed by municipal utilities as "Light-Contracting". A small fashion boutique in the city of Kassel is the first in the country to test the concept.
The basic idea behind this leasing concept is that the electric utility assumes full responsibility for planning, financing, and implementing an energy-efficiency measure on the premises of a commercial customer. The customer then pays off the investment during a number of years, together with the reduced electricity bill, the sum of both being somewhat lower than the pre-retrofit electricity bills.
Once the utility has recovered its investments plus interest, the ownership of the new installation will pass over to the customer, who will then enjoy the full economic benefits of the efficient installation. This leasing concept was introduced in the country by the German Öko-Institut, an independent energy- and environmental-policy research organization, together with some German municipal utilities.
In the Kassel case, the small boutique had high energy bills as well as problems with excess heat during summer. When the municipal utility, Kassel City Works, launched their Kassel Energy Conservation Service, the shop owner was fast in responding. Installation of new luminaires with high frequency ballasts reduced the lighting system's energy consumption by 32% , from 17 000 kWh to 11600 kWh per year and reduced total electricity use by 27%. (Previously, lighting accounted for ~85% of the total electricity use in the shop.)
In addition, indoor temperatures decreased since the lighting system produced much less heat than the previous inefficient system.
Total investment costs for the utility were ~9 000 DM (~US$5 500), and the shop-owner's bill savings are ~1 800 DM per year. After about six years, the shop owner will have paid off the utility's investment.
Due to the secrecy with which German utilities treat their financial affairs there is no information on the internal rate of return the utility uses, and accordingly, no information on the interest rate that the shop owner, in effect, is paying. However, based on knowledge about German utilities, it would be realistic to assume that the interest rate for the customer is in the two-digit range.
Even if the utility recovers the cost of its investment, including a good rate of return, successful, large-scale programs based on this approach would likely lead to revenue losses for the utilities in the long run. However, German utilities are, in principle, allowed to recover lost revenues through their rates, which could help them overcome this potential problem. Furthermore, according to the Kassel utility, the main reason for embarking on these programs is environmental concern. German municipal utilities are doing their share in reducing the impacts to the environment related to energy use.
In Kassel, 25-30 leasing projects are scheduled for 1994, in which banks, insurance companies, and some supermarkets are to participate. These projects will also include technologies other than lighting, such as air-conditioning and ventilation. (See also: "Nutzlicht": Useful light in Rottweil, IAEEL 2/92)
Nils Borg
Contact:
Uwe Ilgemann
Öko-Institut
Binzengrün 34A, 7800 Freiburg, Germany
Tel: +49 761 47 30 31
Fax: +49 761 47 30 38