1. A business wants to reduce its energy use. One option is to replace ten existing 50 watt fluorescent
lights with ten new, 8 watt LED lights that provide the same amount and quality of lighting. The lights are used 12 hours per day, 250 days per year. The cost of electricity is $0.2/kWh. Each LED light costs $11. Assume the new lights last 10 years and that the time frame of the analysis is 10 years. Assume that the electricity system has power plants with an average heat rate of 8000 Btu/kWh.
a. How much total primary energy is saved by the ten new lights, in MJ, over the entire time frame of the analysis?
b. What is the net present value of the investment, assuming a 5% discount rate?
c. What is the simple (zero discount rate) payback time for the investment?
d. What is the present cost per saved MJ?
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