Saturday, June 05, 2010

Stimulus Money for LED's

Mesa got $1 million in federal stimulus money to replace 2500 traffic lights with LED's. That's $400 a light which probably includes the cost of installation. Once they are operational, Mesa expects to save $0.028 million per year in electricity costs. At that rate, it will only take 35.7 years of savings to get the $1 million back. Of course that doesn't include interest. Since the federal government had to borrow the money to give it to Mesa, the appropriate interest rate would be the 30 year Tbill rate - currently 4.13%

What that means is the savings the new lights generate won't cover the annual interest on the borrowed $1 million. Hence over 30 years the net cost after electricity savings will be $ 1.4 million.

No rational person would ever make such an investment with their own money. But since this is federal stimulus money...

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Anonymous Mike Giberson said...

Installation of LED traffic signals might also allow for a quality improvement. With their lower power consumption, it is easier to add battery backup which keeps the signals on during local power outages. I'm not sure how much this is worth, but it is an option of some positive value.

June 6, 2010 at 11:28:00 PM MST  

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