Video Leased LEDs and Energy Service Contracts can Cut Electric Bills (Video) 53
But why, you might ask, is this on Slashdot? Because some of our readers own stacks of servers (or work for companies that own stacks of servers) and need to know they don't have to pay whatever their local electric utility demands, but can shop for better electricity prices in today's deregulated electricity market. And while this conversation was with one person in this business, we are not pushing his company. As interviewee Patrick Clouden says at the end of the interview, it's a competitive business. So if you want the best deal, you'd better shop around. One more thing: the deregulated utility market, with its multitude of suppliers, peak and off-peak pricing, and (often) minute-by-minute price changes, takes excellent software (possibly written by someone like you) to negotiate, so this business niche might be one an entrepreneurial software developer should explore.
Robin Miller (for Slashdot): This is Patrick Clouden. He is the CEO of Consumer Energy Solutions, but wait don’t you sell mostly to municipalities and such?
Patrick Clouden: No, actually we do sell to municipalities and they are customers of ours around the country, but we also sell to regular commercial businesses and we have a small residential program and of course non-profits, we do a lot of work with non-profits.
Robin Miller: Interesting. And you sell like LED hyper efficient lights mostly, right?
Patrick Clouden: Yeah. Well, that’s one of the things that we have is LED lighting, because LED lighting helps businesses and non-profits become more energy efficient which helps reduce their costs.
Robin Miller: Yeah. And I think somebody told me that the way you do it that you actually have a lease program, so that if somebody leases LEDs from you, the savings in electricity covers the lease and then some. Am I right?
Patrick Clouden: You are 100% correct, right. It’s a lease purchase program. So the way we explain it to business people or to non-profits is you are already spending the money, so we are going to reallocate part of that money to this lease purchase program.
Robin Miller: Yeah.
Patrick Clouden: And finance it, and that the savings will more than make the payment on the program and you will actually come out ahead every month, isn't that great.
Robin Miller: How could anybody – now I am often accused of giving free advertising on lucrative Slashdot front-page. But when I heard about this, I said, my god this is just such a – why does anybody not buy it? Question.
Patrick Clouden: Well, you know you have to good credit. This could be a credit issue, right. And then it’s an education issue. So what we have to do is educate business people and executive directors of these different organizations that they can in fact do this and then once they realize how it goes, and that they actually can do it, you need to tell me pat that we are already spending the money, we are going to take money, we are already giving the utility and you are going to help us pay for that. I said, not only that, but in some states – in most states actually, the utilities have rebate programs and they will actually rebate you up to 50% of the cost.
Robin Miller: Now wait a minute. We are in Florida, does that apply here?
Patrick Clouden: It does in certain utilities in Florida here in Duke Energy for example, I am in Florida.
Robin Miller: Right.
Patrick Clouden: Clearwater area, yes, it does, right. So you have to look specific by utility and you can actually get rebates. In states up north they actually have subsidy programs and where the utility actually pays to have the lighting go into either the _____ 3:00 or the business.
Robin Miller: How do you find customers?
Patrick Clouden: Well, we call them on the phone and introduce the program. We go to tradeshows, air shows, business shows and introduce what we have and introduce the whole program to them.
Robin Miller: Yeah.
Patrick Clouden: The referrals from other clients, Consumer Energy Solutions has been selling energy services contracts for a better part of 18 years. So we have a whole big list of customers and so we offer it our customers as well.
Robin Miller: Okay. Just a second, you say, energy service contracts.
Patrick Clouden: Right.
Robin Miller: That sounds suspiciously Enron like.
Patrick Clouden: Right.
Robin Miller: What do you mean?
Patrick Clouden: Enron certainly gave it a bad name, but what we do it’s similar to the long distance industry. Remember back in the day and the stories between AT&T, Sprint,MCI WorldCom, and the list goes on and on and on. But the poles and wires that delivered that long distance to your home or business didn’t change, it was just the service. Similarly in the energy world, in electricity and natural gas, they have programs where you still have your utility deliver the electricity or the natural gas to your home or business, but the commodity itself, you have a choice of who you can purchase it from. So what we do is, we offer businesses, small to medium sized businesses the option of purchasing, let’s say, three years’ worth of energy at a fixed cost and it takes them out of the vagaries of the market. Now when you look at large corporations like Ford or General Electric, this is how they bought energy for years. So with the advancements in technology and the advancements in computers to track all this stuff, small to medium size business people can actually take advantage of – like right now here in 2015 we have had an incredible run at low cost energy compared to certainly a few years ago. And so we have quite a few of our clients, we put them on like a two or three year fixed rate program. So whatever happens into the future, they know what their energy costs are going to be. So they are not subject to the vagaries of the market.
Robin Miller: I met a guy name Herb Kelleher once. And he started a little airline in Texas called Southwest.
Patrick Clouden: Yeah, yeah.
Robin Miller: Yeah, you’ve heard of him. Nice man and a funny guy. But the thing is he bought his fuel on futures contracts.
Patrick Clouden: Correct.
Robin Miller:And he set up the only airline that did that. You know that’s how they managed to wipe everybody on price is they had their fuel costs fixed and low and they had the oil companies wanting to come over and strangle them.
Patrick Clouden:Right. That's actually one of the stories that we tell to people to understand this concept, right. Southwest is a perfect example of that. He did a brilliant job of that and they just buy it at a fixed price into the future, so they have predictable cost. So, this is what we do. So, we have energy services that we offer to our customers. Now LED lighting because if we can help them use less, because LED lighting uses less electricity to run, it's a real simple concept.
Robin Miller:Yeah. I have a 3-watt bulb in the bedroom that replaced a 60-watt incandescent.
Patrick Clouden:Right, probably because of better light, too, right?
Robin Miller:Well, I like it, but yeah.
Patrick Clouden:Yeah. So the car industry is a good example of who's gravitating to LED. And they're using it in their showrooms for example and their showrooms because it gives off a more natural light, so it's a great setting, their outside lighting as well and because again it shows the cars in a more natural light, so it's a better product for the car industry. Now when you look at it from a business point of view, particularly the outside lights, those lights that run probably twelve hours a day, they're looking at probably 70% savings on the cost of running those lights. We've had garages, right, so it could run their lights 24/7 for insurance.
Robin Miller:Yeah. Yeah.
Patrick Clouden:So they have to have it going, those again about 70% savings on that portion of the lighting bill. Typically if you like a rule of thumb for a business, you take a guy's bill, 40% of it will be driven by lighting and so it's pretty safe to say that you could save them anywhere, pretty conservatively, 30% and as much as 70% in certain parts of that bill. So overall, the guy is looking at it, 15% to 18% discount, again it just reduces what he's spending. Then on what he is spending, we put them on a energy services contract that helps them fix that cost and then we have a service.
What we do is utility audit. We go back four years to make sure that they didn't over pay and pay wrong rates, so everything from water – the big three are water, electricity and natural gas. So, we can audit that and making sure and get them a refund and there's no charge if we don't get them a refund.
Robin Miller:Okay. Slashdot’s readership is heavily IT, computer people.
Patrick Clouden:Okay.
Robin Miller:Not people who buy _____8:44lighting but servers. Servers, computers, server farms, big racks from Google on down to the little guys.
Patrick Clouden:Right.
Robin Miller:Yeah.
Patrick Clouden:That's a lot of electricity.
Robin Miller:It is. It's one of their big expenses. And I know that some of our –like I said, some of our readers are right now saying, it's a free _____09:04but the guys who are pouring out big checks every month around their server farms, they're taking your number down, and saying wait a minute, not only that, does he have competition, who can I bid it on? I mean they're going to do that, face it.
Patrick Clouden:That’s part of business, that’s fine, it makes sense.
Robin Miller:Do other people do this, what you do?
Patrick Clouden:Right.
Robin Miller:Are there competitors?
Patrick Clouden:Oh absolutely. It's a very competitive business. As a company, we’re one of the top of our kind in the United States because it's unique what we do as we put all of these together and all of these different servers. I don't know anybody that does a combination of all the three things I just described to you. So you take somebody that's running a lot of computers. So you have certainly that utility bill auditing would be of interest, certainly the energy services aspect to make sure that you get on a contract and you’re with a supplier that is really tailored to your needs.
So, we're like a concierge service. You tell us what you need and want, anything from groups that have to get three beds, we go out and get the three beds. We do all of that kind of stuff for our customers.
Robin Miller:And this is a business that couldn't be without computers and one presumes the Internet.
Patrick Clouden:Oh absolutely not. Yeah, without computers, you’re tracking electrons. Think about it and then of course the use of the – today you have computer programs that will run your office and turn on and off lights at certain times of day and all of that kind of stuff, it's pretty amazing actually, right.
Robin Miller:Yeah.
Patrick Clouden:Brilliant technology. There's so much brilliant technology out there and available and I think LED is a good example of that because it is an education process. And so once people understand what can be done here it's projected that this industry, the LED lighting industry, for example, that's about $4.5 billion a year here in the U.S. And over the next ten years, it’s supposed to grow to about $45 billion.
Robin Miller:Now another thing _____11:17because the average Slashdot reader is not going to go into the business of manufacturing Philips Cree LED lights. But we do have a lot of programmers and a lot of people who put together IT packages and it just seems to me that this is another business that offers opportunities for smart programmers who want to get little creative and do something new.
Patrick Clouden:Oh absolutely, yeah. Again we're talking to programmers for example who are designing system for me from the initial contact we have with somebody, all the way, track it all the way through all of the different services that we deliver them to the end of their contract, then has to be renewed, like utility, what are the rebates for the utility, what is the programs of utility, all of that, it's pretty amazing actually.
Robin Miller:And then again, I'm thinking of sneakily in terms of what our readership does. There's again opportunity for programmers and especially because your business and a lot of other businesses are fairly small, they can work with the boss and probably it's a lot more fun than being in a cubicle farm.
Patrick Clouden:Right.
So paying more in the long run is better? (Score:4, Insightful)
Was this some sort of lease to own scheme? Municipalities tend to pay very little for cash less than a leasing company. Are we surrounded by idiots with no impulse control or long term thinking to think leasing is cheaper?
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If you don't have the capital to invest in purchasing your own stuff and switching over, however, it seems like this is a reasonable option.
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I believe Pat's company does lease to own deals. A lot of them do. That should be a big factor in selecting a vendor for that kind of lease program.
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If you don't have the capital to invest in purchasing your own stuff and switching over, however, it seems like this is a reasonable option.
Depending on the size of the site, it should be possible to replace some portion of the lights at a time. You could even do the first round of replacements and then use the savings from the next (couple) of electric bills to replace the next round of lamps and continue to do so until all have been updated.
Of course in the real world the first round of lights would be replaced and the savings from that would go directly to the CEO's quarterly bonus I suppose.
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Re: So paying more in the long run is better? (Score:2)
The face is that leasing almost never makes financial success except in a short term use scenario. Lease companies generally make very good profits and there is a reason for that.
They also make a lot of money of people and companies who think they only need something for a short time but end up keeping it for a long time.. Very very common.
The only way this sto
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Was this some sort of lease to own scheme? Municipalities tend to pay very little for cash less than a leasing company. Are we surrounded by idiots with no impulse control or long term thinking to think leasing is cheaper?
Without discussion of lease terms, length, and end of lease requirements, you really can't determine if there is anything to be saved. Also, installation costs might be a big factor purposely not discussed. It may be easy to lease the lights, but the costs of installation (and maybe even maintenance) drive the real cost up and potential benefit down.
Comment removed (Score:4, Insightful)
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There are no additional installation costs. These LED lights are designed to be drop in replacements for the older halogen and sulfur types.
It still cost money to send guys out on bucket trucks to replace lights.
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Without discussion of lease terms, length, and end of lease requirements, you really can't determine if there is anything to be saved...
Yep. You'd better shop around.
Re:So paying more in the long run is better? (Score:4, Insightful)
Was this some sort of lease to own scheme?
It would be pretty stupid if it was not. About 20 years ago, most office buildings changed up the ballasts on their fluorescent lights from magnetic to active which gave huge electricity savings. It was pretty common to see deals like this back then. The company that I was consulting at did this. They had a company come in and replace the ballasts. The deal was ten years of half of the savings on the electricity and then the leasing company walked away. So from the POV of the customer, they had no up front cost, for 10 years the customer got half the electricity savings, and for the remainder of the life of the product the customer got 100% of the savings. If purchased outright, the ballasts would have paid for themselves in just a couple of years so it was a really sweet deal for the leasing company.
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. If purchased outright, the ballasts would have paid for themselves in just a couple of years so it was a really sweet deal for the leasing company.
Unless the company goes out of business before the lease is up.
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You can pretty much assume that should that happen, the revenue stream from any outstanding leases would be part of the company's assets sold off in the bankruptcy.
You'll continue to pay *someone* your leasing fees for the entire term of the original contract. Might not be the same company you started with, but someone will buy the contract out for pennies on the dollar and keep on invoicing you for the dollars.
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You're assuming that they're not effectively leasing in the first place.
My town is small enough (300 homes) that most of the lights are managed by the local power company (PEPCO). We pay them a fixed amount per month, plus the energy cost. When something goes wrong with one of the lights, we report it to them, and they fix it. (citizens can also report them, but it's a royal PITA, as you have to give them both the pole number (which means you have to get out of your car, and walk up to the pole, and try
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"but PEPCO insisted that they didn't have enough data"
This situation sounds like a serious conflict of interest where the utility has at the very least no incentive to work towards LED street lights and could very well actively attempt to prevent such a switchover. Street lights by their very nature operate at night, a time where the system load has for the most part has dropped below the utilities baseload capacity. In simplistic terms they are generating power that isn't being used, so they aren't bein
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Like all such arrangements, you're paying to transfer the risk. What's the risk? That the lights don't work as advertised and that a new, better technology is around five years from now.
I addition, the reason municipalities can get money so cheaply is because their interest rates don't reflect actual risk. Given that, their ability to take on debt should be (and has been) limited.
The prudent and right thing to do for government projects is to treat every project as if it borrowed money at commercial rates o
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Yes
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Was this some sort of lease to own scheme? Municipalities tend to pay very little for cash less than a leasing company
EU, which is always ahead on the matter of economical stupidity, now even mandates member state to that a deficit under 0.5% of GDP, which means loaning to invest is forbidden. It seems considered better to spend money to lease instead of paying a debt.
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Enron failed because it thought that its expertise in power pricing was valid in other fields. It was wrong.
Utilities are regulated for 2 reasons: 1. The sort of people who complain about everything in life are goaded by monthly bills into complaining to the government. 2. Being uniquely capital intensive and inherently unable to move, utilities are prime targets for government bullying
If its seems too good..... (Score:2)
We can lease LEDs for all our outdoor lighting for $4,000 per month and save $8,000 on electricity right away
You can't save $8000t "right away". That's just bullshit.
What they are doing is depending heavily on tax subsidy/credits... not actual cost. Then twisting the numbers.
I'm confused... (Score:3)
Is this a legitimate article, or are we taking Slashvertisements to a new level?
Re:I'm confused... (Score:5, Insightful)
"Slashvertisement - a fiction spawned in the brains of basement-dwellers who think that anyone who says anything nice about anything or anyone is getting paid to be positive."
Nope. All ads or "sponsored content" pieces on Slashdot are clearly identified. This piece is legit, and I clearly stated that this is just one of many companies in the energy-saving businesses. Clouden's company is close to me and I first heard about it from a satisfied customer, but at no point did I (or he) say his company was better than others in the same business. In fact, let me repeat: If you're going to buy any kind of energy-saving services, you'd better shop around -- just like Smokey Robinson's momma told him: https://www.youtube.com/watch?... [youtube.com]
Another script-laden web site (Score:1)
I use NoScript in Firefox. It would appear most of the site is navigated using scripts. No thank you.
I have wondered about doing 'leasing' for .... (Score:2)
1) insulate a home;
2) put in new windows, doors;
3) put in LED bulbs;
4) put in geo-thermal HVAC;
Then for the next 10-15 years, collect the difference on the utility bill. After that, the changes belong to the home.
It seems like this might be a win-win type operation.
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HVAC is too mechanical and homeowners are too persnickety. You'd get killed on break fix and maintenance overhead and labor. If you tried not to, your service would suck and people would quit paying the leases or deduct out of pocket repair costs from lease payments.
Plus, what happens when you want to move? "Oh there's this weird lease on the HVAC..." could make it harder to sell.
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Huh? (Score:2)
Isn't the point of a lease market that there's residual value after the primary use? Basically that (for the actual owner) then:
(lease payments) + (resale value at the end) > purchase price
Who buys used LEDs?
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LEDs now days are so good that after they hit their typical 70% of brand-new output they're still pushing more light per watt than brand-new HID bulbs.
So who buys used LEDs? Smart people.
Better methodology? (Score:3)
A better methodology might be to simply stop buying standard bulbs and start buying LEDs. As standard bulbs go out swap them out. Sure you won't see the savings immediately but you also won't throw away a boatload of perfectly good bulbs and you won't have quite such a sticker shock. I can definitely see the use of this leasing service, but only in cases with especially pigheaded bureaucrats, kind of like those ones who claim the world is 7,000 years old or those who think we can convert 100% to renewable electricity and organic food and not have rolling blackouts and half the population starving to death.
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As a thought experiment perhaps, but when factoring in real world requirements such as disposal, transportation, labor & logistics you're hard pressed to justify a major effort to replace bulbs wholesale.
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