Legrand: Lightening Their (Electricity) Load Case Study Solution
Recommendations Regarding the Lighting System:
The second auction that ran in February 2013 at the price of 13.62 US dollar per ton, shows the stronger belief and power to the market which might lead in the future at state and federal levels. For Legrand company, price per ton of carbon avoided by assuming energy savings is 17.49 US dollars, which is more than the floor price and closing auction bidding price. In short Legrand price per ton of carbon avoided by assuming energy savings provides more benefits in term of cost savings that can be adopted through auction purchase.
Lighting project cash flows are in positive,which means they are saving the energy costs, which is a positive indications for the company. So, the continuity of lighting project is beneficial for the company rather to discontinue it. While the yearly spending of around 150,000 US dollars is the big amount which is being spent each year; in order to enjoy the energy benefits that could be minimized by taking AELUX Proposal into the consideration,in the form of lighting system.
In short, considering lighting project, Legrand yearly savings will be around 121,241 US dollars, which indicates the good value of the project, which will be beneficial for the company in the potential years.
Most Questionable Assumptions in Terms of Energy Savings:
In the lighting project, the investments are going to be made in order to avail the energy efficiency by using the permit to emit certain level of carbon in the economy, which leads to the pollution that can be hazardous for the life of a lay men in the economy. This might be avoided and energy savings could be achieved by using the solar systems to produce energy and light. Solar system panels convert the sun rays into energy by exciting electrons in silicon cells, by using the photons of light form the sun.(S., 2019).
Solar system panels can help in contributing to a cleaner and greener environment,which contributes almost none to pollution. It is the great way to mitigate the pollution form the country’s environment, ultimately contributing towards corporate social responsibilities.
Non - Economic Factors:
Largest segments of energy consumption and potential buyers of it are one of the largest non-economic factor that are alleviating the need of new energy system in order to control and fulfil the energy consumption needs of these largest consumers; without harming the natural environment of the country more than the permit level of carbon imitation.
Industrial users are approximately 33% percent of total energy users that are signaling to companies to produce and invest in industrial energy efficiency, by reducing the energy cost that will lead to more profits for the company, because it is the clear path towards more profits ultimately more benefits.
Apart from the largest energy consumption segments;industrial and commercial energy users are regulated and are in search for different ways to adopt industrial energy efficiency, because the products made by the company are not meeting the requirements of at most 0.01 percent utility cost,and are failed in the market. That is why, it is the highly alleviating the need of new energy system like lighting system.
Exhibit 1:Financial Terms
NPV | $ 634,411 |
Net Price Per Ton | $ 17.49 |
Payback Period | 1.21 Years |
IRR (5 Year) | 47 % |
IRR (7 Year) | 57 % |
IRR (10 Year) | 58 % |
IRR (20 Year) | 58 % |
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