Tubular Skylight: Can You Justify the Investment?

Question:

Can you justify using tubular skylights for improving indoor environmental quality in terms of ROI?

Answer:

Justifying the actual return on investment (ROI) for a tubular skylight ("TS") installation in a commercial office building is very difficult in terms of dollar value energy savings.

There is strong anecdotal evidence that advanced interior daylighting systems, such as tubular skylight technologies, can significantly reduce energy costs associated with electric lighting. The U.S. Department of Energy's Federal Energy Management Program reports that such technologies can cut interior lighting energy use by up to 75-80%. However, actual calculations will vary widely and must be made property by property.

Considering that many value-added/opportunistic real estate investors have holding periods of five years or fewer, investments in such sophisticated deep interior lighting technologies would be virtually impossible (failure to surpass breakeven during the holding period) in even the most inefficient buildings in terms of lighting-based electricity consumption. Investors with longer holding periods and family owner-operators with urban real estate portfolios where densely packed tall buildings cause light to be in short supply would find more practical arguments for future returns. Greater light quality inside poorly lit space may also increase potential rents.

When considering such an investment, it may be more palatable to imagine/include the potential increases in employee productivity value. The basic idea is that by bringing healthy, natural light deep inside commercial buildings where windows are scarce or nonexistent and otherwise would have no natural light an operator can increase occupant comfort and productivity and use of those areas.

Rough calculations indicate that tubular skylight installations in commercial settings where the replacement of incandescent bulbs provide the most attractive ROI when compared with residential installations and/or installations where the bulbs being replaced are CFLs. An electricity savings calculation must include the cost of electricity per KWh, the wattage of the lights being replaced, number of hours per year that the existing "to be replaced" bulbs are being used and the total cost of the new tubular skylights in materials and labor to install.

For an example of an ROI calculation for a tubular skylight installation, please see our article on Solatube.

Incidentally, the ROI calculation for tubular skylight is much worse if you are replacing compact fluorescent lamps which use only 30% of the electricity of incandescent bulbs.