A Bright Idea for the MTA: One Simple Fix Can Save New Yorkers Millions

Chris Greco for Zondits, April 2, 2015

This past Sunday, the Metropolitan Transportation Authority (MTA) instituted a fare hike of 10% on its base subway fares and a 4% hike on its 30-day passes. This was the second increase in the MTA’s fares in 2 years. As expected, the MTA has received great backlash from many New Yorkers for putting the burden on riders to provide additional revenue for the agency that operates the most-used mass transit system in North America (and what some might rate as the most complex mass transit system in the world). With a capital shortfall of over $15 billion, raising fares is seemingly the most obvious choice to maintain reliable service for the city that never sleeps.

There are other, more creative options for balancing the MTA’s budgets, and using energy more efficiently is a particularly simple and attractive one. To demonstrate the great potential that energy efficiency offers, Zondits has conducted an analysis demonstrating how one such project—upgrading the subway’s platform lighting to LED technology—represents a great investment opportunity (worth approximately $65 million) that could help the MTA close its budget shortfall without raising rates while also providing additional environmental and societal benefits.

Currently, linear fluorescent tubes comprise most of NYC subway’s platform and station lights. These lights run 24/7, 365 days a year and are replaced immediately upon malfunction. (How often do you see a burned-out fluorescent bulb on the subway?) A majority of these lights are 1.5-inch-thick fluorescent tubes (known as T12s), which draw approximately 68 watts each. During ongoing subway station renovations over the past few years, the city began retrofitting station and platform fixtures to use higher efficiency 1-inch-thick fluorescent tubes (known as T8s), which draw about 55 watts each. The cost of upgrading to T8s is essentially equal to the replacement costs of T12s, making the upgrade seem like a no-brainer.

LED technology represents another option that the MTA could go for in lieu of T8s. LEDs are overhauling the lighting industry due to their longer run hours and lower energy consumption. These two factors lead to cost savings through lower energy bills and reduced maintenance costs. Maintenance costs are further reduced because LEDs do not require ballasts, as fluorescents do, eliminating a piece of equipment that could fail, requiring more man hours and cost for replacement. Last, certain LEDs are manufactured so that they can seamlessly retrofit existing fluorescent fixtures; only the bulb and ballasts need to be replaced and the existing fixture can be used.

A typical high-lumen output LED linear tube lamp that would replace the subway track and platform lights would draw approximately 33 watts, less than 50% and 60% of what a T8 and T12 would draw, respectively. Across New York City LEDs are already replacing existing light types in all sorts of applications. The Lincoln Tunnel and the Empire State Building are notable icons that have already changed to LEDs, and many offices, parking garages, and retail spaces across the city have also made the switch. This proven technology could readily be installed in the subway system.

Zondits designed the model to accurately but conservatively estimate the costs and benefits of installing LEDs to emphasize the potential project’s great benefits. Here’s an overview of the analysis methodology:

  • The analysis compares the economic benefits of three different scenarios:
    1. The MTA continues its plan of upgrading T12s to T8s.
    2. The MTA upgrades only its remaining T12s to LEDs
    3. The MTA upgrades all of its platform lighting (i.e., T8s and T12s) to LEDs
  • Cost savings were based on the estimated cost savings due to reduced energy consumption and reduced maintenance costs.
  • To determine energy savings, the analysis used the standard operating characteristics of the T12, T8, and LED fixtures
  • The number of fixtures to upgrade was conservatively estimated based on the number of subway stations, the number of platforms per station, and an average number of fixtures per track. (Yes, this author went and verified the number of lights on multiple subway tracks.) Given that many stations have platforms with multiple rows of lights and other areas in NYC subways such as hallways and stairwells are illuminated at all times, Zondits’ methodology yielded a reasonable conservative estimate for the number of fixtures.
  • The analysis also assumed that 25% of the older T12 fluorescent fixtures have already been upgraded to T8s. The T8 adoption rate was intentionally overestimated based on this author’s observations on numerous NYC subway platforms in an effort to prevent an overestimation of savings.
  • Maintenance costs and project costs were estimated based on typical labor rates, material costs, estimated labor productivity, and the manufacturer-specified average-useful-life for each fixture type.

The results of Zondits’ analysis are quite compelling. Simply put, upgrading all of the subway’s platform lighting to LEDs represents the best lighting-related economic opportunity for the MTA. The list below shows the key economic results of the analysis:

  • LEDs will generate 6.8 times the annual cost savings compared to the installation of T8s—more than $8 million more per year. Just under $5 million of that comes from maintenance and operation savings alone.
  • The payback period under the MTA’s current trend pales in comparison to the installation of LEDs. LEDs will pay for themselves in less than one-fifth of the time that T8 fluorescents would (15 years for the T8s versus 3 years for the LEDs). This is because upgrading to T8s will not result in any maintenance savings since T8s and T12s have similar average lifespans and upgrading to T8s will generate lower energy savings.
  • Man hours that were dedicated toward replacing burned-out fluorescent lamps can be dedicated toward other tasks. Zondits estimates LEDs will free up over 53,000 man hours per year, which is equal to more than twenty-six full-time (40-hour/week) employees.
  • Despite the fact that 25% of the subway lights already have been upgraded to T8s, Zondits’ analysis shows that the MTA’s total out-of-pocket costs from installing LEDs after the first year would be less than the MTA’s out-of-pockets costs from installing T8s. This can be seen in the figure below: The blue line intersects the red before year 1.

Figure 1. Comparison of T8 and LED Upgrade Cumulative Project Cash Flow

Comparison T8 and LED

  • The net present value might provide the best illustration of the value in upgrading the subway lights to LEDs. Assuming a discount rate of 8%, the MTA’s current plan—only upgrading the remaining T12s to T8s—does not even yield a net positive investment opportunity. In comparison, an upgrade of all lights to LEDs represents a 20-year net present value of over $65 million.
  • Replacing all subway platform lights with LEDs is also almost $30 million more valuable than just replacing the remaining T12s with LEDs and not upgrading the already installed T8s.

Table 1. Summary Of Zondits Analysis Results

T8s LEDS

These numbers show that it makes financial sense for the MTA to simply upgrade all of the lights to LEDs.

Upgrading all of the fixtures to LEDs also creates great societal benefits outside its economic results. The bullets below provide a list of the additional benefits that this one project would provide.

  • The energy saved from upgrading to LEDs saves enough energy to power 6,000 average New York homes, whereas the energy savings from T8s would power less than one-third of that total.
  • Upgrading to LEDs would relieve approximately 4.8 MW of peak demand from the grid, whereas the T8s would only relieve the grid of 1.5 MW. With tens of millions of dollars already being allocated toward peak demand management projects in the NYC area in order to relieve strain from the grid (e.g., Con Edison’s Brooklyn Queens Demand Management [BQDM] program and NYSERDA and Con Edison’s partner demand management program [DMP]), upgrading to the platform lights to LED offers a great opportunity to help achieve NYC’s goal of reducing peak energy consumption.
  • This one project would also yield a significant environmental benefit for potential climate change mitigation. Upgrading the subway platform lights to LEDs would avoid at least 51 million pounds of carbon dioxide (CO2) emission per year. This would be the equivalent of planting almost 60,000 trees and taking just under 4,900 cars off the road.

This Zondits analysis has demonstrated that one simple project the MTA could pursue would yield great cost savings. It is true that the cost savings from upgrading the subway platform lights will not match the revenue generated from the most recent fare hike. However, the MTA, which constitutes approximately 5% of NYC’s total energy usage, certainly has several other opportunities (e.g., upgrading the lighting in the subway cars to LEDs, installing more efficient cooling systems on subway cars, upgrading MTA facilities’ lighting, heating, and cooling systems) to use energy efficiency to reduce its operating costs and, when combined with the lighting upgrade discussed above, could prevent the need for more expensive fares. And like the platform lights, they might be right there in front of us.