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Ealing and Northfield

Voodoo economics Part 354

Labour’s Bassam Mahfouz is evidently pleased with his appearance on the Sunday Politics TV programme in Sunday, click here and move the slider to 44:20.

Cllr Mafouz mentioned LED lighting.

But on top of that we are looking at moving forward by installing energy efficient LED lighting right across all of the streetlights that we have in the Borough.

As it happens we were discussing this programme with council officers last night at the Conservative group meeting. If you look at the Budget Strategy Report 2012/13, Appendix 4, page 3, row 14 you will see that the council is planning to spend £6.8 million on this apparently commendable venture. When officers were challenged on the payback period for this “investment” the answer was 12 years. The lights are only due to last 15 years so they will only be “above water” or “in the money” for the last three years of their lives.

There is no way that a business would expend scarce capital on a project with such a long payback period. Although the council’s cost of finance is lower than most if not all businesses it is very strange that the council wants to take on £6.8 million of debt on such a shaky project. Apparently officers are trying to model future energy prices to make the payback period look better. Sounds like post justification of a poor decision and warped priorities to me. No business would speculate on far distant energy prices to justify such a decision. On a philosophical note examples like this show how government “crowds out” businesses – people would rather lend to governments to do stupid things than companies that would potentially invest in more useful things for the economy.

Once such LED streetlights become more common their price will plunge. We should not be an early adopter. When the payback period gets down to 2 or 3 years at current energy prices we should jump in. In the meantime there are better things to do with the money – even if only to leave it in the hands of residents. They could certainly find some projects with better payback than 12 years.

8 replies on “Voodoo economics Part 354”

I find this all very confusing. In 2005 Ealing Council was offered finanacial encouragement by national government to outsource all its street lighting by means of a PFI. This PFI deal was done with EDF. Susequently EDF sold this PFI to Scottish and Southern Electric (who also supply many of us with electricity). Over the last five years SSE has replaced nearly all the Ealing street lights (14,000+).

Now if anyone is going to replace these new lights with even newer lights it’s going to be SSE – as they own the street lights. SSE is responsible for street light maintenance for the duration of the PFI contract. On the face of it I can’t see why an energy supplier would want to change the PFI contract is such a way as to sell less energy. Presumably this £6.8 million cost to Ealing Council will include expensive changes to the PFI contract.

On the face of it it seems crazy to spend more money to ‘update’ the street lighting just a year after updating all Ealing’s street lighting.

The TV feature with Councillor Mafouz took part in concerned turning down street lights or turning them off – all to save money. As far as I know the current ‘new’ Ealing/SSE street lights can not (selectively) be turned up/down off/on (say between 2:00am and 6:00am), because the need for this was not conceived at PFI drafting (2005).

Eric,

LEDs look like a good technical solution rather than turning lights off or keeping them on for a shorter time. The same light for less cost (both electricity and replacement cost). This particular deal looks like a bad commercial solution.

There is always a deal to be done. Contracts, even PFI contracts, can always be re-written. It just looks like the current council is bad at negotiating. The PFI was signed by the previous Labour council in August 2005 and is due to run for 25 years.

Looking around the internet £500 may well be a market price for a LED light assembly. It is quite a high technology piece of kit with controllers, heat sink, etc.

It effectively costs nothing to replace the lights. The existing lights need replacing regularly and the LEDs need replacing less regularly. The LED life might be 4/5 longer than conventional lights and use at least half the energy.

If commercial capital was cheap you might expect the supplier to put in LEDs and keep the savings for itself – there might be some scope in the contract for the council to share the “dividend”.

It looks like the council is being asked to put up the capital but only to get a modest share of the “dividend” for itself. A worked example I saw showed a payback of 2 years. The twelve years offered sounds like a bad deal.

I suspect that in a couple of years the LED prices will be such that the supplier would find it worth its while to do the job itself.

The £7 million looks like a bad decision.

Good to see your website is back up, Cllr Taylor. I may not agree with your politics but it is ALWAYS worth reading and worth commenting on! (I was worried that the Ealing Council Political Correctness Police (PCP) (joke!) might have waved some legal stuff at you when I couldn’t get to it for the past couple of days).
Will.

P.S. I don’t agree with the Labour Party politics in Ealing either. I am thus a “consumer” of the Ealing environment rather than an apparatchik.

I want to see UTILITARIAN solutions to Ealing issues (that which has the greatest utility, i.e. serving the greatest number) rather than politically-motivated solutions.

See Jermey Bentham, Stuart Mills, etc. Utilitarianism: the foundation of British (and English) justice.

LED streetlights. Go to most technology consultants and they will tell you that you ahould only deploy technology that is two technology generations old throughtout a corporate enterprise due to reliability, support and price/performance considerations. This is why most large companies still use lower-cost Microsoft Windows XP rather than the following Windows 2000, Vista and the latest most expensive Windows 7.0 packages. Being an early adopter of any technology is always very expensive and if Ealing’s lighting service providers want to use Ealing as a showcase than they should foot the upfront costs themselves as a public relations initiative.
Keith Townsend, the Ealing Council board level executive director who is responsible for this area SHOULD know better. He was responsible for the introduction (as an early adopter) of IP PBX (private telephone exchange technology) in Ealing Council as part of the Response initiative and the problems of scalability that came with it. Many of these problems remain unresolved limiting the size of IP PBX telephone systems and limiting their use in many situations to small single site environments and rendering them questionable at best for multi-site distributed applications such as Ealing Council is trying to create with its Acton and Southall council office hubs.
(I do wonder whether anyone has looked at the issue of whether Ealing Council’s ill-chosen IP PBX strategy will be able to address this multi-location environment without replacement.
Will.

Futher opn LED technology.
Present LED technology does not deliver consistent levels of lighting throughout their lifespan. Commercial products today use LEDs give out half the light energy after a couple of years then when they did when they were first switched on. This is part of the degradation of the LED semiconductors through use and current technology solutions to this problem seek to extend the time period of this degradation.
This means that if you shove in a repacement LED light into a fitting today it will be giving out half the light in a couple of years time than it was doing today. This is not a small problem, LEDs are not designed to have the LEDs replaced in them, the whole unit is “throwaway”. Does Mahfouz ACTUALLY know what he is doing?
Will.

Will,

Thank you for your kind words (and interesting technical insights).

The blog was down for a few days due to a trojan horse type attack on the server hosting it. No PC, just gremlins.

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