Before committing funds to a lighting upgrade, it pays to understand just when projected savings will occur. While it may be easiest to use an average electric rate (i.e., total dollars divided by total kilowatt-hours [kWh]), doing so may obscure the impact of time-variable electric rates. Depending on rate structure, the value of power saved by a given option (e.g., occupancy sensors) may be higher or lower than the average cost for power.
In some parts of the United States (e.g., California and the Northeast), a significant portion (30% to 50%) of an electric bill may be based on monthly peak demand charges. In order for sensors to save power priced at an annual average rate that includes peak demand, they must do so by shutting off lights at that peak time. In many facilities, however, nearly all lights may need to be on during the usual 1 to 3 p.m. peak time or may be off in rarely occupied spaces (e.g., store rooms). In either case, sensors would not be providing savings. On the other hand, they may greatly reduce night time (i.e., off-peak) lighting kWh consumption.