Opinion: How Energy Savings Can Help Finance Gas-Pump EMV Upgrades

A little known technique to reduce equipment-improvement costs by more than 10%

By 
Richard Browne, Vice President, Marketing, Patriot Capital Corp.

Richard Browne

Richard Browne

ATLANTA -- Much of the discussion regarding the switch to chip-embedded credit cards for convenience stores has centered on the cost surrounding these upgrades, which are significant. Many retailers have made the decision to move ahead with purchasing the necessary new hardware and software, driven by the desire to improve the forecourt customer experience with TV at the pump, protect their brand, gain share and avoid cost increases on the horizon.

As you plan your EMV (EuroPay, MasterCard, Visa) strategy, combining financing of LED lighting with gas pump upgrades enables convenience retailers to achieve thousands of dollars in financing savings over the life of the LEDs.

Why Upgrade to LED Lighting?

There are two advantages to upgrading to LED lighting: utility savings, and enhanced site appearance and forecourt security. If you are upgrading your pumps, upgrading to LED technology communicates this improvement by enhancing your sites curb appeal.

Energy Star found that qualified commercial LEDs use 75% less energy and last 35 times longer than incandescent light bulbs. That savings alone can drive savings of more than $500 a month for a typical convenience store.

LED’s brighter, whiter light appeals to consumers, especially shoppers that welcome the enhanced security. Today’s consumer will go the extra mile to find a station that offers the right sense of security, according to a recent study by Market Force.

An LSI Industries case study highlights a BP station in Blue Ash, O hio. The replacement of 24 canopy fixtures with LED canopy lighting led to a 76% annual energy and maintenance savings, along with the complete recoupment of the upgrade cost in less than three years.

The Power of Financing

An even greater savings opportunity exists for c-store owners who wish to upgrade fuel dispensers and lighting at the same time.

In addition to the benefits of utility company LED upgrade rebates and monthly energy savings, additional savings by combining gas-pump financing with LED financing can be obtained.

The savings come from:

  • A longer overall financing term by including the dispensers and LEDs in the same package, reducing monthly payments for the LEDs by up to 35%
  • A lower overall financing interest rate due to the larger transaction size

To better understand the benefits that can be reaped at a convenience store, let’s compare three scenarios:

1. LED Financing Only

A $20,000 LED upgrade package would have a typical financing package for a three-year term of about $640 for the LEDs.

2. Dispenser or Gas-Pump Financing Only

Gas-pump equipment financing is typically done over five years. Typical financing rates for dispenser financing could be 1% to 2% below an LED-only transaction.

3. Combining LED and Dispenser Financing

By combining LED and gas-pump financing, a fuel marketer can unlock the financing savings of a longer term and lower interest for both LED lighting and fuel dispensers. LEDs that were break-even in terms of energy savings now create up to a $200-per-month positive cash-flow impact. This financing savings helps to lower the monthly cost of EMV pump upgrade payments. Also, there’s a chance for even greater savings once utility incentives are factored in. Click here to discover utility incentives. 

The concept of bundling financing can be applied with similar results if financing LED lighting is combined with financing underground-storage-tank (UST) upgrades or other convenience-store equipment.

It’s critical for c-store owners to think creatively about ways to combine different options to maximize profitability. Equipment financing remains the quickest and most efficient means by which a station owner can gain the necessary funding.

Richard Browne, Patriot Capital Corp. By Richard Browne, Vice President, Marketing, Patriot Capital Corp.
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