How Does LED Save You Money?

  With many so-called energy revolutions, the downside is usually pretty steep...or we would all be using them.  It's hard to find charging stations for electric vehicles.  Solar energy is relatively more expensive than coal-fired electricity with payback for systems typically measured in years.  These are not entirely deal breakers but they do make the transition slower.  Let's face it...cost is a major concern in a good economy not to mention the so-called recovery we're trucking along on in.  What about LED lighting?  If we're purely motivated by dollars and cents, how does this switch to LED lights save us money?  Oh, let us count the ways!

First, let's look at the the main inputs to this calculation for a pure apples and apples comparison.  We'll leave all the extra savings...the gravy for later because it doesn't really go with apples.  There are two main costs to evaluate.  The cost of the hardware (primarily the bulbs and to some extent the fixtures) and then the cost to power this hardware which is electricity.  Just looking at these two core costs, we're essentially trading a more expensive hardware up front for much less expensive cost to power that hardware over time.  So what are we looking at in real terms.  On average, a incandescent light (assume 60 watt, PAR38) will cost about $3.99 each.  An equivalent (in lumens or light output) LED light will cost $44.50 each.  As you can see, the cost of the bulb is 10 times more.  Now let's look at the big savings.  The wattage for the equivalent LED bulb is 7 watts.  That's right 60 watts is now 7 watts and that's pretty conservative (you could probably go lower) but we'll be conservative.  Now, in a given State where the cost per watt/hour is ten cents, let's assume 10 hours a day for 365 days.  The cost to run the incandescent is roughly  $22.  The cost to run the LED light is roughly $2.50.   So we're looking at a difference of almost $20 to power one bulb.   This isn't  subjective...there's a certain wattage that must be paid for going into each bulb.  Some State will actually be more expensive per KWH (Kilowatt Hour) but we'll stick with ten cents/KWH.  So...the straight hardware and energy cost for the 1st year difference is $40 more for hardware and $20 less for energy.  So what's the big deal? 

That's just year 1.  Just a little hidden secret...LED's last much longer than incandescents so the replacement costs drop significantly while the energy savings continues.  In fact, the incandescent lamps will have to be replaced every 241 days (or 1.51 replacement value) with the above usage.  That means the cost of our bulb is really over $6 (3.99 x 1.51) and that's each year!  What about the LED lights?  We're quite comfortable estimating 5 years of life based on the above criteria so now we're looking at hardware costs of $30 for incandescent versus the $44.50 for LED during the first 5 year window.  That's a difference of $14.50 versus the energy savings of $100 (5 years times $20) for a total savings of approximately $85.  Strictly looking at cost per watt on a hardware and energy basis, we're saving $85 on a $45 investment.  Now imagine 10 lights.  That's $850 on a $450 investment.  What about 100 lights or 1000 lights.  You're looking at almost 20% return per year.  If only the market could generate that kind of gain!  Of course, if your energy costs are higher, the numbers above just magnify.  Is that it?  No.  Definitely not.

We haven't even discussed the State and Federal rebates and tax incentives available with a transition to LED's.  In certain areas, the rebates can be substantial..up to 50% of a bulb's cost.  There's also the saved labor from having to replace the failing incandescent bulbs (remember the every 241 days failure rate above).  The switch over can generally be a capital improvement in terms of write off and accounting.  Incandescents generate a tremendous amount of heat (which is partially why they're so ineffective in terms of watts to lumens conversion).  That heat further drives air conditioning costs depending on your climate not to mention the ballast failures that result from the heat.   We don't includes these in the calculation but they do translate into real cost savings when using LED lights.  Our goal is provide a true snapshot of the savings available and we're 100% sure of the cost of watt to lumens calculation detailed above.  It is what it is.    The best approach is to request a LED light quote for your particular situation to have us make the same calculation above but with more detail and obviously more relevant to you.

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