Over the past decade, LEDs have gained tremendous popularity for their energy and money savings and longevity. Business owners, therefore, are being urged to switch to LEDs everywhere they turn. Yet, LEDs are still considered a relatively new technology in a fast-growing market. As such, LEDs are much more expensive than incandescent and CFLs (fluorescent lighting). There are many great examples of when converting from incandescent/CFLs to LEDs makes the most financial sense—even if they are more expensive—yet, this is not always the case. The following will provide some information and examples so you can better understand your lighting needs.
The first step every business should take to better understand their lighting is to have a free energy audit. When the auditor comes to your facility, he or she is looking at several things. These include:
- What current lights and fixtures you have: LED, CFL, metal halide, incandescent
- T12 (oldest)
- T8
- T5 (newest)
- The total number of lights you have, interior and exterior
- The total number of hours your lights are on, interior and exterior
- What lights and fixtures can be replaced with utility incentives
Based on the total number of lights, fixtures, and hours used, calculations are made to determine how many kWh your business uses annually. The four factors above are critical to determining if your business should upgrade to LEDs. While there are many examples of when a business should and should not upgrade with LEDs, the following post will provide basic examples of some very common occurrences.
Example 1: Upgrade to LED
Incandescent, CFL, LED
The most common type of bulb we see is the 60 watt incandescent. Incandescent lighting is the oldest and most inefficient type of lighting. In Massachusetts and across the country, incandescent bulbs are being phased out—they won’t be sold in stores anymore. If you could still purchase one in a store today, you could get one for about $1.50. Each bulb has an average lifespan of 1,000 hours. Most business owners will consume 2,000-3,000 (8 hours/day) hours of electricity per bulb. If your building was run entirely on incandescent lighting technology, you would have to change all of your lights 2 or 3 times per year.
The most common type of replacement for the 60 watt incandescent bulb is the 11 watt LED. The 11 watt LED costs about $15 each and lasts about 25,000 hours. Compared to the 60 watt incandescent, the light would only need to be replaced once every 8-12 years.
In terms of replacement costs, the LED wins. Assuming $3.00 (at minimum) a year for each 60 watt replacement, you would spend anywhere between $24.00 – $48.00. Right now, the 11 Watt LED has a replacement fee of $15.00 over 8-12 years.
Beyond replacement costs, however, we also must discuss energy savings. The 60 watt uses nearly 6 times as much energy as the 11 watt LED. We pay for every kWh (kilowatt hours) that we consume. In Massachusetts, the current standard rate is 14.8 cents per kWh. At 60 watts running at 2,000-3,000 hours annually, a single 60 watt incandescent generates 120-180 kWh. At 14.8 cents, that’s $17.76-$26.64. The 11 watt LED, however, would only consume 22-33 kWh. At 14.8 cents, that’s $3.25-$4.88.
In this scenario, the replacement cost and energy savings far outweigh the price of keeping incandescent lighting in place. Not only does the 11 Watt LED save at least $23.51 annually (per bulb), but the total range is easier to manage, simplifying the work you need to do to figure out your annual budget. Most businesses have at least 30 lights installed throughout their facility. Thus, business owners can expect to save hundreds of dollars annually in this scenario.
Yet, not all customers have older technology. Many businesses have made upgrades to their lighting in the past and have a mixture of LEDs and CFLs (compact fluorescent lamp). The following will provide an example of when LED are not the ideal technology for an upgrade.
Example 2: Do Not Upgrade to LED
To elaborate on when an LED upgrade is not a financially sound decision, let’s talk about linear fluorescent lights. Linear fluorescents are very common in office buildings, warehouses, convenience stores, and more. Many businesses with linear fluorescent lighting that operate from 9:00 AM – 5:00 PM, however, are not good candidates for LED upgrades. Why? The lights aren’t on for enough hours. The following will provide a simple analysis.
Linear fluorescent lighting (T12, T8, and T5) comes in varied shapes, sizes, and prices. We commonly see 4 ft. T8s, so we’ll use that in this example. In current market prices, you can get a 10-pack of these in most hardware stores for about $30-$35, so we’ll assume each costs $3.50. Each light has an average lifespan of about 20,000 hours. In current market prices, LED linear lighting costs approximately $22.00 per lamp. Each lamp has an average lifespan of about 40,000 hours. Assuming a business operates 8 hours a day, a business will keep its lights on between 2,000-3,000 hours. Running at these annual business hours, you wouldn’t need to replace your T8 linear fluorescent lighting for 6.5-10 years, and double for the T8 linear LEDs.
Although the LEDs last twice as long, they are about 2-3x the cost. In this case, the T8 linear fluorescent lighting is more cost effective. If we compare the replacement cost vs. the LED, we see that one LED replacement can cost about $22.00 for 13-20 years. Since fluorFinal Thoughts
Short answer to our question: yes and no. There are countless variables that determine whether or not your business should upgrade to LEDs. Since LEDs are an emerging technology, these variables change daily, and it would be impossible to list all of them. If we tried, we’d write a book as long as War And Peace, and by the time it was finished, it would be completely outdated. Depending on your current lights and fixtures, the total number of lights you have, how long they are on, and what incentives you can receive, LEDs may or may not be the best option for you. Despite this, LEDs do save more energy. If you’re adamant about saving energy—you may want to go with LEDs, but at current market prices, you’ll be paying a premium (sometimes a big premium). We advise business owners who are trying to find the most cost-effective option to consult with energy efficiency experts—such as Prism Energy Services—to receive a complimentary energy assessment to help understand their lighting needs.escents can last between 6.5-10 years, we’ll need to replacement the lights, at most, 3 times during the course of a year. At $3.50 a pop, that means our replacement cost will run approximately $7.00-10.50. Staying with the T8 linear fluorescent lighting could save your business up to $15.00 a year for every light. That’s hundreds of dollars saved annually by keeping or upgrading to fluorescent lighting instead of LED.
Let’s discuss energy savings again. At 32 watts running at 2,000-3,000 hours annually, a single 32 watt T8 linear fluorescent generates between 64-96 kWh. At 14.8 cents, that’s approximately $9.47-14.21 a year. The LED uses about half as much energy, so you save about half the price, but that’s only a difference of about $4.29-$6.44 per light.
In this scenario, the replacement cost and energy savings outweigh the price of upgrading to LEDs. Annually, a business owner will spend between $16.47-24.71 per light with T8 fluorescent lighting vs. $27.18-29.77 with LEDs. In the end, LEDs are not a cost-effective option.
Final Thoughts
Short answer to our question: yes and no. There are countless variables that determine whether or not your business should upgrade to LEDs. Since LEDs are an emerging technology, these variables change daily, and it would be impossible to list all of them. If we tried, we’d write a book as long as War And Peace, and by the time it was finished, it would be completely outdated. Depending on your current lights and fixtures, the total number of lights you have, how long they are on, and what incentives you can receive, LEDs may or may not be the best option for you. Despite this, LEDs do save more energy. If you’re adamant about saving energy—you may want to go with LEDs, but at current market prices, you’ll be paying a premium (sometimes a big premium). We advise business owners who are trying to find the most cost-effective option to consult with energy efficiency experts—such as Prism Energy Services—to receive a complimentary energy assessment to help understand their lighting needs.