LED Home Lighting | Calculate The Costs And Savings Of Switching To LED
Why the more expensive purchase actually costs less
There is no question that the purchase price of LED lamps is significantly higher than that of either CFL (Compact Fluorescent Lamp) or conventional Tungsten or GSL (General Service Lamp) counterparts.
But the purchase price is not the full story. The cost of anything, light bulbs included, is what it costs to both buy AND use. What is known as Total Cost of Ownership.
A regular incandescent 100w GSL light bulb lasts about 1,000 hours and costs roughly $1.
An equivalent 13w LED lamp lasts 50,000 hours and costs say $100 (in reality, rather less than that these days and getting cheaper all the time).
The CREE Evolux and LR6 are both good contemporary examples of the sort of LED lamps that are becoming available for use in the average domestic household.
Doing the math
The accepted standard rate of electricity is 10 cents per kilowatt hour and our comparison will be over the lifetime of our LED lamp.
Our GSL rated at 100w thus costs you $500 worth of electricity over 50,000 hours and has to be replaced 50 times, giving a total cost of ownership of $550.
Our LED rated at 13w costs $65 over the same period and does not have to be replaced at all, giving a total cost of ownership (purchase + running costs) of $165.
The LED actually costs less to run throughout its entire life than it costs to buy! This is simply unheard of in a light bulb - before now. And with purchase prices for LEDs dropping fast (as always occurs with any new technology as it becomes commonplace) the LED holds out a promise of extraordinarily low cost lighting.
The bottom line is that the “cheap” bulb is in real money terms $385 more expensive for you to own! And that’s just ONE BULB!
Assuming 8 hours use per day, the payback time (the point at which you will have recovered all the initial cost difference between the two options) is just under 3 years and it will actually save you money for the next 14 years after that.
This estimate is also being extremely generous to the incandescent lamp, since it has not accounted for increases in the price of either electricity or replacement bulbs, nor has it allowed for the fact that home LED lighting is in fact getting cheaper by the day.
If you want to play around with the figures yourself, CREE provide a great LED Savings Calculator.
An example…
For a fairly standard family household layout that uses banks of halogen down lighters (mixed mains and low voltage) in the kitchen, bathrooms, hallways and bedrooms (say 40-50 individual lamps in total) replacing these with LED lighting would save well over $10,000 easily.
Interestingly, the net saving is relatively unaffected by the amount of daily use for lighting. If you have your lighting on less (say 4 hours per day) then the payback period is longer, but so also is the total period of saving. If you increase to say 12 hours a day then the payback will tend be little more than one year but the savings are spread over a much shorter period which actually increases your annual savings.
So $10,000 over ten years obviously puts $1,000 dollars back into your pocket each year whereas over thirty five years (the lifetime of an LED used 4 hours per day) the total saving remains about the same but each annual saving is only about $286.
Of course, this is only looking at replacing halogen spot lights throughout your home. There are many other areas where home LED lighting can be used to either replace or augment your existing lighting.