How Energy-Efficient LED Lighting Saves Money for Homes and Factories

Most of the case for LED gets made with one number, the percentage saved on the bill. That number is real, but it is the least interesting part. Once you run the arithmetic for a specific building, the savings turn up in four separate places, and the electricity line is only the first of them. We do this calculation for clients regularly, so here is how it goes, with the assumptions written down so you can swap in your own.

Start with watts and hours, not percentages

A light fixture costs what it draws multiplied by how long it runs. Everything else follows from those two figures. A halogen downlight draws 50 watts. An LED fixture that puts the same light on the counter draws about 9. The saving per fixture is 41 watts, which is why nobody notices it on a single lamp. It becomes money when you multiply by the count and the hours.

Take a house with 24 halogen downlights across the kitchen, living room and hallways, on for an average of four hours a day. That is 1,200 watts running 1,460 hours a year, or about 1,750 kilowatt hours. Replace them with 9 watt LED fixtures and the load drops to 216 watts and roughly 315 kilowatt hours. At 16 cents per kilowatt hour, close to the US residential average, the difference is a little over $230 a year. Not dramatic on its own, but it recurs every year for the life of the fixtures, and it says nothing yet about the other three places the money shows up.

On a production floor the same arithmetic gets serious. A 400 watt metal halide high bay actually draws about 455 watts once the ballast is counted. A 150 watt LED high bay replaces it at the same light level, often better, because the LED does not lose a third of its output over the first year the way metal halide does. Two hundred fixtures running 4,000 hours a year is a 61 kilowatt reduction and about 244,000 kilowatt hours. At a commercial rate of 12 cents that is roughly $29,000 a year, before a single rebate is claimed.

Maintenance is the saving nobody budgets for

An incandescent lamp lasts around 1,000 hours. Halogen, 2,000 to 4,000. A compact fluorescent, 8,000 to 10,000. A properly engineered LED fixture is rated to 50,000 hours, and the rating means something different: it is the point at which output has fallen to 70 percent of the original, not the point at which the lamp fails. Most keep going past it.

In a house that mostly means you stop buying lamps and climbing ladders. In a factory the lamp is the cheap part. A lift, a two person crew and a shutdown of the line underneath cost far more than the metal halide lamp being replaced. Twenty thousand hours of metal halide life at 4,000 hours a year means every fixture gets a service visit every five years. At 50,000 hours the LED goes twelve years between visits, and the visit is a fixture swap rather than a lamp change.

• The tally for a 200 fixture floor over ten years: around 400 lamp changes on metal halide against close to none on LED.
• Fewer visits means fewer hours on lifts over working machinery, which the safety officer will value more than the accountant does.
• Group relamping schedules, where every lamp is replaced on a fixed cycle whether it has failed or not, can be dropped entirely.

The cooling load is a second electricity bill

A watt of lighting becomes a watt of heat inside the room, and in a conditioned building the air conditioning then has to remove it. The conversion is fixed: 1,000 watts of lighting adds about 3,400 BTU per hour of cooling load, roughly a quarter ton of air conditioning running whenever the lights are on. Halogen is worse than the raw wattage suggests, because it also radiates infrared straight onto whatever it points at. That is why a display of chocolate under halogen spots needs the case chilled.

On the factory example above, the 61 kilowatts of lighting removed is about 17 tons of cooling the HVAC plant no longer has to provide in summer. In a house the effect is smaller, but anyone who has stood under six halogen downlights in a kitchen in August knows it is not imaginary. LEDs do produce heat, at the back of the fixture rather than the front, which is why the heat sink and the IC rating of the housing matter. The total is still a fraction of the alternatives.

Control multiplies the saving

A halogen lamp on a dimmer saves less than you would think, because filament efficiency falls as it dims. An LED on a proper driver saves almost in proportion: a fixture running at 50 percent draws close to 50 percent of the power. That changes the value of controls. Occupancy sensors in storage aisles, daylight dimming along the window wall of a warehouse, and a residential evening scene at 30 percent all turn directly into kilowatt hours.

The protocol matters. TRIAC dimming, the phase cut method used by ordinary wall dimmers, works well in houses and retrofits where the dimmer already exists. 0-10V is the commercial standard and connects to building management systems without fuss. DALI-2 gives each fixture an address, which is what lets a warehouse dim only the aisle nobody is standing in. Choose the protocol before the driver is ordered, since the driver has to match it.

Rebates, and the paperwork that comes with them

Most US utilities run prescriptive rebate programs for commercial lighting: a fixed dollar amount per fixture, or per watt reduced. The condition is nearly always that the fixture appears on the DesignLights Consortium qualified products list. Ask for the DLC listing before ordering, because it cannot be added afterwards. Residential rebates are rarer and smaller, though some utilities offer them for ENERGY STAR labeled fixtures and for smart dimmers.

Commercial projects targeting LEED can count the lighting power reduction toward the energy credits, and the interior lighting power allowances in ASHRAE 90.1 and the state codes based on it are now low enough that LED is effectively the only way to comply on a new build.

With a rebate, a commercial LED changeover typically pays back in one to two years. Without one, two to three. Residential payback runs longer because the run hours are lower, and the fixtures last correspondingly longer for the same reason.

What it does not cost you

The trade that used to come with efficient lighting was quality. Early LED meant a blue tinge, poor color and visible flicker on dimming. That trade is gone at the architectural end of the market. Our downlights run a 15 watt chip at up to 97 CRI, in 2700K through 4000K static, or with a dim to warm option that drifts from 3000K down to 1800K as it dims, the way a halogen did. The efficiency is the same either way. Choosing good color no longer costs you the savings.

Three objections, briefly

• The fixtures cost more. Per fixture, yes. Per year of service, no, once lamp changes and the cooling load are counted.
• LED is too harsh. Cheap LED is. Check the CRI and the color temperature on the spec sheet rather than the box; anything under 90 CRI is a compromise in a space people live or work in.
• It does not scale. The opposite is true. The bigger the building and the longer the hours, the faster the arithmetic favors LED.

Running the numbers for your own building

Count the fixtures, note the wattage of what is in the ceiling now, estimate the daily hours honestly, and find the rate on the last bill. That gives you the electricity saving in ten minutes. Add a lamp change cost per fixture, then the cooling load if the building is air conditioned. If you send us the fixture schedule for a project, we will run the comparison against our own fixtures with photometrics, so the light level after the change is a calculated number rather than a hope.