LED lighting offers significant energy savings when replacing conventional lamps and luminaires, especially if the installation being upgraded is old. In addition, LED lamps have a much longer service life than conventional products, providing additional savings by reducing the frequency of lamp replacements.
LED products are considered expensive, but this is a misconception; although they have a higher upfront cost (which is continuously dropping) than legacy lighting systems, their long-term cost of ownership is much lower thanks to energy and maintenance savings. In general, LED lighting offers wide benefits.
Savings from LED lighting
- Between 30 and 50 percent energy savings when replacing fluorescent lighting, lasting two to three times more. For example, a 20-watt LED tube normally replaces a 32-watt T8 fluorescent tube.
- Between 40 and 80 percent energy savings when replacing HID lighting, lasting five to eight times more. For example, a 450-watt high-bay metal halide fixture can be replaced with a 200-watt equivalent LED product.
- Over 80 percent energy savings when replacing incandescent lighting, lasting 20 to 30 times more. For example, a 16-watt LED bulb typically replaces a 100-watt incandescent bulb.
What is the best way to upgrade to LED lighting?
When upgrading a lighting system with LED technology, there are two main options:
- Upgrading only the lamps and keeping the fixture bodies.
- Installing integrated LED fixtures, which replace the existing luminaires completely.
A lamp-only upgrade is generally more affordable, but the full savings potential is not achieved because the existing fixtures are not designed to optimize LED lighting. On the other hand, when integrated LED fixtures are used, the entire product is built for maximum efficiency, although this comes at a higher price.
Generally, lamp-only upgrades are the most cost-effective option for existing buildings, where a full replacement can be too expensive and disruptive. In new constructions, on the other hand, the best recommendation is to install integrated LED fixtures from the start – they only represent an incremental cost beyond the lighting system that must be installed anyway.
Hiring a contractor is highly recommended for an LED lighting upgrade, since it may involve modifying the existing circuits and working in a tall ladder or hoist. Carrying out the upgrade by yourself is only recommended if you purchase LED lamps that use the same sockets as those being replaced, with zero modifications to electrical circuits, and if they are not located high above the ground.
Is LED lighting a good investment in terms of cost and benefit?
The best way to illustrate the financial attractiveness of LED lighting is with an example. Assume a small business with an area of 200 square meters is about to be opened. The installation will include 20 fluorescent fixtures, with a power consumption of 125 watts each, but it is also possible to use LED luminaires that only consume 45 watts. In this case, the lighting is used for 200 hours each month, and the average price of electricity is €0.15 per kilowatt-hour (unit of energy).
- Since each LED fixture saves 80 watts, total power consumption is reduced by 1,600 watts.
- With 200 hours of use per month, this translates into 320 kWh of energy, or €48/month.
- The total yearly savings would be €576.
Assuming the LED product is €100 more expensive than the conventional fluorescent fixture, the total project cost is increased by €2,000. However, with yearly savings of €576, the payback period is less than four years. The best LED products in the market typically offer a service life of up to 100,000 hours, which represents more than two decades of energy savings with minimal maintenance expenses – the payback period is only a fraction of the fixture’s lifetime.
In case of an existing shop, a full fixture upgrade may have a cost in the range of €200 to €300 per luminaire – since there is already a lighting system, the project is assessed based on the full cost and not the price difference. In this case, a cost-effective alternative is upgrading just the fluorescent tubes to LED. Assume 80 fluorescent tubes can be replaced with 60 LED tubes, with a cost of €30 each, for a total of €1,800.
- If each fluorescent tube draws 32W and each LED tube draws 20W, total power drawn is reduced from 2,560W to 1,200W.
- Considering the same schedule and electricity rate of the example above, the resulting savings are €41/month, or €492/year.
The resulting payback period would be under four years in this scenario as well. With a full fixture upgrade it would be closer to 10 years because the full upgrade cost is assumed, and not just an incremental cost like in a new construction.
In both cases, there are also savings associated with avoided lamp replacements: LED lamps last three times as much as fluorescent tubes, so two replacements are avoided throughout the project’s life time. Each fluorescent tube can have a replacement cost of around €2; replacing 80 tubes twice would cost €320, which are saved with LED lighting.
A lamp-only upgrade can be carried out by your staff, if no modifications are required on the existing circuits. Hiring an electrical contractor is recommended when fully upgrading all the fixtures or installing a lighting system on a new construction: these cases involve working with wiring, conduit, breakers and other electrical components.
Lighting as a Service – An Alternative for LED Upgrades
The best proof of LED being a good investment is the existence of Lighting as a Service (LaaS). LaaS is an emerging business model that allows companies to carry out an LED retrofit without an upfront investment:
- The LaaS provider upgrades your lighting installation to LED
- The upfront cost is zero, and your business agrees to pay a monthly fee instead. In other words, the lighting fixtures are leased.
Light-based communication capabilities are being developed for LED fixtures, with the potential to replace Wi-Fi while offering much higher data transmission speeds. These features could soon be included as part of LaaS. The only drawback of LaaS is that another company keeps a portion of your energy savings, in exchange for assuming the upfront cost.