Let’s Do The Math

The US government has abolished the old incandescent bulb and is pushing consumers to maximize energy efficiency by promoting the use of LED lighting over fluorescent.

LED lighting has several key advantages over fluorescent.  LED offers a major reduction in energy usage, better light quality, significantly longer life, reduced maintenance expense, produces less heat, eliminates flicker, offers superior lifetime performance and the bulbs are recyclable and safer as their design replaces glass with plastic. Fluorescents contain the hazardous material mercury gas, are not recyclable, require hazardous disposal and require more frequent bulb and ballast replacement, adding to material and labor costs.


There exists a confusing array of LED lighting products available for the overhead tube lighting market which can make the financial advantages of LED unclear.

The ideal product for an LED upgrade has the following attributes:

  • a rated power consumption of 18 watts for maximum energy savings
  • a rated lifespan of 50,000 hours for maximum bulb replacement savings
  • operates with no external ballast for maximum maintenance savings
  • utilizes the existing fixture and connecters for minimum installation cost.


Using an LED tube with these qualities creates an LED upgrade project that provides substantial replacement and maintenance savings reflected on your utility bill with a minimized initial investment which more than pays for itself.

The utility savings of upgrading to LED is based on the reduction in wattage. The most common four foot fluorescent tube is rated at 32 watts and with the most common ballast operates at 33 watts.  The best replacement LED tube is rated at 18 watts, providing for a 15 watt reduction or a greater than 40% savings in energy use per bulb.

The utility savings of an LED upgrade depends on the number of tubes replaced and the local utility rate.  The annual utility savings for a project replacing only 500 fluorescent tubes in a medium sized warehouse or office building is shown below:

Warehouse1 Office Building2
Utility Rate Annual Savings3 Annual Savings
$0.120 per kWh $7,884 $2,475
$0.100 per kWh $6,570 $2,063
$0.080 per kWh $5,256 $1,650
1 – Warehouse scenario defines a 24 hours/day, 7 days/week operation (8,760 annual hours).
2 – Office Building scenario defines a 7 am to 6 pm, 5 days/week operation (2,750 annual hours).
3 – Annual Savings calculated as kilowatt reduction (0.015 kW) times 500 bulbs times the operational hours
(8,760 or 2,750 hours) times the utility rate (as shown in the table).


lighting-maintanceMAINTENANCE SAVINGS

The maximum maintenance savings is realized by using a replacement LED tube requiring no ballast and is rated at 50,000 hours, which is often more than twice the life of both the old fluorescent tubes and ballasts.  This avoids at least two complete replacements of the tubes and ballasts, plus the disposal costs for both.  Using conservative cost estimates4, this would save more than $35,415 over the life of the 500 LED tubes.  Installation can typically be done with existing maintenance personnel as the ballast only needs to be bypassed, avoiding additional electrician labor costs.

4 – Assuming $2 replacement and $1 disposal cost for fluorescent tubes; $30 replacement per ballast, $45 per fixture professional installation labor and $1 disposal cost for ballasts (3 tubes per fixture) over 2.5 replacement cycles.

It is the total lifetime utility and maintenance savings that drives the conversion to LED.  The total lifetime savings of the 500 replaced tubes is shown below:

Lifetime Lifetime Total
Utility Rate Utility Savings5 Maint. Savings6 Lifetime Savings7
$0.120 per kWh $45,000 $35,415 $80,417
$0.100 per kWh $37,500 $35,415 $72,917
$0.080 per kWh $30,000 $35,415 $65,417


5 – Lifetime Utility Savings calculated as annual warehouse savings times the life of LED tubes in years (5.7).
6 – Lifetime Maintenance Savings calculated as shown #4 above.
7 – Total Lifetime Savings calculated as Lifetime Utility Savings plus Lifetime Maintenance Savings.

The best cost for a quality 18 watt LED tube rated at 50,000 hours and requiring no ballast is around $20.00, defining an initial investment of $10,000 for the 500 tubes.  This represents a total positive cash flow of around $60,000 over the life of the LED tubes, with a payback of less than 12 months in the warehouse setting and around 36 months in the office building setting.  The combined utility and maintenance savings more than covers the monthly payment in a lease-purchase scenario.  This creates a net positive cash flow project, where the exact amount depends upon the operational hours of the lights and the lease-financing terms.

Additional applications of this LED upgrade in a 24 hour, 7 days per week scenario would include distribution centers, hospitals, manufacturing facilities, hotels and certain outdoor lighting, parking ramps and parking lots.  Additional applications in a 10-12 hour, 5 days per week scenario would include retail stores, schools, show rooms and restaurants.


For more information contact us at energyefficiency@consumerenergysolutions.com.

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About Consumer Energy Solutions

CES was founded in 1999 and over the past 22+ years has serviced everything from small mom and pop shops to fortune 500 companies. We represent the largest and most reputable energy suppliers in North America and have an impeccable track record at securing the lowest rates possible.