Close up comparing 2 LED lamp models

A Cost and Benefit Breakdown of LED Replacement Lamps Vs Halogen Lamps

Close up comparing 2 LED lamp models
Breaking down the financial comparison between halogen and LED replacement lamps, at scale

According to the Department of Energy, buildings account for 76% of electricity used in the United States, and 40% of all U.S. primary energy use and associated greenhouse gas emission. Lighting is one of the primary drivers for power consumption in buildings.

In addition to the significant environmental impact of building lighting infrastructures, low efficacy sources with short lifespans also result in higher operational costs. For designers, institutions and building managers interested in benefiting from environmental sustainability initiatives and lower operational costs, there are essentially two options:

1. Use design strategies that support natural lighting conditions
2. Use better light sources with higher efficacy and longevity

LED lighting would fall primarily into the latter category, but because LED sources are easier to control than other sources, they can be used in coordination with natural lighting strategies to create a more robust design that provides increased efficiency. However, despite some of the well-documented ways in which LEDs can be used to lower energy consumption and reduce costs, there may still be some lingering resistance to LED adoption, especially by large institutions with extensive legacy lighting infrastructures.

This series of four articles is designed to help you navigate the challenges of converting to LED, and to articulate some of the benefits of LED lighting. As most of Litelab’s LED offerings support conversion from Halogen to LED, this article will focus primarily on converting a Halogen infrastructure, although some of the information in this article will also pertain to other legacy sources, like Fluorescents.

The Challenges of Converting to LED

Establishing Return on Investment

One of the biggest obstacles to adopting LEDs is the upfront cost of implementation. This takes two forms:

1. The cost of LED lamps versus legacy sources, like Halogen

2. The cost of LED fixtures in relation to legacy fixtures and lamps

The first concern addresses whether or not to proceed with Replacement LED lamps; the second with whether or not to invest in an Integral LED solution. It is best to evaluate both options to ensure that you understand the full implications of each before making a decision. This article will address LED replacement lamps, while the third article in this series will specifically address Integrated LED solutions.

LED Replacement Lamps - Cost / Benefit Analysis

Depending on the lighting infrastructure, you may be interested in using LED replacement lamps. As their name implies, these lamps were designed to simply replace existing legacy sources, like Halogen, allowing institutions to upgrade their lighting without investing in entirely new fixtures.

Energy Savings

Based on the brand, LED replacement lamps (rLEDs) can cost up to 10 times as much as their Halogen equivalents, depending on the lamp type. At this rate, relamping a building with hundreds, if not thousands of fixtures (like a museum) can represent significant investment, and this upfront cost can act as a deterrent to converting to LED.

However, LED replacement lamps utilize significantly less energy than do Halogen sources. For example, an institution with 1,000 fixtures using 35 watt Halogen MR-16 lamps will consume 35,000 watts, or 35kW of energy. Meanwhile, a 7.5 watt LED replacement lamp will consume only 7,500 watts (or 7.5kW) of energy.

If the museum is open 10 hours / day, 6 days a week, this means that a Halogen infrastructure will consume 350kWh of energy / day, or approximately 9,100 kWh of energy / month. Using LED replacement lamps, these figures become 75kWh / day, and 1,950kWh / month, respectively.

According to the U.S. Energy Information Administration, energy in the United States costs 10.5 cents / kWh on average. Using the scenario above, monthly energy costs would be $955.00 for a Halogen infrastructure versus $204.75 / month for LED replacement lamps. This represents an annual savings of $9,003.00.

[insert graph energy cost per year]

Assuming an average price / lamp for an MR16 Halogen GU5.3 base lamp of $2.00, and an average price per lamp for an LED replacement lamp equivalent of $18.00, and including no other variables, it would take a little less than 2 years to recoup the cost of converting to LED.

Lifetime Calculations


Energy consumption savings is only one variable among many when considering converting to LED. In addition to energy, one of the major cost drivers of Halogen infrastructures is maintenance. This is because compared to LEDs, Halogen lamps have very short lifespans. The average lifespan for a Halogen lamp is approximately 1000 hours, compared to 25,000 hours on the lowest end for LEDs. The institution described above would have to change a Halogen infrastructure over three times in the course of a year, making the effective cost / unit $6.00 per year.

[insert graph longevity of halogen vs led]

In addition to material cost, there are also labor (and sometimes equipment) costs associated with relamping a large institution. Labor is probably the highest cost associated with maintaining an Halogen infrastructure. Regency Lighting has a very helpful guide for calculating the labor costs associated with changing lamps.

In Regency’s example, labor costs use a base pay of $45/hour for lighting maintenance, and Regency estimates approximately 8 minutes / lamp, resulting in a cost / lamp of $5.99. Changing 1,000 lamps three times over the course of one year results in an estimated cost of $17,970.00 / year to maintain the lighting infrastructure of our example, not including any additional costs associated with equipment.

LED replacement lamps have a rated lifespan (L70) of between 25,000 - 35,000 hours. If the museum is open 10 hours / day, 6 days / week, the fixtures may be on an average of 3,120 hours / year.

Using the conservative estimate of 25,000 hours, it would take approximately 8 years before the LED replacement lamp solution will need to be changed. Accounting for the initial installation, labor costs associated with converting to LED replacement lamps would come to $5,990.00.

[insert graph 8 year labor costs]

Including labor, in the first year the institution in this example would save $4,983.00 by converting to LED replacement lamps. Over time, however, these savings will increase significantly. Using the 8 year lifespan as a baseline, and assuming cost stability for Halogen sources, the institution would save $125,790.00 in labor and $42,000.00 in additional lamps over the 8 year installation period.

Incentivization and Ancillary Costs


In addition to savings associated with material cost and labor, there are at least two other factors to evaluate when considering converting to LED replacement lamps: Incentives & Ancillary Benefits. Incentives and ancillary benefits can provide additional rationale for converting to LEDs that are not captured in a one-to-one cost comparison like the one above.

Many municipalities provide incentives for converting to LED, either in the form of grants or tax rebates, especially for publicly owned or run facilities. In many instances, these municipalities have already done a one-to-one cost-benefit analysis and ascertained that converting to LED will lower operational costs, and reduce demand on the grid. City and county-based incentives can typically be found on city and county websites, or on the websites of local energy providers.

In addition to local incentives, both states and the federal government have incentive programs to support conversion to LEDs. As with municipalities, these incentives typically take the form of grants or tax rebates that can help defray the up-front cost of LEDs. A fairly exhaustive database of state and federal initiatives is provided by DSIRE (Database of State Incentives for Renewables and Efficiency).

Incentivization programs are incredibly helpful in covering the upfront cost of converting to LED, which is a major obstacle for institutions with tight budgets and large lighting infrastructures. When combined with the long-term material, energy and labor savings described above, this makes a very compelling case for switching from Halogen to LED. However, there are other ancillary benefits that also accrue through the implementation of LED infrastructures.

For example, Halogen lamps produce very large heat loads. Depending on regional climate and season, this can add to operational costs associated with cooling spaces. Like lighting, HVAC (Heating Ventilation and Air Conditioning) is one of the primary drivers of energy consumption in buildings. LEDs can help lower energy demands associated with cooling buildings because they produce significantly less heat.

For institutions exhibiting art or lighting sensitive materials, LEDs are designed to propagate electromagnetic wavelengths only within the visual spectrum. As a result, they do not produce damaging ultraviolet radiation that requires special filters. While it is still important to follow conservationist guidelines pertaining to lux-hours by medium, the elimination of UV radiation is a powerful ancillary benefit of LED lamps and fixtures.

Finally, as Halogen and other legacy sources are slowly phased out of the market-place due to stricter efficiency requirements in local, state and national energy codes, these sources will inevitably be subject to pricing escalation and obsolescence. This will make it harder to source these types of lamps, and make what lamps remain on the market more costly. More importantly, as legacy sources become obsolete, institutions may find themselves in a position where converting is no longer an option, but timing couldn’t be worse.

It is better to start planning now, exploring resources and programs that support LED conversion, and building long-term budgets that account for both cost and savings.

Conclusion

When evaluating the costs and benefits of converting to LEDs, it is important to take a long-term, holistic approach and consider all of the options, their risks and their benefits. In many respects, converting to LEDs fulfills a moral imperative to reduce our negative impact on the planet by reducing the overall energy consumption of buildings, and the harmful pollution associated with certain types of energy production.

This moral imperative is supported by sound business practices that also provide long-term return on investment for converting to LEDs, including savings that can be actualized within a year of converting, and which accrue over time. In many instances, institutions utilizing local, state and national incentive programs can significantly defray, if not entirely eliminate the up-front costs associated with converting to LEDs.

The combination of environmental sustainability and sound business model makes LED conversion a win-win proposition for institutions looking to upgrade their existing infrastructures, but this does not mean that there aren’t risks. LED conversion should be done thoughtfully — there are a lot of options and some associated risks depending on the options that you choose.

In the next installment of this series, we will evaluate some of the associated risks with converting to LED replacement lamps, and some best practices to ensure that conversion to LED replacement lamps goes smoothly. In the third and fourth installments of this series, we will address the costs, risks and benefits of converting to Integrated LED fixtures.