How LEDs Pay for Themselves

One of the most common hurdles for large lighting projects is securing adequate funding. Sports field upgrades may face grant delays, while industrial projects often see budgets redirected to other priorities. In this post, Ted Leonard, VP of Market Operations from EnPowered (a lighting project financing platform), discusses how LED systems can generate cost savings and how financing platforms can help execute large-scale lighting upgrades.

Many businesses continue paying energy bills without evaluating their lighting expenses. However, adopting energy-efficient LED solutions can potentially reduce lighting costs by up to 80 percent under optimal conditions, though actual savings vary based on existing systems, usage patterns, and local energy rates.

Beyond reducing operating costs, LED systems also generate less heat waste and offer programmable controls to maximize energy savings.

LED Upgrades Benefit Multiple Business Sectors

Most commercial and industrial facilities can capture meaningful energy savings through LED upgrades. According to industry data, lighting typically accounts for approximately 11 percent of total energy use in U.S. commercial buildings. Office productivity may also improve after converting to properly designed commercial LED lighting systems.

Other sectors show even higher lighting intensity. In greenhouse operations, lighting can represent 10-30 percent of operating costs, with the U.S. horticultural sector spending approximately $1 billion annually on lighting energy.

Sports facilities offer additional LED benefits beyond energy savings. LEDs produce significantly less heat waste, reducing cooling requirements in facilities like ice hockey rinks and further cutting operational costs.

For buildings with extensive natural light, programmable LED systems can utilize Power over Ethernet (PoE) technology, which delivers both low-voltage power and internet connectivity through a single cable. This enables daylight harvesting, an automated process that adjusts artificial lighting based on available natural light throughout the day.

When properly implemented, daylight harvesting systems can reduce lighting energy consumption significantly without compromising occupant comfort. For example, the 52-story New York Times Building reportedly achieved a 43 percent reduction in lighting costs using daylight-harvesting LED systems.

The LED market has grown substantially, with LEDs representing over half of global lighting sales in 2020, compared to less than 20 percent in 2016.

Evaluating Total Cost of Ownership vs. Upfront Investment

While LED adoption continues growing, many lighting projects remain stalled due to upfront cost concerns. LED pricing has decreased dramatically over the past decade, dropping from $12.90 per kilolumen in 2010 to $0.86 in 2019 according to Department of Energy data, with forecasts predicting further decreases to $0.30 per kilolumen by 2035.

Despite these price reductions, LEDs typically require a higher initial investment compared to traditional lighting options like halogen bulbs. However, focusing solely on upfront costs overlooks the total cost of ownership advantages.

LED systems can operate up to 80 percent more efficiently than incandescent and fluorescent bulbs under optimal conditions. Combined with longer operational lifespans (potentially up to 100,000 hours compared to approximately 2,500 hours for incandescent bulbs), LEDs often provide positive returns within the first few years of operation.

For example, based on 11 cents per kilowatt hour, an LED bulb operating 12 hours daily may cost approximately $4.80 annually to operate, compared to roughly $20.72 for an equivalent halogen bulb under the same conditions. Note: Actual costs vary significantly based on local energy rates, usage patterns, and specific product efficiency ratings.

Organizations should evaluate cumulative savings over the expected system lifespan rather than focusing exclusively on initial investment. Delaying LED upgrades often results in ongoing higher energy costs that could have funded the upgrade project.

Selecting Quality LED Products and Providers

The expanding LED market includes significant variation in product quality and performance. When evaluating LED solutions, consider factors such as:

• Verified efficiency ratings and certifications
• Warranty terms and manufacturer support
• Compatibility with existing electrical systems
• Dimming and control capabilities
• Installation and maintenance requirements

Working with experienced LED suppliers helps ensure proper product selection and installation for optimal performance and savings.

Financing Options for LED Projects

For organizations facing upfront cost challenges, financing platforms like EnPowered offer alternative funding approaches. These programs may allow businesses to install LED systems with reduced upfront costs, using projected energy savings to support project payments over time.

Disclaimer: Financing terms, eligibility, and actual savings vary by project scope, existing systems, and individual circumstances. Consult with qualified financial and technical advisors before making investment decisions.

To explore LED solutions for your facility, contact our lighting specialists who can help evaluate your specific requirements and potential savings opportunities.

For information about EnPowered’s financing programs, visit their website to learn about available options for your lighting projects.