How LEDs Pay for Themselves

One of the most common hurdles on large projects for customers is funding sources.

For sports fields, grants sometimes do not come through. For industrial projects, sometimes cash gets reallocated to other priorities.

In this post, Ted Leonard, VP Market Operations from EnPowered discusses how LEDs can pay for themselves and how platforms like EnPowered can assist customers in executing on their large lighting projects.

Lighting is something we commonly take for granted, but your company should give it a second (and third) thought if you want to reduce costs—and who doesn’t?

Many businesses continue to pay their energy bills without evaluating their lighting expenses. But adopting energy best practices and the latest LED solutions can cut your lighting costs by up to 80 percent.

Aside from reducing operating costs, installing smart LED systems also leads to less heat waste, and the ability to program lights to maximize your savings.

Every Business Can Benefit from LED Upgrades

We all pay for lighting, which means LED solutions will help any organization capture more savings. For instance, lighting accounts for 11 percent of total energy use in U.S. commercial buildings. Office productivity in commercial spaces can increase after converting to the right types of commercial LED lighting.

Other sectors are even more lighting-intensive. For example, lighting accounts for 10–30 percent of a greenhouse’s operating costs. The U.S. horticultural sector spends $1 billion on lighting each year. Switching to LEDs would capture $350 million in annual savings.

Sports facilities are another sector with lots of savings potential. For these work sites, LEDs offer additional benefits such as lower heat waste, which reduces the need for additional cooling in places like ice hockey rinks, further cutting energy costs.

For buildings with lots of windows like office towers and hotels, programmable smart LED systems can be powered and connected to the Internet through the same cable using Power over Ethernet (PoE) technology.

PoE feeds low-voltage DC power and internet access to LED systems, enabling daylight harvesting. This refers to using daylight to reduce lighting demand in real time through automated responses that monitor the time of day and weather.

Daylight harvesting can be used to reduce lighting energy usage by up to 80 percent without compromising occupant comfort. For example, the 52-story New York Times Building used daylight-harvesting, dimmable LED systems to cut its lighting costs by 43 percent.

The huge range of use cases for LEDs means the market is growing quickly. LEDs accounted for over half of global lighting sales in 2020, up from less than 20 percent in 2016. Overall the LED market is forecast to grow to $160 billion by 2026.

Remember to Look Beyond Upfront Costs to Lifetime Savings

More organizations are adopting LEDs than ever, but too many lighting projects remain on the drawing board. This is because many companies are hesitant to invest in LED systems, either from a lack of market insight, insufficient government incentives, or concerns about price.

Of these factors, price continues to be the biggest hurdle standing in the way of LED projects. The cost of LEDs has decreased substantially over the past decade, dropping from $12.90 per kilolumen in 2010 to $0.86 in 2019, according to the Department of Energy.

Moreover, LEDs are forecast to drop to $0.30 per kilolumen by 2035. That said, LEDs still have higher upfront costs than legacy lighting options like halogen bulbs.

These upfront costs often deter energy users from investing in LED systems, resulting in lost savings over time. LED systems are up to 80 percent more efficient than incandescent and fluorescent bulbs, which means their operating costs are lower.

Combined with longer LED lifespans (up to 100,000 hours or 40 times the life of an incandescent bulb), this leads to significant savings even after a year or two versus legacy lighting options.

LEDs are more than four times cheaper to run than a halogen bulb. Specifically, an LED bulb operating for 12 hours each day only costs $4.80 per year (based on prices of 11 cents per kilowatt hour), compared to $20.72 per year for a halogen bulb in the same circumstances.

As such, companies shouldn’t base their decision on upfront costs. Instead, businesses need to take the cumulative savings that LEDs provide into consideration. Hesitating to upgrade your lighting systems only increases the cost of waiting, due to higher electricity bills and missed savings.

Ironically, the Savings They’re Missing out on Could Have Already Paid for the LED Project

The LED market is increasingly crowded, and not all LED products are created equal. Concerns about price and product quality deter companies from investing. As with any energy efficiency solution, working with a trusted provider is key to turning lighting projects into reality.

How Enpowered Helps Companies Realize Their LED Lighting Projects

Upfront costs are a big obstacle for businesses, but EnPowered Payments empowers companies to purchase LED systems with no upfront costs and minimal risk. Businesses can install LEDs right away, using a portion of their future energy savings to repay the project through their electricity bill, all while remaining cash-flow positive.

Want to learn more? Reach out to EnPowered and learn how they can help accelerate your organization’s adoption of energy efficiency LED systems.