This is the fifth blog post in the series to calculate the total Return on Investment (ROI) that a business will generate from their LED lighting retrofit project. Previously, we published the following posts in this series:

1. How to calculate the HVAC energy savings from an LED lighting retrofit project – April 2019
2. Energy Savings from an LED Lighting Retrofit project – March 2019
3. Labor Savings from an LED Lighting Retrofit project – February 2019
4. What will you save from an LED Lighting Retrofit Project? – January 2019

This post focuses on the Material savings gained by a lighting retrofit project and the long-life LED products incorporated into the project. Most of the products you’ll be replacing during the project, like incandescent, CFL or halogen bulbs, have life-spans of 1,500 to 15,000 hours.  That means that if you operate your lights 12 hours a day for 250 days a year (3,000 hours), you’ll be replacing burned out bulbs up to 2 times per year.  Those costs can add up quickly, especially if you have hundreds, or even thousands of fixtures in your facilities.

LED lights, on the other hand, have life spans of 35,000 to 100,000 hours. At 3,000 hours per year, that’s 11 – 33 years!  An even then the bulb may not burn out but may just lose some of its’ output capacity, so your life spans could exceed the standard rated hours.

We will continue our example from the series in that we are replacing 90 watt PAR 38 bulbs with 14 watt LED PAR 38 bulbs that operate 3,000 hours per year. 

Step 1: Gather Data – the following information will be needed to start the calculations:

• Rated life for the current lights: for this calculation we will make an assumption that you are using a PAR 38 with a rated life of 1,500 hours.
• Rated life for the new lights: for this calculation we will make an assumption that the replacement lights are LED PAR 38 with a rated life of 50,000 hours and come with a 5-year warranty.
• Replacement cost for the current lights: for this calculation we will make an assumption that the replacement cost for a 90W Halogen PAR 38 is $7.50.
• Replacement cost for the new lights: for this calculation we will make an assumption that the replacement cost for a 14W LED PAR 38 is $18.50.
• Total Annual Running time: in this example the annual run time is 3,000 hours.

Step 2: Calculate the number of times you will need to replace the current lights per year, which is dependent on the rated life and run time per year:

• Total Run Time per year: 3,000 hours
• Divided by: Rated life of current lights: 1,500 hours
• Equals: Number of times per year you’ll replace each light: 2 replacements per year

Step 3: Cost of replacing existing lights:

• Annual replacements from above: 2 per year
• Times: Cost to replace from above: $7.50
• Equals: Annual replacement costs per year: $15.00

Step 4: Calculate the number of times you will need to replace the new LED lights per year, which is dependent on the rated life and run time per year:

• Total Run Time per year: 3,000 hours
• Divided by: Rated life of current lights: 50,000 hours
• Equals: Number of times per year you’ll replace each light: .06 replacements per year

Step 5: Cost of replacing new LED lights:

• Annual replacements from above: .06 per year
• Times: Cost to replace from above: $18.50
• Equals: Annual replacement costs per year: $1.11

Step 6: Calculate your savings per year:

• Annual replacements per year for current lights: $15.00 per year
• Minus: Annual replacements per year for new LED lights: $1.11 per year
• Equals: Annual material savings per light: $13.89

(Note that this calculation does not take into effect the normal 5 year warranty provided by the LED light manufacturer, so during years 1-5 of the project your replacement cost for the LED lights would be zero and you’d have an even larger annual material savings per year.)

Using the annual material cost savings per light ($13.89 in this example) you can determine the total material savings based upon the number of lights you’ll be replacing during your LED lighting retrofit project.  Multiplied over hundreds or thousands of replacements and the savings add up quickly.

The professional lighting installation experts at PKK Lighting would be delighted to talk to you about your LED retrofit project.  We can help you evaluate the opportunity, manage the entire project, and provide ongoing lighting maintenance of your system.