You can calculate most of the ROI yourself

There’s nothing to dislike about LED lighting. It consumes less energy, lasts longer, and has proven health benefits. The only challenge is figuring out how to justify making the switch.

You’ll still have to pay for the LED bulb replacements – or even a fixture retrofit – and that’s what creates an obstacle. Here’s information to help demonstrate a clear return on investment (ROI), so you get LED lighting installed this year.

The cost factor

Yes, it’s going to cost money up front to replace current lighting fixtures with LED replacements. Or at least the bulbs themselves. One of the first steps in getting a decision to proceed is to show how quickly the investment can pay for itself.

This ROI can be shown in different ways. Frequently, it’s expressed as a cost savings in energy. Let’s say, for example, that your facility uses mostly fluorescent ceiling lights that are on for 12 hours daily throughout the year. According to this online calculator, replacing just a single 40-watt T12 fluorescent tube light with its equivalent – a 15-watt LED tube – would provide an annual savings of 136 kilowatts a year. If your average cost for electricity is 10 cents per kilowatt-hour, that’s a $13.58 annual savings.

A single bulb’s cost point savings might not be all that impressive. But you’re going to be swapping out more than one fluorescent tube. A retrofit project involving 500 fluorescent tubes has a potential annual energy savings value of $6,789.

Another online calculator provides even deeper insight into cost savings and can help determine how long it will take for the energy savings to pay for the initial cost of switching to LED lighting. Using the same energy cost and operational hours, and adding a cost of $10 per LED tube, this calculator reports it would take less than a month to start seeing a return on the $5,000 investment for LED replacement lights. Meanwhile, the building would reduce its carbon footprint by over 68 percent, or more than 408 metric tons.

The HVAC factor

There’s another frequently overlooked contributor to savings when you switch to LED lighting. Incandescent and halogen lights generate significant heat. A building’s HVAC system has to compensate. The American Society of Heating, Refrigeration, and Air Conditioning Engineers (ASHRAE) website advises that between 30 and 35 watts of cooling are necessary to compensate for the heat output for every 100 watts used to light a space.

A true ROI calculation should include this additional savings factor if your building utilizes a significant source of lighting that generates heat.

The longevity factor

According to LED Benchmark, manufacturers claim that their LED lighting has a life expectancy of 20,000 to 50,000 hours. Using an 8-hour daily operational timeframe, it would give LED lighting a lifespan of about 17 years. This would be 5x longer than compact fluorescent bulbs, and an astounding 30x longer than standard incandescent bulbs.

There may be overlooked associated costs, as well. Many office buildings feature lighting in areas that are difficult to service. High ceilings or recessed features may require expensive equipment to reach. It also may place employees at a higher risk of accidental injury. Consider this factor when making your assessment.

Purchasing substandard quality LED lights might likely prove the longevity benefit theory wrong – and it is a theory for the time being because as LED Benchmark notes, high powered LED lights haven’t been in use for 20 years yet.

The health factor

This part of the equation may be the most difficult to nail down regarding actual dollars and cents, but it may be one of the most important contributions to your decision. According to Inc. magazine, 68 percent of American employees are dissatisfied with their office lighting.

Dim overhead lighting causes eye strain and can result in a lack of focus or even drowsiness. Conversely, harsh lighting such as fluorescent illumination can make it difficult to focus and has been linked to triggering migraine headaches. Poor lighting conditions can also have a negative impact on our cortisol levels. This hormone is associated with stress and energy levels.

The solution, according to Inc. magazine, is to bring in more natural light. If that’s not possible, the next best solution is LED lighting. LED is capable of producing illumination more closely approximating natural light.

You’ll be able to show actual improvements in cost savings when you switch, and the calculators in this article can get you started. People aren’t light bulbs, though. Calculating productivity increases might be more challenging.

Read more about the benefits of having LED lighting installed at your business and find out how we can help you create a retrofit strategy.