Thursday, January 01, 2015

Are LEDs A Good Investment For My Home Office?

A light in my office burned out and I wanted to see if replacing it with an LED "bulb" with the same light output made sense. Surely the energy savings is a good thing to do, from the standpoint of preserving our planet for future generations, but do I have to make a financial sacrifice too?
Short answer: No. I just have to have a long enough planning horizon - that is, I have to think ahead!

I replaced a 50 watt (w) Halogen bulb, rated to last 2,000 hours, with a 6 w LED Bulb, rated to last 25,000 hours.
At the outset, let's look at replacement costs. The LED cost me $20.77 (which includes Washington State sales tax - our very regressive alternative to income tax - but that's another topic) whereas another halogen would be around $1.90 (with the same tax, so it's a wash.) The LED lasts 12.5 as long as the halogen, so I multiple $1.90 by 12.5 and get $23.75. Just by making this purchase, I'm saving $2.98, although I have to invest $20.77 for more than a decade to get it. This is not necessarily a smart investment on a cash basis, but it's not a stupid one either. But that's not all.

The basic rate for my home office is $0.0506  per kilowatt hour (there's a higher rate if I go above a limit, which I never reach.). On average, the light is on 3 hours a day: (more in winter, less in summer.) 3 hours/day for one year is 3x365.25 = 1095.75 hours (The .25 is for leap years - don't you hate it when people forget leap years?). As a reality check, this is more-or-less consistent with the MTF of the battery of halogens in my office (of the battery of six, only two are still working.)

Now, accepting my arm-waving assumptions for a moment, let's do some simple math:

50w - 6 w = 44w.
1095.75 hours x 44 w = 48213 wh = 48.213 kwh.
48.213 kwh x $0.0506 = $2.44 saved per year.
$20.77/$2.44= 8.5
The energy savings pays for the LED bulb in 8.5 years.

Now let's combine the two kinds of savings.

Buying a halogen every 2nd year is basically saving 95 centers a year. Add that to the energy savings:
$2.44 + $0.95 = $3.39
$20.77/$3.39 = 6.1

The two kinds of savings pays for the LED bulb in 6.1 years, or roughly a return of 16%. Not bad! And this investment is rated to continue paying you for about 25 years! Wow! Too bad it's only a few bucks. I sure could use a million dollar investment that pays 16% a year for 25 years - couldn't you?

Now there are other factors.
  • It costs money to lock up my $20.77 for that 6.1 years (although it's really more like 3.05 years since I get the use of some of the money back with every electric bill). With interest rates so low right now that cost is negligible so long as my overall debt remains manageable. 
  • There may be tax benefits; check your 1040.
  • The halogen bulb is noticeably hot - probably much of the energy savings comes from emitting visible light instead of infrared. While the heat may be helpful in winter ... incandescent bulbs are in some sense just an inefficient space heater ... it's an annoyance in summer, so I don't feel I should credit that.
  • The color spectrum of the LED's light may differ from that of incandescents or compact florescents. I think this is manageable by changing the color scheme in my lit areas; I have yet to find a source of artificial light that really satisfies the way that the Sun does (...and nothing matches moonlight!...) so it's important to decorate to compensate for the colors that are lacking.
  • There's the effort of bulb replacementis only a few minutes (assuming that I combine the purchase with other chores) but it's all wasted time, and that's the one commodity we have a limited supply of.
  • Finally, let's get back to the issue of leaving our planet a better place for the next guy who comes along. Cutting energy waste is just good manners, and since LEDs are now economically competitive with the alternatives, we have here a case of "Doing Well While Doing Good"!

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