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ATEX and IEC Ex Flame-proof Explosion Proof Lighting & Equipment
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01/29/13 High Efficiency Lighting Improves the Bottom Line

Article-January 2013 By Larson

150 Watt High Bay LED Light Fixture

Larson Electronics 150 Watt High Bay LED Light Fixture

In the industrial and commercial setting it is well established that the less money you spend on general operations without reducing productivity, the more money you actually earn. Although this is a greatly simplified version of the concept, it holds pretty well across the whole spectrum of industrial and commercial operation sectors from procurement to production. Because of this, any changes, upgrades, expansions or added processes are critically scrutinized to determine if a positive return on investment will result. If the change shows no potential for net benefit, then it becomes difficult to justify its enactment.

One area where industrial and commercial business is finding great potential for improved return on investment is the switch to energy efficient technologies. Narrowing this down further, improved lighting technologies offer a potential source of improved revenue that almost any business can take advantage of with good results. Yes, we mean improved revenue. While the initial outlay for advanced lighting technology does indeed cost more than traditional forms of illumination, the impact such systems have on energy use, maintenance costs, and workplace productivity more than make up for this higher cost.

The long standing leader in lighting has been the traditional incandescent bulb. Cheap to purchase, easy to install, and producing a decent amount of illumination, the incandescent has served well through the over 130 years it has been in use. However, the incandescent bulb has changed very little from its original design, and not because developers have not tried, but because the basic design and operating principle behind the incandescent limits its potential. Since the incandescent at its core relies on creating heat to produce light, most of the energy that goes into the bulb is wasted as heat. Up to 90% of the electricity fed into an incandescent bulb is radiated as heat rather than light, making it a very poor source of light indeed. For over a century though the incandescent was an acceptable light source due to the generally low cost of producing electricity. Today however, electricity is no longer cheap, and more efficient ways of producing light are as a result quickly replacing the incandescent.

In the average home equipped with incandescent bulbs, over 20% of the electrical power used can be attributed to lighting. In the commercial and industrial sector, lighting can account for over 40% of the electricity used. Since this electricity represents a portion of the energy bill and thus is a part of the overall operating costs, reducing the use of this electricity can have a significant effect. For example, a common industrial building with 20,000 square feet of space can have annual lighting costs in exceeding $14,000. With a full upgrade to LED lighting systems, experts predict that costs from lighting for such a building can be reduced by approximately $4,500 annually. To further add to these savings,  over $400.00 a month can also be saved on bulb replacements, $1,000 a month on maintenance, and the reduced load place on air conditioning systems from the cooler operating LEDs can add another  $300.00 per month in savings.

It is worth noting, that while these are projected savings, already there are plenty of real world examples that not only demonstrate the effectiveness of new lighting technologies like LED, but that real world performance often surpasses expectations. Some more commonly reported results include an Applebees restaurant which reduced lighting expenses by 88% with the installation of LEDs, and cities like Madison Wisconsin and St. Paul, Minnesota which realized $360,000 in savings annually just by switching traffic signals to LEDs. Clearly, there is huge potential in upgrading existing lighting systems, potential which obviously can translate into lower operating costs, and thus an improved bottom line.

One of the big issues many businesses have with considering an upgrade to LEDs is the higher initial costs. LEDs cost more than traditional incandescent lamps, and more even than fluorescent systems, their largest competitor. However, the benefit of LEDs must be considered on a longer term basis than other systems if their true potential is to be realized. If we assume the cost to run 100 incandescent fixture is approximately $1700 per year, then consider that we can replace those 100 incandescent bulbs with only 70 LED fixtures, yet produce the same amount of light, and use only $210.00 per year of electricity, it quickly becomes apparent just how quickly the LEDs will pay for themselves and begin providing a return on investment.  Much depends on total overall outlay, operating hours, number of fixtures etc, however, most experts consider 1 to 1 ½ years to be a reasonable period to begin seeing a net savings, and oftentimes as soon as 6 months is possible.

It is not enough though to simply consider energy savings. In the industrial and commercial space, we must also consider the cost of maintenance and replacement. So, if we consider that the incandescent bulb will last an average of 1,000 hours, a fluorescent 15,000 hours, and the LED and average of 30-50,000 hours, it then becomes clear that less maintenance will be required, and fewer lamp replacements needed over a longer period of time, essentially knocking down operating costs still further. Again, many lighting industry experts expect LEDs to reduce total operating costs, including energy savings, maintenance and replacement, by up to 80%. This is a very significant percentage, and when compared to a current annual tally with incandescent systems, eye opening. For instance, if we consider a yearly operating cost of $350,000 for a typical incandescent based lighting system, then subtract even 40% just to be conservative, we see a net savings of $210,000 annually. That is $210,000 that becomes part of an improved bottom line once the new system recoups its initial costs, which is a fairly short period of time given the savings.

As it stands, there are plenty of great reasons for businesses to consider upgrading their lighting systems to high efficiency LEDs. From a financial standpoint however, there is no greater reason than increased profit for little more than changing a light bulb.

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