Monday, April 28, 2014

Cost of LED Bulbs and Return on Investment

I like LED bulbs.  A while back I decided I should put together a spread sheet to figure out the return on investment on LED bulbs.

It isn't hard, put in the total amount of your electrical bill, enter the number of KWh you purchased for that amount of money and then divide the cost by the KWh, then divide KWh by 1,000 to get your actual cost of electricity per watt hour.  EC.

Now, we can enter some equations to calculate the total cost of each of the bulb styles, incandescent, fluorescent and LED.  These are not difficult calculations.  We need typical bulb life, bulb cost, electricity cost and bulb wattage.  Once we enter the formulas in a spread sheet we can change the values and see how things "compute".

EC = Electricity Cost
BL = Bulb Life
BW = Bulb Wattage
BC = Bulb Cost

Suppose we have an incandescent bulb and we enter 1,000 into a cell for Bulb Life.  In another cell we enter 25,000 for the LED bulb life.  For total bulb cost we divide LED BL (LED Bulb Life) by I BL (Incandescent Bulb Life) and then multiply that number by I BC (Incandescent Bulb Cost).  in this case it takes 25 incandescent bulbs to replace an LED bulb at a cost of $0.25 so the total cost for the Incandescent bulbs is $8.25.

(25,000 / 1000) * $0.25) = $8.25
(LED BL / I BL) * I BC =  Sub-Total I BC

Now we multiply the wattage of the bulb by the LED BL, (LED Bulb Life), by the EC (Electricity Cost) and add the cost of the bulb to determine Total Bulb Cost.

((LED BL * BW) * EC) + Sub-Total I BC) = Total I BC

Now we can change the bulb life times and the bulb costs to compare total costs.

Suppose we say a fluorescent bulb costs $0.50, lasts 6,000 hours, an LED bulb costs $7.50 and lasts 25,000 hours, the fluorescent bulb costs about $11.00 more over the life of the bulb.

The problem with LED bulbs is that they do not always last as long as advertised.

If the LED costs $20.00 and lasts 10,000 hours the LED bulb is about $10.00 more expensive than the fluorescent.  If the fluorescent lasts 12,500 hours the fluorescent is about $12.00 cheaper.  If the LED lasts 25,000 hours and costs $20, the fluorescent is about $3.00 cheaper over the life of the bulbs.  If the fluorescent lasts 6,000 hours the fluorescent is about $2.00 cheaper.

Plug in your own numbers, how much you pay for bulbs and electricity, what kinds of wattage you use and you will figure out what the costs are depending on bulb life and cost and electricity cost.

For me, after crunching the numbers, the break even is about $8.00 apiece for LED bulbs so if an LED bulb runs more than about $8.00 it isn't going to provide any savings for me over a fluorescent bulb.

You can crunch the numbers yourself and figure out what your specific numbers are.

Recently, in my area, Ikea lowered the cost of 60 watt equivalent bulbs to $7.50.  I figure someone ran the same numbers I did and came up with some numbers similar to mine.

On the other hand, LED bulbs at Home Depot are still too expensive, which means either other manufacturers or Home Depot are too stupid to set practical price points for bulbs.

EDIT:  Home Depot currently has Cree 60 watt equivalent LED bulbs for $7.97, which is my price point.  Check prices everywhere, you might find better deals.

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