How Much Can You Save Switching to LED Bulbs?

What is an LED Light?

While the technology itself is over 50 years old, LEDs (light-emitting diodes) are among the fastest-growing types of light bulbs on the market. LED technology is highly efficient. LEDs are capable of producing light 90% more efficiently than incandescent bulbs. This dramatic improvement in efficiency allows the lamp to consume less energy to produce the same amount of light as other bulbs such as halogens, traditional incandescents, and CFLs. 

LEDs also have a "heat sink," which absorbs the heat produced by the light. With LEDs, you can avoid a "burnout" typical of overuse with older light bulbs. These new technologies increase the LED's useful life. A single LED bulb will keep working longer than other bulb types. So how does this increased efficiency in LEDs translate into your savings? Let's take a look.

What Is The Annual Operating Cost of Light Bulbs?

LED's higher efficiency allows them to use less energy to produce the same amount of light. The bulb's wattage measures the amount of energy each bulb uses. The lower the wattage, the less energy is used. The less energy used, the more money saved! To get the cost to operate a bulb, we have to look at your electricity cost—how much you pay for the watts used. Any electricity bill will have your electricity cost stated in cents per kilowatt-hour (kWh). If you do not have an electricity bill at hand, you can estimate using your state average or the national average at 13.34 cents per kWh. The equation will be:

Annual operating costs = (electricity price x average hours lights are on per day x 365 x bulb wattage) / 1,000

*Note: you need to divide the entire equation by 1,000 since the electricity price is per kilowatt-hour (1,000 watt-hours), but we want to compare based on watts.

For lights that are on an average of 6 hours a day, 365 days a year, the annual operating costs will be:

• Annual cost to operate one LED: ($.1334 x 6 x 365 x 9)/1,000 = $2.63
• Annual cost to operate one halogen: ($.1334 x 6 x 365 x 43)/1,000 = $12.56
• Annual cost to operate one incandescent: ($.1334 x 6 x 365 x 60)/1,000 = $17.53
• Annual cost to operate one CFL: ($.1334 x 6 x 365 x 13)/1,000 = $3.80

While halogens and incandescents were the cheapest initially, they cost exceedingly more to use due to higher energy requirements. They end up being five to seven times more expensive, in operating costs alone!

What Is the Lifetime Energy Cost of Different Light Bulbs?

A standard LED bulb lasts 15,000 hours. If it is on for 6 hours a day, 365 days a year, its lifetime is about 6.85 years. The difference in lifetime energy costs equals the differences in annual operating costs (calculated above) multiplied by the LED's lifetime (6.85 years based on 6-hour average daily use):

• Halogen: ($12.56 - $2.63) x 6.85 = $68.02
• Incandescent: ($17.53 - $2.63) x 6.85 = $102.07
• CFL: ($3.80 - $2.63) x 6.85 = $8.01

These numbers represent how much more you will pay to operate these bulb types than an LED over the LED's lifetime. On top of that, you will have to purchase replacement bulbs over the lifetime of the LED. Lifetime replacement costs are the final piece of calculating the total lifetime savings of an LED.

How Much Do Light Bulbs Cost To Replace?

In addition to using less energy, LEDs have a much longer life—which means you need to replace bulbs much less frequently. 

To calculate replacement costs, we must calculate how many years each bulb will last based on our use (6 hours a day). Then, compared to our LED base case of 6.85 years, we will see how many times each bulb needs to be replaced, multiplied by the replacement bulbs' cost. 

• LED: a life of 6.85 years, 0 replacements, $ 0-lifetime replacement costs
• Halogen: life of .9 years, 7 replacements, $10.22 lifetime replacement costs
• Incandescent: life of .91 years, 7 replacements, $8.89 replacement costs
• CFL: life of 4.55 years, 1 replacement, $1.74 replacement costs

How Much Will LED Lights Save You?

To get the total lifetime savings of switching to LED, we look at the difference in operational costs and replacement costs over an LED's lifetime. Here's the equation:

The total lifetime savings of switching your bulb to LED = lifetime energy costs + lifetime replacement costs – the initial cost of LED.

While initially spending $2.12 (or less with bulk buying) on an LED bulb, you will be saving these grand totals on lifetime energy and replacement costs:

• Halogen: $68.02 + $10.22 - $2.12 = $76.12
• Incandescent: $102.07 + $8.89 - $2.12 = $108.84
• CFL: $8.01 + $1.74 - $2.12 = $7.63

Remember, these savings are only for one bulb. The average U.S. household has at least 45 light bulbs in their home. Multiplied by 45 bulbs, your savings are as high as $343 for CFL, $3,425 for halogen, $4,898 for incandescent! The savings could be even more significant if your light bulb types have higher wattages, or you keep them turned on longer (like outside floodlights). Besides just the financial savings, switching to LEDs will save on the repeated time and effort spent to replace the bulbs over the life of a single LED.