Four Easy Steps to Calculate How Much You’ll Save with an LED Upgrade

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Four Easy Steps to Calculate How Much You’ll Save with an LED Upgrade

Okay, by now you know that LED lighting is more energy efficient—in fact it’s the state of the art of lighting. Most of us know that LED lighting will save money on the electric utility bill, but most do not know how much money will be saved by upgrading their facility to LED lighting or even how to estimate this potential savings.

Four Pieces of Information

Estimating the utility savings of a proposed LED upgrade project is much easier than you might think. To make a simple savings estimation on any facility, all that is required are four pieces of information. First, is an accurate assessment of the number of light bulbs to be upgraded. Second, is an accurate assessment of the lighting usage—how many hours per day are they on. Third, is an accurate determination of the utility rate. And the fourth is the reduction in wattage realized by the LED upgrade. The utility savings is obtained by multiplying these values together.

1. Count the Bulbs
Assessing the number of lights in an LED upgrade project is no more involved than simply counting the number of light bulbs. This can be done by counting each bulb, or by counting the number of fixtures and multiplying that times the number of bulbs per fixture or in any way that provides an accurate assessment of the number of bulbs in the project. For a retail space, parking ramp or office building, a counting of the four-foot-long fluorescent tubes would be required. For a parking lot, gymnasium or security lighting a counting of the HID bulbs would be required. (High Intensity Discharge bulbs—this is the type of bulb found in lighting large spaces like warehouses, football stadiums, parking lots, etc.)

2. Assess Lighting Usage
Assessing the lighting usage can appear involved, difficult or even challenging, but it can be made very simple. If the facility operates on a consistent daily schedule, such as a retail business or office building, just use the normal business schedule and add 1 hour for each operational day to account for turning the lights on a bit before business hours and a bit after. Use this to determine the average lighting usage for a typical week. If the facility operates on an inconsistent schedule but this is repeated each week, just get the total number of operational hours in the typical week. If lights are on 24 hours a day, then it’s easy. Just multiply 24 times 7 to get the usage per week. For example, a company might have its lights 10 hours per day 5 days a week and they are off on the weekend. So that’s 50 hours per week.

3. The Utility Rate
Assessing the utility rate is the easiest. The utility rate can be more accurately determined by simply taking the total electric bill for a given month and dividing it by the number of kWh noted in the bill. An average office building might have a monthly bill of $10,000. Let’s say the total number of kWh noted in the bill is 100,000. So if we do the division we get a rate of $0.10 per kWh.

4. Wattage Reduction of an LED Upgrade
Determining the wattage reduction of the LED upgrade is equally as easy. But first it’s important to understand how electricity is billed. Electrical energy is sold in kilowatt-hours. Kilo means one thousand. One kilowatt is equal to one thousand watts.

A watt-hour is a measurement of how much electricity is constantly used over a period of one hour. For example, a 100-watt light bulb uses 100 watts at any given moment in order to run. If it is turned on for one hour, it uses 100 watt-hours of energy: 100 watts x 1 hour = 100 watt-hours.

If it is turned on from 9 am until 11 pm and runs for 14 hours, it uses a total of 1,400 watt-hours: 100 watts x 14 hours = 1,400 watt-hours.

Now, 1,000 watt-hours are equal to one kilowatt-hour (kWh).

Here is how to figure out how many kilowatt-hours were used: (Number of watts x Hours Used) divided by 1000 = Kilowatt-hours.

Let’s say we have twenty 100-watt light bulbs on for 10 hours a day. These bulbs use a total of 20,000 watt-hours per day. Over a 30 day month these bulbs use 600,000 watt-hours. If we divide 600,000 watt-hours by 1,000 we’ll get 600 kilowatt-hours. Remember, the electric company bills in kilowatt-hours. Let’s say the electric company’s rate is $0.10 per kWh. That electric bill would be $60.00: 600 kilowatt-hours x $0.10 = $60.00.

Upgrading the common four-foot fluorescent tube, typically operating at 32 watts, with its LED equivalent operating at 18 watts, yields a 14 watt reduction per bulb. Upgrading the common 400 watt exterior HID bulb with its LED equivalent operating at 120 watts yields a 280 watt reduction per bulb.

Let’s take an example and show how the annual savings would be calculated for a small office building.

  1. They have 400 four-foot fluorescent tubes.
  2. They operate the lights 50 hours per week or 2,600 per year
  3. The utility rate is $0.10 per kWh
  4. The equivalent LED bulb produces a wattage reduction of 14 watts per bulb.

To calculate the annual utility savings you simply use this equation:
Number of bulbs × Number of annual operational hours × The watt reduction per bulb ÷ by 1,000 × Utility Rate

So for the example office it would look like this:

LED Upgrade Savings Formula

One More Thing!

Many utility companies are offering incentives to save energy and upgrading to LED is a huge way to save energy. Some utility companies will actually pay you per bulb that you upgrade. Others offer a credit based on the wattage reduction. Check with your local utility company and see what incentives they offer. It all has a huge effect on your bottom line!

By | 2017-09-26T12:03:37+00:00 April 30th, 2015|Energy Efficiency Tips, LED Lighting|0 Comments

About the Author:

Patrick J. Clouden is the Chief Executive Officer of Consumer Energy Solutions, Inc., one of the nation’s top energy consulting firms. Consumer Energy Solutions was founded in 1999 and represents some of the largest energy suppliers in North America. CES has enrolled over 2.5 million residential and 300,000 commercial customers across the United States and Canada including many Fortune 500 companies.

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