How much your business can save with LED

Lighting often accounts for a large share of a company's electricity bill, especially in warehouses, industry, retail and offices with long operating hours. Switching from fluorescent, metal halide or halogen to modern LED is therefore one of the fastest and most profitable energy measures available. In this guide we cover how to calculate the saving and what affects the payback time. If you want to jump straight to the numbers, use our lighting calculator and get an estimate in seconds.

Where does the saving come from?

LED saves energy in several ways at once. The light source converts a much larger share of the energy into light rather than heat, giving 50 to 70 percent lower power for the same light output. LED switches on instantly with no warm-up, tolerates frequent switching and therefore works excellently with occupancy control and daylight sensors. It also lasts a long time, often 50,000 hours or more, which lowers the cost of replacements and maintenance, especially in high or hard to reach locations.

How to calculate

The basics are simple. Multiply the luminaire power in kilowatts by the number of operating hours per year and by the electricity price per kilowatt hour:

1. Annual energy (kWh) = power (kW) x operating time (h/year) x number of luminaires
2. Annual electricity cost = annual energy x electricity price (per kWh)
3. Saving = old cost minus new cost
4. Payback = investment divided by annual saving

Do not forget that older luminaires often have extra losses in their control gear, so the real power draw can be higher than the figure printed on the lamp. A useful tip is to measure the actual consumption with an energy meter over a week and then scale up to a full year, which makes the calculation more accurate than relying on the rated power alone.

Example: a warehouse with 100 luminaires

A common scenario is a warehouse replacing 100 old metal halide fittings with LED high bays. The table shows the impact.

In this example the business saves 120,000 kWh and 180,000 per year. With an investment of around 250,000 the payback time is just under 1.5 years. After that the saving is pure profit for the remaining life of the luminaires, often more than ten years.

Reduced CO2 emissions

Lower electricity use also means a smaller climate footprint. How much depends on the origin of the electricity. Using a European average of around 0.25 kg CO2 per kWh, the saving of 120,000 kWh above corresponds to roughly 30 tonnes of CO2 per year. That is a clear contribution to a company's sustainability targets and often makes LED projects easy to justify from a reporting perspective too.

Factors that affect payback

Payback is shortest where operating hours are long and the old lighting draws a lot. Warehouses, production, car parks and retail with evening and weekend opening hours are at the top. Add controls with occupancy and daylight sensors and consumption can fall a further 20 to 40 percent. The electricity price level also matters greatly: the higher the price, the faster the investment pays for itself.

Look at quality, not just price

Not all LED luminaires are equal. Cheap products can have lower efficiency, poorer heat management and drivers that wear out early, which eats into the saving. Look at lumens per watt to compare efficiency, at the lumen maintenance (L value) that shows how much light the luminaire delivers after many years, and at the warranty. A luminaire with good efficiency and a long life often costs a little more to buy but gives a lower total cost. The right colour temperature and colour rendering also matter for comfort and the working environment, especially in retail and offices.

More benefits than the electricity bill

The energy saving is the clearest win, but LED offers more. Less heat from the lighting can reduce the cooling demand in spaces with air conditioning. Fewer replacements mean less disruption to operations and lower costs for ladders, lifts and labour. Better, more even light also improves safety and the working environment, which can reduce accidents and increase productivity. Taken together, this means an LED project is often even more profitable than the electricity saving alone suggests.

Getting started

The best way to see the potential is to calculate for your own luminaires and operating hours. Use our lighting calculator for a quick estimate of saving and payback. If you want to take the next step, you will find energy efficient options in our Eco Linnear high bay collection and among our indoor lighting. We are happy to help with a review of your current situation and a concrete proposal.