May 23rd, 2008

Glowing LED

Return on Investment

So, two halogen lamps of the type we use in the extension cost EUR 7.00 -- EUR 3.50 per piece. They have roughly 1000 hours of operation (it says on the package that they will last a year, if you burn them three hours per day). That comes to EUR 3.50 per lamp per year.
A single warm white LED lamp (with 38 LEDs, so that should give enough light) costs EUR 21. But LEDs have a longer life. If you go by EUR 3.50 of deprecation per year, the lamp will be fully deprecated in 6 years. After that, you're 'earning' money.

So, simply looking at the cost of the lamps, the Return on Investment is at six years.

But wait! The halogens draw 50W, while the LEDs draw 2.1W! Let's do some calculations with that...
We have fourteen spots in the extension. Suppose we do run the lights for three hours every night for a year. And suppose we pay EUR 0.20 per kW/h.

Then:
14 * 50 W = 700 W. 700 W / 1000 = 0.7 kW. 0.7kW * 3h =2.1 kW/h. 2.1 * 20 = EUR 0.42 per night. For a year, that makes 0.42 * 365 = EUR 153.30.
So, using the halogens costs us EUR 153.30 per year (if all of the assumptions are correct, of course. But these being assumptions, we assume them to be correct anyway. ;) ).

For the LEDs:
14 * 2.1 W = 29.4 W. 29.4W / 1000 = 0.0294 kW. 0.0294 kW * 3h = 0.0882 kW/h. 0.0882 * 20 = EUR 0.01764 per night. For a year, that makes 0.01764 * 365 = EUR 6.44.

The difference between using LEDs and halogens is thus a whopping EUR 146.86 in electricity costs! That makes a cost reduction of EUR 10.49 per spot, which means that the break-even point, seen from the cost of electricity alone, is almost exactly after two years.
The third year, we'd be seeing a cost reduction of EUR 146.86 + (EUR 3.50 * 14) = EUR 195.86. And if we do an conservative estimation and assume that the LEDs will have an operational life of 10.000 burning hours, that means a total cost reduction of EUR 1566.88 during the life of the LED lamps.
Of course, that assumes the price of electricity stays constant -- which is doubtful to say the least.

I think I'll be ordering a few of those LED lamps to see if they can replace the halogen lamps... With a RoI of two years, that is certainly a worthy investment.

Also, feel free to point out any miscalculations I may have made!