LED Lighting Savings Calculator

Use the calculator & graph below to calculate the return on investment (ROI) payback period for installing LED lights. The general rule of thumb is that it is worth replacing any light that is used for more than 2 hours a day.

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Return On Investment Graph

Assumptions & Notes

• The payback period is when the green line crosses the red line. If the green line is always below the red line, then the payback period is < 12 months.
• Total cost over X years, is the cost of globes + the cost of electricity
• All bulbs are assumed to need replacementment at the same time, at the end of their lifetime. There is an assumption that the man power required to initially install & than change globes is free, but you could add this to the globe purchase cost if required.
• A conservative estimate of compunding electricity price increases of 5% per year is included in the calculation. You should enter in the price you are currently paying.
• LED lights are currently expensive relative to traditional lights, but the price is coming down rapidly. We assume a 10% fall in the price of LED globes per year.
• Typical power costs vary around the world. Check your last power bill for details. Values of $0.15 to $0.45 per kWh are typical.
• We have seen some manufacturers claim life times of 30+ years for LED lights. But at the same time offer only a 1 year warranty. We suggest a conservative approach and assume lights will need replacing after 5 to 10 years. Or even shorter if installed in a hot environment.
• While a reasonable effort has been made to provide an reasonable cost estimate, your circumstances may vary significantly from our assumptions. We recomend that you do your own calculations taking into account your own cirumstances before any lighting purchase.
• For CO2 (carbon dioxide), the emissions intensity of Australia’s electricity generation was around 880g CO2 per kWh in 2008, as compared to around 740g CO2 in China, 540g CO2 in the US and less than 500g CO2 in the United Kingdom, Germany and Japan. Source: Vivid Economics and Norton Rose carbon emissions report, May 2011. Being based in Australia, we have used the Australian number. If you live elsewhere your CO2 saving will probably be less.
• Using LED lights in an air conditioned environment can reduce air conditioning costs. This is not taken into account in the chart above.

Related Pages

• Pros and Cons of LED lighting
• Will LED lights be cheaper to run?
• What is the life expectancy of LEDs?