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Seeing the Light: Can An Eco-Conscious Consumer Overcome Sticker Shock and Make Life-Cycle Purchasing Decisions?

By Peter Bronski

My wife, Kelli, and I try to be eco-conscious consumers. When I joined RMI as editorial director in November 2012, it only strengthened our resolve, especially when it comes to energy. We bought a house in Longmont, Colo., and to our dismay, 100 percent of its 80-plus bulbs were inefficient incandescents (also known as Edison bulbs)—they’re the cheapest kind to buy and the costliest to operate.

Swapping them out for a more efficient variety was a no-brainer, but should we go with compact fluorescent lamps (CFLs) or light-emitting diodes (LEDs)? LEDs seemed the obvious choice—there’s much to love about them.

Compared to incandescents, which are only about five percent efficient—converting just a small fraction of their energy to light and wasting the rest as heat—LEDs average 80 percent efficiency. Good LEDs easily outcompete even CFLs, to the tune of 100 lumens per Watt vs. 60–75 lumens per Watt for CFLs. In other words, they save tons of energy for the same amount of light output; analyses confirm we could reduce lighting energy consumption by a whopping 80 percent by switching to LEDs.

LEDs also go the distance. They can last 25,000 hours or more, compared to a scant 1,000–2,000 hours for Edison bulbs and up to 10,000 hours for CFLs, though CFLs often last a fraction of that—a McKinsey & Co. report says LEDs last three to five times longer than CFLs. Finally, LEDs put out relatively little heat, they contain no toxic mercury (as CFLs do), and they’re instant-on (unlike CFLs’ slow warm-up to full brightness). All of these benefits are icing on the financial cake: an LED vs. CFL cost break-even point of about six years, according to McKinsey.

Yet, despite such impressive performance, U.S. DOE forecasts only expect LEDs to surpass 25 percent installed residential lumen-hours by 2020 and 62 percent by 2030. Why such slow growth in spite of overwhelming benefits?

As Kelli and I found out, there’s one major problem: cost. It’s fairly common to find LEDs priced around $30 per bulb. For consumers accustomed to paying $1 or less for a 60-W incandescent, that’s a major hurdle. Indeed, although residential LED adoption has grown more than 50-fold since 2009, LEDs still represent less than one percent of total lighting infrastructure.

When it came to LEDs, I knew the smarter long-term choice—lighting accounts for nearly one-fifth of electricity spending in the average household—but could I overcome sticker shock and become part of that growing one percent?

It would have been prohibitively expensive to swap out all the bulbs in my house at once. The most efficient bulb is the one you never turn on, so we turned our attention away from the basement, where we spend little time, and instead focused on bulbs that got the most burn time: evening exterior lights in front of the house, an entryway chandelier, and the kitchen and dining room where we spend the bulk of our time.

I then did what any (former) engineer would do: built a spreadsheet and ran the numbers to put my mind (and wallet) at ease. My calculations included a few basic assumptions, including our retail electricity rate from municipal Longmont Power & Communications (at just under 7.5 cents per kWh, we enjoy some of the cheapest electricity in the country); a subsidy taken at the checkout counter of our local home improvement store that knocked the price back from $30 to $20 per LED bulb; estimated hours per day and days per year of bulb burn time; and conservative estimates of CFL and LED lifespans, factoring in the number of CFLs I’d need to replace over the much longer lifespan of the LEDs. My results were surprisingly consistent with the McKinsey findings: just over six years to break even.

Though beyond the three-year payback acceptable to most consumers, it was good enough for us. We dropped $350 on 17 bulbs. Now we’re enjoying bright, warm, instant light that’s using a small fraction of the energy it did before, and for an upfront investment that will earn itself back and then start paying us with energy cost savings into the foreseeable future.

We were in good company. According to a May 2013 U.S. DOE EERE report, in 2012 Americans installed 49 million LED lamps and luminaires. A-type lamps (the standard light bulb shape we all think of) and directional lighting (like the flood and spot lights in my kitchen and dining room) made up 65 percent of energy savings, adding up to $675 million last year. That number could be $37 billion if all bulbs were swapped out for LEDs overnight.

There are even better times ahead. Earlier this year, manufacturer Cree—which recently doubled its market cap to $7 billion in just one year, according to Forbes—unveiled LED bulbs with a retail price of around $10 each. Many commentators are calling that a magic number that may help LED sales jump through the roof. Moreover, this spring, Philips announced a prototype LED boasting 200 lumens per Watt, double the energy-saving efficiency of today’s LED standard. The lifespan of LED bulbs is also increasing; the U.S. DOE anticipates a crazy 75,000 hours by 2030.

We’re seeing these increases in efficiency and lifespan even as costs are dropping dramatically. For A-type lamps, for example, the average price dropped from $250 per kilolumen in 2008 to $40 in 2012, while bulb efficiency increased by more than 50 percent during that same period. There’s also the additional driving force of federal energy efficiency standards, which will phase out 40- and 60-Watt incandescent and other bulbs by 2014.

As LED technology continues to improve and prices drop further, we expect our whole house—like those of millions of other Americans—will switch over to LEDs. We’ve seen the light, and there’s no turning back.

Peter Bronski is editorial director of RMI.


Light bulb image courtesy of Shutterstock/Chesky.

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