Business Lighting Costs and How to Reduce Them

energy efficiency in industry
Apr 25 2019

If you run a business, you might find the cost of keeping the lights on to be incredibly high. It might surprise you to know that todays costs are incredibly inexpensive compared to historical data. LED lights have made that cost structure even less than a few years ago.

Using LED to Cut Down on Business Lighting Costs

The good news, with the evolution of LED lighting, lighting costs for businesses will continue to drop dramatically in the near future. Ten years ago, an LED could have a lumen per watt (light produced per unit of electricity) of 60-80. Today, Philips and other manufacturers are producing lights with a lumen per watt of over 200, and there is no slowing down in terms of advancements.

To break this down, older incandescent lights put out 800 lumens of light with 60 watts. Modern LED lamps put out that same 800 lumens with only 8 or 9 watts. That means that mainstream lights today are 8 times more efficient than in the past, and future lights will be 2 or 3 times even more efficient – ten and even twenty years from now.

Historical Light Costs for Businesses

Before electricity, for thousands of years, you had to use fat and a wick to keep the lights on. That was expensive, time consuming, and smelly to keep light on dark days or at night. Seriously, try selling a fine dining restaurant experience with bear fat burning between two lovers on Valentine’s day.

Native Americans in the US used salmon to make candles, sacrificing calories for light. Since most light sources came from animal/fish fat being burned with a wick, there was a serious supply and demand conflict with calories. While we have plenty of calories available today, that story was quite different historically. No one was on any kind of a diet in the middle ages, other than where do I get my next meal so I don’t starve diet.

The middle ages had really expensive light costs – probably only the king and queen could read in bed. Early live in the US was no different – limiting business and commerce after the sunset.

In the mid 1800s, candles were made from oil and coal extraction methods, bringing the cost down for the same light. However, shortly after that, the first incandescent light bulb was invented in 1879 and everything changed, dramatically dropping the cost of light.

Electricity Sources and Price for Business Lighting

Initially, electricity was expensive and not available everywhere. The cost of electricity was so expensive in the late 19th century and early 20th century, which explains the stories of our grandparents running around turning off lights in the house. As you can see, the cost for light is really low compared to historical costs.

price for lighting over time
The light from early filament lamps in the 1875-1900 range cost 100 times the cost of a lamp in 1990, since electricity prices have dropped.

How LED Helps Businesses Save Money on Lighting

An LED today uses approximately 15% of the energy to produce the same light as an incandescent. While they cost more to purchase, they cost far less to operate over time. This drives the cost for light down even further, so far that it looks negligible on this graphic.

LED technology is evolving so quickly that we now have a new challenge on our hands – LED fixtures and lamps last so long, that trends in lighting design and the improvements in lumen per watt increase – yet the current LED fixtures now will last 70,000 hours. By the time current LED fixtures go bad, the newest version will be dramatically different and more efficient – ten and even twenty years from now.

Return on Investment from Better Lighting

What drives fixture replacements today are typically an ROI (return on investment) regarding the cost savings of energy prices to a business. There are maintenance savings as well, but cost savings is the biggest driver in a majority of situations.

We look at an ROI of 1.5 to 2 years as a sweet spot for our clients – anything less often means you are leaving off opportunities around HVAC, motors, and smart controls that will lead to a long term cost savings for a facility. Anything more than 2 years, and a business really needs to know that they have a long term lease or building ownership – or are choosing to make improvements for aesthetic or safety reasons.

business lighting cost savings

Competitive Advantage of LED Lighting for Businesses

If you are not willing to invest in your business at a ROI of 1.5 -2 years, imagine two things.

First, your competition is investing – so you could be facing higher operating costs than they are, so you could be losing a competitive advantage.

Secondly, imagine your ROI when converting from whale fat to LED – it would be a 25 second ROI. My point – we are lucky in today’s business environment to have access to the opportunities that we do. Don’t miss out on those opportunities, or at least truly understand the options you have as a business owner.


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