LED Cost Benefit Analysis

Discussion in 'Landscape Lighting' started by INTEGRA Bespoke Lighting, Feb 6, 2008.

  1. INTEGRA Bespoke Lighting

    INTEGRA Bespoke Lighting LawnSite Platinum Member
    Posts: 4,102

    A freebie to you all: My protocol for calculating a cost benefit analysis for LED vs. Incandescent lamps in a LV Outdoor Lighting System.

    Assumptions:
    1 - Incandescent source is a 20W load that has a field life of 3000 hours.
    2 - LED source is a 6W load that has a field life of 35,000 hours.
    3 - I will leave the cost sections blank for you to fill in with your prices for your market.
    4 - Be sure to include the 'real cost' of electricity in your market. This includes the electricity, delivery charges, debt retirement charges, surcharges, taxes, etc. (Take your household bill and divide the total number of KWh used into the total amount of the bill)

    Per Fixture Cost of Operation:

    Halogen Lamp
    A: (20W X 35,000 hours) / 1000 = Total KWh consumed X $ per KWh = Cost of Electricity used by Halogen lamp for the purposes of this analysis.

    B: 35,000 hrs / 3000 hrs = 11.6 Lamp Changes X $(cost of lamp to client) = Total Lamp Change Cost to client.

    C: Man hours labour per lamp change X 11.6 Lamp Changes X Labour Rate = Total Labour Cost to to client.

    Add up A+B+C = Total Cost of operation to the client for Halogen Lamp for 35,000 hours of operation.

    LED Lamp
    A: (6W x 35,000 hours) / 1000 = Total KWh consumed X $ per KWh = Cost of Electricity used by LED lamp for the purposes of this analysis.

    B: Initial Cost of LED Lamp.

    Add up A+B = Total Cost of operation to the client for LED Lamp for 35,000 hours of operation.

    Cost Benefit Calculation.
    Subtract the Cost of operation of the LED Lamp from the Cost of operation of the Halogen Lamp. The remainder is the savings the client will realize per fixture if they choose to go with the LED lamp over the lifetime of the product.

    In my market the client stands to save over $200 per fixture when they choose the LED lamp.

    If the lamps actually last the 50,000 hours that the manufacturer is claiming ( I am de-rating them to be 'safe') then the client will see a savings of $340 per fixture in my market.

    This calculation can be easily adapted to your market and other LED technology by changing the variables and costs.

    Have a great day.
     
  2. INTEGRA Bespoke Lighting

    INTEGRA Bespoke Lighting LawnSite Platinum Member
    Posts: 4,102

    Note: This the above case is only taking into account the lamp technology. Unlike Mike Murphy, I am not de-rating or downsizing my transformers, cable, connectors, or wiring techniques for reasons stated previously.

    Regards.
     
  3. Mike M

    Mike M LawnSite Bronze Member
    from usa
    Posts: 1,941

    I'm just saying that's an expensive insurance policy. Not only will you use four times the needed resources, you will also have to dig more trenches. You may as well dig a hole and bury a halogen fixture at each stake, too.

    James, you know what would be interesting? I searched online but didn't find it: what are the Japanese using for garden lights? That would be awesome to see, since they are so tight with their limited natural resources and have a knack with electronics.
     
  4. jhuanger629

    jhuanger629 LawnSite Member
    Posts: 49

    Wow, great post. thank you for the great formula
     
  5. irrig8r

    irrig8r LawnSite Platinum Member
    Posts: 4,533

  6. Mike M

    Mike M LawnSite Bronze Member
    from usa
    Posts: 1,941

    Greg, believe it or not, I already saw that article. I think it's in Japanese. May as well be!:laugh:
     
  7. Eden Lights

    Eden Lights LawnSite Senior Member
    Posts: 805

    Thanks for the Formula James, I just plugged in my numbers that I had done in the past and here is what I came up with. Like everything else everyone has a angle and things will be different for everyone.

    This is based on 30 fixtures:

    Energy @.7 per KW
    Halogen $1470
    LED $441

    Lamps
    Halogen $3000
    LED $0

    Labor will be equal for me, because changing the lamp is just a small amount of the time in our maintenance procedures that leds really don't affect.

    Equipment (Based on Kichler List prices)
    Halogen $1800
    LEDS $4050

    Total Cost
    Halogen $6270
    LEDS $4491

    Difference of $1779 or $60 per fixture
     
  8. Mike M

    Mike M LawnSite Bronze Member
    from usa
    Posts: 1,941

    To be clear, you guys should breakdown an analysis based on comparing the installation price between LED and halogen systems, first. Since that will be the first bill they will pay.

    Then, compare long term value in service and longevity of light source, and energy consumption.

    Then, compare the entire investment over a set number of years.

    That is how I did it, except mine includes differences in transformer and wire, and installation configuration. :)

    Keep in mind the additional value of a dimmable, more controlable system.
     
  9. INTEGRA Bespoke Lighting

    INTEGRA Bespoke Lighting LawnSite Platinum Member
    Posts: 4,102

    Eddie. A couple of things....



    My numbers are based on comparing LED MR16 Lamps Vs Halogen Lamps... So I dont have fixture cost differences to deal with, the fixtures are the same no matter what lamp I use. All the sealed LED fixtures from Kichler etc come at a huge premium. I believe they are trying to cash in to be honest.

    I really doubt your true cost of electricity is $.07 per KWh. Add in the surcharges, delivery charges, and taxes to get your REAL cost. Here it is .14 per KWh actual.

    You really should be adding in your labour costs on lamp changes/maintenance. To suggest that there are none is not accurate. You are paying for it, so add it in. This includes your time on site divided into the number of fixtures maintained, paid breaks, the whole bit. Not accounting for actual costs is a easy mistake to make in any business. Do an audit sometime and you will be amazed. (I budget 10 mins for ground mounted and 20 mins for tree mounted, of which a majority of my fixtures are)

    Base your lamp prices on what you charge the client not on your cost.

    Do the calculation on a per fixture basis first and then extrapolate to the system, not on a system wide basis.

    Regards.
     
  10. JoeyD

    JoeyD LawnSite Silver Member
    Posts: 2,933

    I think california is up to like .20 per KWH. I try not to stare to long at my Electric Bill becuase it seems to grow more and more.
     

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