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Calculating Return on Investment for Industrial High Bay Retrofits

Calculating Return on Investment for Industrial High Bay Retrofits

Getting Started

It seems everywhere you look, there is advertising for LED lighting. It’s the new cool thing in electrical distribution, and if you are a owner of a building that is more than 10 years old, you can’t help but wonder whether you should spend the time, money and effort to change out those old, uncool (literally) and energy sucking incandescent, fluorescent and high intensity discharge (HID) lamps. Learn how to calculate Return on Investment for Industrial High Bay Retrofits

One of the most common applications of HID lighting is in industrial and commercial facilities that have warehouses with high ceilings. These warehouses need high wattage lighting to sufficiently light a factory floor or storage space. For the purposes of this article, we will focus on the total costs for the replacement of a 400W Metal Halide fixture with an equivalent wattage LED fixture in an industrial or commercial warehouse. These fixtures are extremely common throughout the United States because of their availability and low costs. Metal Halide lamps are a type of high intensity discharge lamp that creates light by igniting a mixture of metal halide and mercury gas. LED stands for light emitting diode, and create light when the diodes are energized (to those lighting engineers out there, please excuse this simplified definition).

To get started, let’s compare the products costs between a 400W Metal Halide fixture and an equivalent wattage LED fixture that produce the same amount of lumens.

400W Metal Halide High Bay Fixture = $175.00

400A Metal Halide lamp = $11

200W (400W equivalent) LED High Bay Fixture = $175.00

200W LED Lamp = included

LED cost difference = -$11

Product savings over the life of an LED lamp

The typical life of a Metal Halide 400W lamp is 10,000 hours, and the typical life of a LED lamp is 50,000 hours. Assuming the lamp is energized 10 hours a day, the LED lamp will last about 10 years longer than the Metal Halide lamp. This means, over the life span of an LED lamp, a Metal Halide lamp will need to be changed 6 times. Granted the Metal Halide lamps are only $11 each, but there are also costs associated with the time to change them out. Assuming that takes 30 minutes, multiplied by a $20 hour wage = $21 * 6 = $126 additional product costs over the life of an LED lamp.

Energy Savings

Energy savings is not only good for the bottom line, but also for the environment. Lower energy uses means less pollution, less demand on the grid which lowers our infrastructure costs, and a lower overall cost of living for everyone due to decreased energy demand.

Energy usage in the United States is measured in Kilowatt hours. A kilowatt is 1000 watts, and a watt is volts times amps. A typical rate for a kilowatt hour in the United States is 12 cents, so we will use this number for our example.

Let’s do the math to determine the savings over the lifespan of an LED replacement fixture.

The reason LED fixtures are so attractive is not only do they last longer, but in industrial and commercial applications, it only takes a 200W LED fixture to equal the same brightness, or lumens, of a 400W HID fixture. Assuming in a standard application the lights are on for 10 hours a day, and there are about 250 work days in a year, the LED fixture is running a total of 2500 hours in a year. An LED fixture consumes 200W less than an equivalent HID fixture as we stated earlier. To determine the kilowatt hours, which is how we are billed for energy usage, we divide 200 by 1000 to equal .2 kilowatt hours. We multiply .2 (kw hours) *12 cents for kilowatt hour to get .024 cents per hour savings. Multiply this by 2500 hours, we see a savings of $60 per year, or $600 over the life of the fixture. Add this to the product savings of $126, and you have a total savings of $726 over the life of the fixture. Now multiply this by 10 fixtures for a 10,000 square foot facility, and you have a total savings of $7260 over a 10 year period. Definitely worth it I would say!

It is important to know that not all LED fixtures are of equal quality. My advice is to use a name brand manufacturer such as Lithonia, Philips or GE. It’s tempting to use off brand manufacturers because of the initial lower cost, however the savings can be greatly diminished if the fixtures are defective, or do not last past the warranty period. There are qualified electrical contractors in every town that can help with converting incandescent lighting to LED. For a list of contractors in your area, visit your local IBEW site or NECA.

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