When Jason Chroman relocated from San Francisco to the suburbs, he and his family moved into a bigger, newer house. It was all exciting until their first electric bill arrived.
"The house was maybe 30 percent bigger, but the electric bill was something like 200 percent more," Chroman said. So he started trying to figure out what could be using so much power. He found the answer when he looked up: "Because it was a new house, it had a lot of recessed lighting, all of which was incandescent."
Chroman is vice president of finance at a Silicon Valley startup called Tubular Labs, so he put his money skills to work at home. The question: Since LED lightbulbs cost more but use less energy, how soon would they pay for themselves? He was surprised to find that because of California's high energy prices, he could recoup his costs in less than two months.
"When I figured out the economics of each bulb, I upgraded all the bulbs in the house," Chroman said. "It cost me a bundle, but my power bill went down by about half. I was blown away by how much electricity lighting consumes."
Chroman's home is big and his power rate high, but the numbers are compelling even for an average home with 40 lightbulbs. The average rate for electricity is 13 cents per kilowatt hour. If all 40 lightbulbs were 75 watt incandescent, which is pretty typical, you could convert to 11 watt LEDs to get the same amount of light.
Here's the math for using incandescents vs. LEDs if you leave all 40 lights on five hours a day:
- Monthly cost per bulb: 75-watt incandescent ($1.46); 11-watt LED (21 cents)
- Monthly cost per 40 bulbs: 75-watt incandescent ($58.40); 11-watt LED ($8.40)
- Yearly cost for 40 bulbs: 75-watt incandescent ($700.80); 11-watt LED ($100.80)
In this scenario, homeowners would save $600 a year by switching from incandescent to LED bulbs.
But what about the cost of the bulbs themselves? When LEDs came on the market, there was serious sticker shock. LED spotlight bulbs, for example, once cost as much as $100. But plenty of LED bulbs are available for $5 apiece online, and they can cost even less thanks to rebates offered by power companies. By comparison, incandescent bulbs cost about $1 each, although prices probably will increase as they become scarce because of the government requirement. Prices vary, but let's say the difference between a basic LED and an incandescent bulb is $4. According to the math above, the monthly usage savings for one bulb is $1.25. So most people can recoup the cost of a new LED bulb in just more than three months.
LEDs can save not only money, but also time, with fewer trips to the store and up the ladder, since they last about 25,000 hours. That's more than 13 years, if you keep your lights on five hours a day. Incandescent bulbs last only 1,200 hours; compact fluorescents, 8,000 hours.
And LED bulbs save energy.
But not all LEDs are created equal. Look for the Energy Star label. This means they meet standards for brightness, color quality, efficiency, steadiness and immediate lighting.