LEDs: Energy-Efficient Business Lighting Gets More Affordable

When it comes to energy-saving opportunities for businesses, lighting frequently tops the list. Every business needs lights, and energy-efficient varieties – such as compact fluorescents (CFLs) and T8 fluorescent tube lights – use 40 percent to 75 percent less energy than their conventional (dare I say “old-fashioned”?) counterparts. Replacing older lights with more efficient alternatives often pays back in less than two years – far quicker than other, more costly energy upgrades.

But there’s another big lighting opportunity on the horizon: Light-emitting diodes, or LEDs.  They are getting more affordable, too.

LEDs: Energy-Efficient Business Lighting

Many businesses already use LED-lit exit signs and “Open” signs because they are cost-effective alternatives to signs with less efficient bulbs. And many large corporations, from Wal-Mart to Starbucks, are starting to invest in LEDs for many different types of fixtures.

But most small businesses don’t currently use LEDs in their light fixtures because of the substantial upfront cost. CFL bulbs may cost $2, while an LED light bulb can cost more than $30. However, it’s hard to overlook the energy-saving potential: LEDs use less than half the electricity of fluorescent lights and can last more than 30 years.

Consider this: One 60-watt incandescent light bulb might cost $12 in electricity a year to operate, while a CFL might cost $3 and a LED might cost $1.50. But once you factor in the upfront cost of the bulbs, it takes far longer to pay off the LED. The real savings comes in the long lifespan of LEDs. Moreover, LEDs tend to have a more pleasing, softer quality of light than fluorescents and don’t contain mercury.

The economics of LEDs is getting brighter every day, and there’s reason to start considering them. The New York Times recently reported that the price of certain LED light bulbs had fallen below $20 at Home Depot – several years before forecasters ever thought they’d get so affordable. When the price starts getting below $10 or $15, it may be time to buy.

Moreover, there’s already some financial help for businesses interested in installing LEDs. Some state programs and utility companies have introduced rebates for businesses that install LEDs, greatly reducing the price. Efficiency Vermont, an energy-efficiency advocacy program, offers $30 rebates for businesses that install Energy Star-qualified screw-in  and pin-based LEDs and $150 for businesses that put in LED directional track lighting. That goes a long way toward helping cover the big upfront cost.

It might be worth seeing what incentives for LEDs are available to your business.


Kelly Spors Kelly Spors is a former small-business and entrepreneurship reporter and blogger for The Wall Street Journal who has also written for Yahoo!, Entrepreneur, NFIB's MyBusiness magazine and The New York Times. Kelly is now a freelance editor and writer based in Minneapolis and has previously managed communications for an environmental non-profit that helps businesses find ways to be greener.

5 Reactions
  1. I’d love to have LED lighting in my house, but the cost is prohibitive right now. I’ll keep hoping that technology brings down the cost (which it will).

  2. LED lights are more rugged and damage-resistant than compact fluorescents and incandescent bulbs. And they don’t flicker.
    Envirobrite has a product line – CooLED – that actually extracts excess heat from the LEDs through their specially designed fixtures. They are perfect for replacing linear fluorescents in cooler/freezer applications, cove lighting, under kitchen cabinets, outdoor lamps, and many other areas. With CooLED, you get more consistent lighting, better reliability, improved performance and energy savings.

  3. Hi Robert,

    Yes, so far the utility incentives have been primarily aimed at businesses – not residential customers. But with more competition flooding the market, it’s very likely the price will come down rather quickly. It will be a big deal when LED bulbs sell for under $10.


  4. Kelly,

    Thanks for the article. It’s important to keep small businesses in the loop on changes in technology that can help save them money and energy. Energy efficiency has become a major motivation for us at COSE. We released our Energy Resource Guide yesterday at our Small Business Conference; it discusses case studies, best practices, checklists of steps (many of which are low or no-cost), and resources to help small businesses here and throughout the country become more energy efficient. We also have a Lighting Retrofit Program that aims specifically to help small businesses find affordable, turnkey solutions for efficient lighting upgrades.

    For the average small business, lighting can account for upwards of 50% of the electric costs and consumption; this is typically even higher for professional office businesses, for which lighting can take up more than 50%. Lighting upgrades are a great first step to take, as they are cost-effective, save a lot of energy, and usually have payback periods of less than 3 years.

    – Tim Kovach,
    Product Coordinator, Energy at COSE