Calculating Your ROI When Replacing Fluorescent Office Lighting with LED Strips
If you are looking to reduce operational costs in a commercial office, one significant avenue for achieving this goal is upgrading to LED lighting. Specifically, by replacing fluorescent lights with LED strips. This switch offers remarkable energy savings and long-term financial benefits. In this blog, we'll delve into the details of calculating your Return on Investment (ROI) when making this switch. To illustrate, we'll consider the scenario of an office upgrading 20 panel light 2x4 fixtures from fluorescent tubes to magnetic LED strip lights.
The Initial Investment
Before we dive into the numbers, let's establish the scenario. In this example, the cost of each 2x4 LED strip light retrofit kit, which contains all the parts necessary to convert one fluorescent fixture, is $60. To retrofit 20 fluorescent fixtures, the total cost would amount to $1,000 (20 fixtures multiplied by $50 per kit).
Each of the 2x4 fluorescent to LED retrofit kits used in this example includes two 4-foot magnetic linear LED strips along with an external magnetic-mount LED driver. These retrofit kits are designed to seamlessly replace the existing fluorescent tubes while offering superior energy efficiency and longevity.
The Energy Consumption Saving
A pivotal advantage of LED lighting is its significantly lower energy consumption compared to traditional fluorescent lighting. LEDs boast impressive efficiency in converting electricity into visible light, while minimizing wastage as heat.
Let's consider the following assumptions:
- Each fluorescent tube in the existing fixtures consumes 40 watts, totaling 80 watts per fixture (2 tubes X 40 watts per tube).
- With the switch to LED strips, each fixture will consume only 35 watts.
The energy consumption reduction per fixture is 45% (80 watts - 35 watts) or 0.045 kWh per fixture.
Now, let's calculate the annual energy savings:
Annual Energy Savings = Energy Consumption Reduction per Fixture (kWh) X Number of Fixtures X Hours of Operation per Day X Days in a Year X Cost of Electricity per kWh.
Assuming the office operates for 12 hours a day and electricity costs $0.13 per kWh, the annual energy savings would be:
Annual Energy Savings = 0.045 kWh * 20 fixtures * 12 hours/day * 365 days/year * $0.13/kWh = $418.68.
The Maintenance Cost Savings
Fluorescent lights have a shorter lifespan compared to LED lights. Replacing burnt-out fluorescent tubes and addressing ballast issues can lead to higher maintenance costs over time. Conversely, LED lights can last significantly longer and require less frequent replacements.
While the exact maintenance costs can vary, let's conservatively estimate an annual savings of $50 per fixture in reduced maintenance expenses after switching to LED strips.
Annual Maintenance Savings = Maintenance Cost Reduction per Fixture X Number of Fixtures = $50 X 20 fixtures = $1,000.
Total Annual Savings
The total annual savings from both energy consumption and maintenance cost reductions would be:
Total Annual Savings = Annual Energy Savings + Annual Maintenance Savings = $418.68 + $1,000.00 = $1,418.68.
The Return on Investment (ROI)
To calculate the ROI, we need to compare the total annual savings to the initial investment:
ROI = (Total Annual Savings / Initial Investment) X 100.
With a total annual savings of $1,418.68 and an initial investment of $1,000.00, Return on Investment in this example would be:
ROI = ($1,418.68 / $1,000.00) X 100 ≈ 141.87%.
Your ROI Could Be Even Higher
In this hypothetical scenario, the ROI for upgrading 20 panel light 2x4 fixtures from fluorescent tubes to magnetic LED strip lights is approximately 141.87%. This demonstrates the substantial financial benefits of transitioning to energy-efficient LED technology.
But there's more: The load reduction on the power grid is also so high that many utility companies offer financial incentives to encourage commercial electricity users to upgrade their lighting. In Southeastern Pennsylvania, for instance, PECO commercial customers are able to reduce the cost of retrofit kits to as low as $1/kit plus sales tax. In this scenario, the cost for the kits would come down to $100, which turns into an ROI of 1418.68%! We have an Instant Rebate Finder on all of our rebate-eligible lights that allows you to quickly see if financial incentives are available in your area, and how much they could save you on your new lights.
Beyond the immediate ROI, businesses can enjoy ongoing energy savings and reduced maintenance costs, leading to significant long-term financial gains and contributing to a more sustainable future.