# LED Return of Investment Calculations

Posted by admin on Aug 4, 2010 in Utility Bill | 0 commentsDue to the widespread application of LED technology in a lot of lighting discipline, many clients are satisfied by what that technology gives them. As known information, purchasing the LED lighting system will cost much as compared to the traditional lighting systems being implemented, but that is only at the first cost. Employing the system will definitely mean an investment. Because of adopting all the benefits and advantages of employing LED bulbs, the investment can be returned not in terms of money, but in terms of financial savings. The rate of return of investing in the LED can be computed by using the LED ROI calculator. This calculator determines the yearly power and energy cost savings and possible lifetime saving once you decided to replace those conventional lighting system to LED.

Now to compute the ROI of LED, first one must determine the following important details regarding the bulb to be replaced and the LED.

1. Original Bulb wattage

2. LED replacement bulb wattage

3. Number of bulbs to be replaced

4. Number of Hours of use per day

5. Number of possible days to use

6. Number of possible weeks to use

7. Energy cost per kWh

8. LED replacement bulb life (in hours)

9. Cost of LED replacement bulb (each)

10. Original bulb life (in hours)

11. Possible labor cost in changing original bulb (maintenance)

12. Cost of original bulb

13. Cost to install replacement LED light

Those are the needed information in computing the following:

1. Total kilowatts saved

2. Total kilowatt saved per year

3. Total energy cost saving per year

4. Lifetime energy cost savings

5. Total lifetime bulb changing cost savings (maintenance)

6. Total amortized replacement cost savings per year

Mathematically, this works by the following formula:

1. To compute for the Total Kilowatts Saved:

D = {(a-b)*c}/1000

Where: D= total Kilowatts saved (kW)

a = original bulb wattage (W)

b = LED replacement bulb wattage (W)

c = # of bulbs to be replaced

2. To compute for the Total kilo watt hour saved per year:

H = D*e*f*g

Where: H= Total kWh saved per year (kWh/yr)

D = total kilowatts saved

e = total number of hours use per day (hr/day)

f = total number of days per week (day/week)

g = total number of weeks per year (weeks/year); 52 weeks max per year

3. To compute for the total energy cost savings per year:

J = H*i

Where: J = total energy cost savings per year ($)

H = total kWh saved per year (kWh/yr)

i = energy cost per kWh ($)

4. To compute for the lifetime energy cost savings:

M = (k/l)*J

Where: M = Lifetime Energy Cost Savings

k = LED Replacement bulb life (hrs)

l = total number of hours used per year (hr/yr)

J = total energy cost savings per year ($)

*** To compute the simple payback on energy consumption:

O = (n*c)/J

Where: O = Simple payback on energy consumption (yr)

n = price of each LED replacement bulb

c = # of bulbs to be replaced

J = total energy cost savings per year ($)

***To compute for the ROI

P = 100 / O

Where: P = ROI (%)

O = Simple payback on energy consumption (yr)

5. To compute for the cost savings from upgrading to LED; Total lifetime changing cost savings

Q = {(k/r)*(s+t)*c}-u

Where: Q = total lifetime changing cost savings ($)

k = LED Replacement bulb life (hrs)

r = original bulb life (hrs)

s = labor cost in changing the original bulbs

t = cost of original bulb

c = # of bulbs to be replaced

u = cost to install LED replacement

6. To compute the total amortized replacement cost savings per year:

V = Q/w

Where: V = Total amortized replacement cost savings per year ($)

Q = total lifetime changing cost savings ($)

w = (k/l) (yr)

*** To compute the simple payback on energy consumption plus replacement costs:

X = n/V

Where: X = simple payback on energy consumption plus replacement costs (yr)

n = price of each LED replacement bulb ($)

V = Total amortized replacement cost savings per year ($/yr)

*** To compute the ROI:

Y = 100/X

Where: Y = ROI (%)

X = simple payback on energy consumption plus replacement costs (yr)

Those are the things that can be computed by the LED ROI calculator given all the necessary details in replacing the traditional bulbs with new LED fixtures.

Click Here to Use Our FREE LED ROI Calculator