Are LEDs Cost Effective?

Costs of LED lighting products do vary widely with good-quality LED products carrying a cost premium when compared with lower quality, inferior designs. Nevertheless, over recent years production costs of LED devices has declined rapidly, primarily as a result of the adoption of LED technology in the production of HD TV’s.

To truly understand the cost effectiveness of LED technology in lighting it is important to consider total lamp replacement, energy usage and maintenance costs over the expected life of the LED device. This form of “over-life” analysis provides a clear comparison of the real costs of ownership between LED lights and traditional incandescent or halogen options where the benefits of LED technology become apparent.

The operational life of current, highly evolved, proven and certified designs of white LED downlighter lamps is in excess of 100,000 hours. This is 11.4 years of continuous operation or 22.8 years of 50% operation. The long operational life of an LED luminaire is a stark contrast to the average life of a halogen bulb, which is approximately 5,000 hours.

An “over-life” comparison between LED, fluorescent and halogen luminaires/bulbs as shown below clearly indicates that the true cost “over-life” is the energy cost plus that of replacement bulbs and time needed to replace them.

Total cost per light for 100k hours


These overall savings are significant especially where there are a large number of installed fluorescent or halogen luminaires/bulbs. For office buildings and skyscrapers, maintenance and disposal costs to replace light bulbs and fluorescent tubes can be enormous. These issues can all be virtually eliminated with an LED option.

The table overleaf illustrates the savings available assuming 25 bulbs per household where it becomes very apparent that LED technology is dramatically more efficient and the “over-life” savings are substantial in comparison.

Based on the “over-life” comparison above:

Total cost of running 25 luminaires


The key strength of LED lighting is reduced power consumption. When designed properly, an LED circuit will approach 80% efficiency, which means 80% of the electrical energy is converted to light energy. The remaining 20% is lost as heat energy. Compare that with halogen lamps which operate at about 10% efficiency and 90% of the electrical energy is lost as heat energy.

In real money terms, if a 50 Watt halogen luminaire is used for 1 year with an electrical cost of 14p per kilowatt hour, approximately £60 will be spent on electricity costs. Of that £60 expense, £54 will have been used to heat the room rather than light the room. Compare this with an equivalent LED device and it is easy to see how the energy savings are generated.

LED technology in street and amenity lighting offers the potential for local government authorities, councils and highway management operations to generate substantial energy savings and to dramatically reduce maintenance costs. Furthermore, LEDs offer dim down based systems which can offer full flexibility dependant on traffic or pathway usage. The ability to dim and instantly control the light level and density using LED technology combined with an intelligent lighting system offers even greater levels of energy saving potential, way beyond any conventional technology.

The table below illustrates a very typical example of where LED technology stands in terms of real light output equivalents where the LED systems are operating at around 85% efficiency against standard off the shelf Fluorescent and halogen/incandescent technologies:

Comparison of light output


The table below compares the significant characteristic features of LED, fluorescent and halogen / incandescent technologies:

Comparison of the significant characteristic features of LED, fluorescent and halogen/incandescent technologies



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