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It seems businesses are working even harder to cut their energy costs, seeing energy reduction as a necessity to remain competitive in their respective fields. According to this excerpt from the ASHRAE HVAC&R Industry newsletter, the Deloitte Center for Energy Solutions conducted an annual survey ("reSources 2012") which showed that not only have 90% of businesses set goals for energy reduction, but that they plan to cut nearly 25% of their energy use over the next 3 - 4 years.


EXCERPT:
Businesses View Saving Energy as Financially Vital
HOUSTON—Ninety percent of companies have set goals on electricity use and energy management practices, according to a recent survey by the Deloitte Center for Energy Solutions. The annual survey, "reSources 2012," also found that businesses are driving efforts to cut energy consumption, and plan to cut their energy use nearly 25% over three to four years. Eighty-five percent of respondents view reducing electricity costs as essential to staying financially competitive.

Click here to read the survey results 



-Jesse M.

Well, that depends on a number of factors. I went through some past client files and dug up an "average" home. This 1580 sqft home's annual electric bill is approximately $2423/year for about 17,303kWh/year @ $.14/kWh, plus the monthly service fee of about $9. Of this 17,303kWh, about 2000kWh is consumed by interior lighting. There are approximately 70 60-watt light bulbs in the home. The new LED manufactured by Philips uses 15 watts to produce the same amount of light as the existing 60-watt incandescent light bulbs.

Now, the math.

Replacing all 70 of the 60-watt bulbs will, in theory, reduce the 2000kWh/year to approximately 500kWh/year. This is a savings of approximately $153/year. 

Now, the standard price tag on these bulbs is roughly $60/bulb. So to replace 70 of them is an investment of $4200. This cost, divided by the annual savings, $153, equals approximately 27.45. This is the number of years it will take for your savings to equal your investment. After that point, the investment turns to profit. However, this is greater than the expected lifespan of the bulbs (20 years, a savings-to-investment ratio of about 0.7:1), meaning you'll have replaced most, if not all of them, by the time this happens, and that you won't actually profit from the investment.

Now, let's say you purchase the bulbs at the "discounted" cost described in the Yahoo! Finance article linked at the bottom of this blog, $22. You've now only invested $1540 for the same annual savings of $153. 1540 / 153 = ~10.07; about half of the expected lifespan of the bulbs. At this rate, your savings-to-investment ratio is nearly 2:1. That's 100% profit, just by changing out some light bulbs. Now take into account the fact that in this 10-20 year period, utility rates are only going to rise, and it's obvious that the investment becomes more worthy over time.

In conclusion, while the investment's not worthy at $60/bulb right now, it may very well be worthy as the cost falls, utility rates rise, and as the phase-out of incandescent light bulbs progresses.

EDIT:
Mind you, this is also assuming that the bulbs will actually last 20 years each. Depending on usage and misinformation (considering the bulbs haven't been out for 20 years, we can't know for sure that they will last that long), their lifespan is really unpredictable, and they may not last anywhere near 20 years. However, in the example above, so long as they do last longer than 10 years (and were purchased at the discounted rate of $22), the homeowner would remain in the black.

-Jesse M.

Reference:
http://finance.yahoo.com/news/rebates-cut-price-60-led-222118250.html