Energy Savings
February 5, 2016 08:00

That’s a great question and one we hear all the time. Remember anytime you spend money on a facility improvement, it should pay for itself or it’s not a wise investment.

Your ROI is easy to calculate because it all boils down to three things:

  1. The quantity of high bay fixtures in your facility
  2. The total annual hours your lights are on
  3. Your blended electric rate, known as your KWh rate

As a manager or business owner, you can’t make an informed decision on a lighting retrofit upgrade without knowing your return on investment.

The most critical factor are your hours of operation. The longer your lights are on each day, the faster your payback will be.

Think about it, the cost of your new fixtures and your installation are the same for a one shift operation as a three shift operation, however the company operating three shifts will save 3X the energy, paying for their LED lighting retrofit 3X faster.

Let’s calculate a sample payback for a typical company who currently uses standard 400 watt metal halide high bay fixtures and is considering converting to LED high bay lighting by contracting with a turnkey lighting retrofit contractor.

We’ll assume the following:

  • Customer operates two, 8 hour shifts, 5 days a week (ie. 4160 hours annually)
  • Customer has 100 MH fixtures and will convert to 100 new LED high bays
  • Customer will have a lighting retrofit contractor handle this turnkey project
  • Let’s assume a completed lighting retrofit project cost of $35,000
  • We’ll use a blended KWh rate of .11 cents as their energy cost (typical)

100 each 400 watt MH high bay fixtures draw 458 watts each
100 each 16,000 lumen LED fixtures draw 141 watts each
The LED fixtures will save 317 watts x 100 fixtures x 4160 hours annually/1000 for KWh x 11 cents per KWh. This comes out to a $14,506 in annual energy savings. Add to that a conservative annual maintenance cost savings of $1225. Your annual combined savings totals $15,731. With a $35,000 project cost your simple payback is 2.2 years.

LED Lighting Retrofit Benefits (in addition to your energy savings)

  1. 1. You’ll virtually eliminate maintenance costs in the futures since LED fixtures have an average rated life of 60,000-70,000 hours
  2. 2. Your shop will likely be twice as bright, helping to improve safety as well as your productivity.

To learn more about the benefits of having a lighting retrofit project performed in your industrial facility, click on the video below: