I recently found myself comparing replacement lightbulbs at my local Home Depot store. Each box touted the details of energy savings, lumens, wattage, and of course, the price. After doing some rough calculations, I found that, at the same cost as traditional incandescent bulbs, LED bulbs offered huge energy cost savings. Later that evening, I went through more formal light bulb comparison calculations, so keep reading to learn what I found.
An Eye-Opening Calculation
My main comparison focuses on a bathroom light fixture that recently had a bulb blow. The fixture contains three bulbs using 60 watts each. I estimated I use the light approximately two hours a day. Here’s how I calculated the energy use for that bulb:
Each bulb is 60 watts, so 60 x 3 bulbs x 2 hours per day x 30 days per month = 10,800 watt hours (wh) or 10.8 kilowatt hour (kwh) per month. My electricity provider charges close to $0.11 per kwh, but when I added in the delivery fees and transfer costs, the cost was closer to $0.183 per kwh. This is how I calculated the cost even further:
Per month, the light uses 10.8 kwh, so 10.8 x $0.183 = $1.97 this single light fixture uses in electricity each month.
The new LED bulbs only use 9w each, or 27w total for the fixture. Using the same calculations above, the LED lit fixture will only consume $0.2964 in electricity per month. This is a savings of $1.67 per month on this single fixture for bulbs that cost the same as their less efficient counterparts.
Using the quoted life of 10,950 hours per LED bulb, I will get 15 years of use and savings. In comparison, I would have to replace a traditional incandescent bulb 10 times over this same period. This is because LED bulbs can last for 10,000 hours or more, while traditional bulbs only last 750 to 2,000 hours.
Household Arbitrage at Its Finest
I’m not a person who has historically been a penny pincher. I understand the value of saving money, even on a small scale, but I always scale this value according to the time and effort it takes for me to attain it. I won’t spend four hours searching for plane tickets just to save $15, but I will research products and services with the time and effort comparable to the value I plan to create.
In this case, some quick calculations and research provided me with more than enough information to start making the switch to LED bulbs. I’ll start with lights that are in the most use and then replace bulbs as they fail throughout the house.
There are special situations where the risk or time you spend on two options is equal, yet the value you gain is different. From a traditional finance stand point, this is defined as “arbitrage.” For the same price as incandescent bulbs, using LED bulbs will lower my family’s energy bill by seven, and I won’t have to replace any LED bulbs for the next decade. Getting a reward without additional risk is household arbitrage at its finest.