LED or light emitting diode is a semiconductor device which does not have a filament, like your standard incandescent or fluorescent bulbs, so they last longer and do not contain toxic materials nor radiate other waste energies. They are efficient because they emit light by movement of electrons in a semiconductor material when voltage is applied. What this means to you is that they save energy in the range of 50% to 80% compared to your old standard lighting.
Return on Investment
The calculation of a pay-back period when investing in LED lights depends upon the cost of electricity at a specific location and the type of LED device being used. Since LEDs do not get hot, the facilities that they installed in operate cooler which saves on air conditioning and they do not burn out and have to be replaced like standard incandescent lights. An incandescent bulb can last 1,000 to 2,000 hours while an LED bulb can last 25,000 to 50,000 hours. Therefore, the savings is derived from a variety of areas which are all estimated in a detailed energy evaluation report. There are many experts out there now which can calculate the energy savings almost down to the kilowatt.
LEDs can save money in energy costs anywhere they are installed but a low volume energy user may not realize their return on investment for many years. The energy audit is imperative to distinguish good candidates for LED lighting retrofits. Great examples of high volume users are medical facilities, warehouses, public facilities, parking structures and fast food chains. The ROI for these entities can be very short and almost within a year to a year and a half.
LED lighting and retrofit projects fall into the category of “leasehold improvements” and “consumable products”. Mention both of these characteristics to your average traditional lender and they will be walking away from you before you've finished your sentence. In other words, the level of risk with an asset which can not be reclaimed is beyond what commercial lenders are able to approve. Step in the wholesale lenders and private investor groups which have filled in this gap and have established approval criteria which many healthy companies can meet.
LEDs are now well tested and dependable; financing has been established and a variety of finance and lease programs are available for commercial clients. An energy audit is reliably inexpensively and if your facility is spending thousands of dollars per month on energy bills, an LED retrofit could save you big money in the long run. It is time to embrace this green technology while keeping more money in the bank at the same time.