Are LEDs a Good Deal?

Fifty years after they were invented LEDs or light-emitting diodes have at last become widely accepted and a conventional source of interior lighting.    Yet customers still struggle with the perception that they are more costly than alternatives.

First let us define LED lighting.  Then we’ll review whether energy efficient lighting makes sense and whether LEDs are cost-effective.


LEDs have been a familiar part of our lives for decades, often seen in the little indicator lights on televisions, digital clocks, dashboards.  Today they are replacing interior lighting fixtures such as ceiling fixtures and lamplights as well as numerous outdoor lighting displays, street lamps and stoplight.



Unlike incandescent bulbs or fluorescent lights, LED lighting is a solid state technology that makes light from a combination of semiconductors and electroluminescence.  Semiconductor materials transmit electric current from one metal to another; as the electrons move toward positively charged ions light is emitted.    Different kinds of materials emit different color light:  Gallium arsenide emits red, gallium nitride blue, and yttrium aluminum garnet white (although white is also produced by a combination of blue, red and green).

LEDs have several advantages over alternative light sources:

  • They produce light hundreds of times longer than alternative sources
  • Bulbs are 5-6 times more efficient than incandescent bulbs per unit of electrical input.  The same amount of energy that creates 13-18 lumens in an incandescent bulb and 55-70 lumens in a compact fluorescent bulb (or CFL) produces 100 lumens in an LED
  • Bulbs are made of epoxy materials instead of delicate glass
  • Light is directional and not diffuse so less light is lost with reflectors required to direct the light.  The earliest LEDs were too focused but this has been corrected.
  • LEDs emit little heat compared to incandescent bulbs which lose 90% of their energy in heat and CFLs which lose 80% of their energy in heat
  • They contain no mercury or other harmful chemicals

At the same time LEDs have a few disadvantages that engineers are working to fix:

  • The light is often viewed as “cold” or “harsh” and so must be muted for some interior purposes
  • The bulbs require a number of rare earth minerals that are produced in some politically challenging countries and subject to monopoly control
  • External heat (as opposed to heat produced by the bulb) can interfere with brightness so exterior streetlamps may need to be cooled by a fan
  • Soldering joints can be brittle if bent or moved.

In addition LEDs are more expensive on initial purchase.  The next section examines whether LEDs are cost-effective given their price.


Up until a couple years ago the costs of LEDs were considered by many building owners as prohibitive.  Worldwide demand fueled by government incentives has led to a rapid decline in LED costs.

Today, initial installation costs of LEDs are 2-3 times alternative light sources.  However, life-time costs are a fraction of comparable costs for alternative lighting technologies.

When coupled with savings in the cost of electricity required to operate LEDs, LEDs are unquestionably cost-effective.

Installation Costs.  Today a 60-watt equivalent LED can be purchased for under $5 or less than 5 times the cost of an incandescent bulb for about $1.

The following chart was prepared by  Assuming 2 hours per day of usage and electricity costs of $.11 per kilowatt, the energy savings of both an LED will offset the additional cost of the bulb within two years.


Note that when we refer to “installation costs” we have ignored the cost of labor.  Many interior lights require mobilizing scaffolds, scissor lifts and other expensive equipment to replace lighting.  The longer lives of LEDs reduce that inevitable expense.