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  • LED Lighting Gaining in Cost-Effectiveness

Photonics Spectra
Jul 2006
As the technology advances, the total cost of ownership declines.

Chris James, Cree Inc.

A number of developments are converging to stimulate widespread replacement of traditional incandescent and fluorescent bulbs with LEDs in many general illumination applications. Some call it a revolution in lighting technology. Although several factors are driving this revolution, realization within the lighting community that LEDs can be cost-effective on a total cost-of-ownership basis is emerging as a key consideration of new lighting projects, removing economic obstacles to adoption.


The efficacy of LEDs will increase rapidly through 2012, spurring widespread adoption.

LEDs have historically been considered a relatively expensive approach to general illumination when compared with other technologies, based on the initial purchase price of the lighting system or fixture. The relevant metric, however, is the total cost of ownership measured over the lifetime of the installation. Measurements for the labor and capital costs of maintenance, the cost of bulb and fixture replacement, and the amount of energy savings must be factored into lifetime cost calculations and compared with traditional technologies to determine which is the better solution. Today, in fact, some LED-based applications pay back in as little as one year.

One attribute of LEDs that decreases their relative cost of ownership is the directional nature of their light, which may help to reduce the number required either to comply with an Illuminating Engineering Society (IES) specification or to conform to customers’ personal preferences. For instance, traditional lamps emit light in all directions more or less simultaneously — a full 360° sphere of light — while LEDs and their integrated lens systems emit most of their light in a narrower arc, 110° to 150°, partially because of the lens systems involved. The more directional the light, the more lumens are directed to the application target, such as the desktop or parking lot surface, and the less light is wasted. We call this the concept of “useful lumens” because what matters is how the lumens are applied and not just how many are emitted.

A direct comparison of the number of lumens emitted from a traditional lamp with the number emitted from an LED lamp, therefore, may not be valid. Working with the concept of useful lumens, fewer total lumens may be needed to achieve an equivalent light level. Hence, lighting manufacturers may need fewer LEDs than originally believed, and that may significantly reduce the initial cost.

As an example, consider how one might replace a conventional 100-W streetlight bulb. For standard high-intensity-discharge lights, the total output is approximately 8500 lm, which would require 190 LEDs rated at 45 lm per LED to generate an equivalent amount of light. If we take into consideration the required light at street level according to the IES specification, the useful lumens’ requirement is only about 4700. In this case, we would need only 107 LEDs rated at 45 lm each to generate the required amount of light — a significant reduction.

Moreover, the efficiency of LEDs is increasing rapidly (see figure). The higher the lumens per watt per LED, the greater the amount of light per LED, and the fewer the number of LEDs required for each application.

As the metric of total cost of ownership and the concept of useful lumens become more widely accepted as a means for evaluating lighting technology investments, LED adoption will take off.

Meet the author

Chris James is vice president of marketing and business development at Cree Inc. in Durham, N.C.; e-mail:

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