Nearly half a century after their invention, light-emitting diodes are moving into the spotlight for businesses looking to save energy.
In October, the Chili’s restaurant chain announced plans to outfit 827 restaurants with 125,000 LED lamps—an installation that the company claims will save up to $3.7 million per year and mark the largest LED rollout in the United States to date. Best Buy, meanwhile, has pledged to install 35,000 LED lamps in place of halogen bulbs for digital-camera displays and high-end audio and video showrooms. Walmart, which devotes one-third of all energy in most of its U.S. stores to lighting, now uses LEDs to light freezer cases, jewelry displays, exterior signage, and hundreds of parking lots and recently began introducing the technology for general lighting on the sales floor in a pilot market. “Everything at some point will switch over,” Charles Zimmerman, vice president of international design and construction for Walmart, predicted in an interview.
LEDs, which last orders of magnitude longer than incandescent bulbs, typically slash the energy required for lighting by as much as 80 percent. They have been used in some display and signaling applications since the 1970s, but because they come with high price tags, they have yet to garner a significant portion of the general illumination market. So large installations by companies like these mark important progress for LEDs.
LED light fixtures that are designed to replace screw-in incandescent bulbs still cost $40 or more for the equivalent of a 60-watt bulb and $20 for a 40-watt equivalent. LED tubes often cost as much as $50 to $100, versus as little as $2 to $10 for fluorescent counterparts. But LEDs save money over their life span because they use less electricity and last longer. A four-foot LED tube will typically require only about 15 to 25 watts of power, compared with 30 watts or more for a fluorescent tube that will last half as long.
Increasing efficiency and decreasing costs are expected to make the technology more competitive during the next few years—and incandescent bulbs are being phased out by law. So LEDs, which have long been expected to disrupt the lighting market, may finally be poised to do so. By 2020, someone using LEDs instead of standard fluorescent lights can expect to recoup the higher investment in less than a year, according to Michael LoCascio, a senior analyst with Lux Research. By that time, the firm predicts, LEDs will account for 60 percent of all low-bay lighting (overhead lighting, typically for ceiling heights of less than 20 feet) in commercial, industrial, and public buildings, up from just 1 percent today. Lux also forecasts that LEDs will make up 42 percent of the residential lighting market by 2020. Virtually no homes use LED lighting today.
LEDs cost more in part because they require special fixtures and use chips and control electronics. But these electronics mean that LED lights can be networked, which can lead to new efficiencies. For example, a company called Digital Lumens says its lighting management software for LEDs can reduce a business’s lighting-related electricity expenses by 90 percent and pay back their cost within about two years. At the same time, manufacturing scale is increasing and LED makers are able to pump in higher current and get more output per chip. This means fewer chips are needed to produce a given amount of light, while other portions of the lamp, such as thermal management systems (for conducting away energy lost as heat), can be simplified to further reduce cost.