Lighting Retrofits: LED Payback Calculations Done Properly
LED retrofits are one of the more straightforward energy upgrades, but the payback claim on a vendor's flyer often skips real-world details. Here's how to check it properly.
Why the generic payback figure on a flyer is often optimistic
A vendor's generic '2-year payback' claim usually assumes a specific number of operating hours per day and a specific electricity rate that may not match your actual site — a space lit only during business hours has a very different payback than one lit continuously, even with identical fixtures.
What a proper calculation actually accounts for
Actual operating hours for the specific space (not a generic assumption), your real electricity tariff (including any TOD variation, if the space is lit during peak-rate hours), and the maintenance savings from LED's longer lifespan versus the fixtures being replaced, which is a real cost saving vendors often leave out of the headline payback number.
Where retrofits pay back fastest
Spaces lit for long hours (warehouses, parking areas, factory floors running multiple shifts) see the fastest payback, since the savings accumulate proportionally to actual usage hours. A space lit only a few hours a day sees a genuinely longer payback — still often worthwhile, but worth calculating honestly rather than assuming the same timeline applies everywhere.
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