Cost-benefit analysis

The introduction of LEDs has led to a rush among customers, architects and specifiers to use the new technology in new and modernised installations.
However, to use LEDs should be done with care. Not all applications are suitable for a LED installation. For example, the higher cost price of a LED luminaire compared to one using a conventional light source may not be recouped during the installation’s life time. Therefore, a total cost of ownership approach is crucial, analysing investment in luminaires, energy costs, lamp change costs, cleaning costs and others. Also, sensors should be taken into account, since they will reduce energy costs and increase luminaire lifetime further. In most cases, a LED solution’s annual costs including capital costs would be lower than that of a conventional solution.

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The figure explains the principle of total cost of ownership. The initial investment in the LED installation may be higher than a traditional lighting installation, but the LEDs lower energy consumption and maintenance cost may provide a lower total cost over the lifetime of the installation.