How to calculate the return on investment when upgrading to LED lighting?

In industrial facilities, a significant part of the cost of running the plant is the consumption of electricity for lighting. This is because, in industrial facilities, it is essential to maintain comfortable working conditions, which affect the quality and efficiency of operations. One way to reduce the energy intensity of lighting systems is to upgrade and replace outdated luminaires with industrial LED lights.

Why is the return on investment calculated?

Retrofitting works are generally associated with considerable monetary outlays. However, the optimisation of energy consumption for lighting leads directly to a reduction in operating cost. Therefore, when deciding to replace industrial luminaires, it is important to keep in mind the resulting potential savings.

How to calculate the return on investment when upgrading to LEDs?

First of all, determine the amout of energy used for lighting and its cost, then establish how far the upgrade should go and find out its cost.

The cost generated by the existing lighting

At first, determine the present condition of the existing lighting system and the associated wiring. This work includes:

• counting the luminaires installed,
• determining the wattage of existing llights,
• assessing the condition of the lighting.

Based on the above data, it is possible to determine the energy consumption of the luminaires. This in turn is an input for the calculation of the cost incurred for the lighting system operation and information on the scope of the planned retrofit.

Analysing the needs and cost estimation of the project

The basis for the selection of appropriate industrial luminaires is the operating profile of the company. Each of them has workplaces with differing lighting requirements. Properly selected lighting is essential for the efficient operation of employees. For this purpose, a preliminary lighting design is made taking into account the needs of the facility. It should include a summary of the luminaires selected and the retrofit work carried out. This serves as the grounds to determine the energy consumption and its price after launching the new solution and the cost of the lighting project.

Calculation of savings and project profitability index

The next stage involves calculating the annual profits from the solution. These are the difference between the cost generated by the existing lighting and the value of the energy consumed with the future project, expressed in a currency.

The return on investment is then determined by taking into account the annual profits as well as the outlay of the planned project. This relationship is the return on investment, or ROI.

All of the above is carried out during a lighting audit.

How to calculate whether an upgrade to LED lighting is going to pay off?

It is already known how to calculate the return on such an investment when upgrading your lighting to LED. Analysing it is also an important aspect. The ROI is actually the financial potential of the investment, which indicates after what period of time the project will be bringing only profits. So the lower it is, the better.

Contact us if you are wondering whether it is worth investing in the lighting upgrade. Our experts will perform an audit and show you the potential of the investment for your business.

Feel free to contact us!

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