Investing in energy-efficient lighting

tl;dr I just saved a bunch of money by replacing some light bulbs with energy-efficient alternatives. Once you're debt free, your most profitable investments may be in energy efficiency upgrades.

Ever since I paid off my student loans, I can be a bit more relaxed with money. For an upstanding Mustachian that doesn't mean daily or even weekly lattes at Starbucks. It means that, now that I've exhausted my 6.8% guaranteed-return investment opportunity (i.e. student loan debt payoff), I have to search for other attractive investment opportunities.

I want to fill you in on one such "investment" that we made: replacing a bunch of light bulbs and fixtures with energy-efficient compact fluorescent bulbs (CFLs). I did not do a cost-benefit analysis before making the plunge; well, nothing besides thinking "gee, I bet I can save money on electricity with CFLs since that feels like the prevailing wisdom nowadays". I want to do that cost-benefit analysis now to see how good or bad an investment we made, and to give ball-park figures for your own energy efficiency improvements.

We made two changes: first, we replaced six overhead light fixtures in the basement and hallways; second, we replaced the decorative globe incandescent bulbs in both our upstairs bathrooms with CFL equivalents.

Since we moved into our house, I have hated the light fixtures in the basement. They were these brass-colored fixtures whose covers were in various stages of falling apart. Maybe they looked good when they were original, but they certainly didn't look good when we arrived. (I wish I had a picture to show but I'm not sure I took one. I'll post one if I do dig one up.) They took these bulbs, 25-watt globe with candelabra base. Six for the large fixtures, three for the small fixtures. I'm intimately familiar with this type of bulb because of the number of times I've had to replace them. I must have replaced dozens upon dozens of these bulbs in the less-than-two years we've lived in our house. I'm not sure why, but after replacing all the dead bulbs, the first burn out would occur within a week or two. Then in the next month or two we'd lose another one or two (this is per-fixture, by the way). The net effect was 1) most of the time half our bulbs were burnt out, 2) way too much time spent replacing bulbs, and 3) way too much money spent replacing bulbs.

I forget what the last straw was, but in late January I went to Lowe's and bought new fixtures. We decided on a chrome finish and frosted glass (see pictures). For three large fixtures and three small fixtures, the total cost was $224.78. Each came with a single CFL that retails at somewhere between $5 and $7 (I haven't had to replace any in the two months we've had these fixtures installed).

The old fixtures used 27 incandescent candelabra bulbs at once. I'd guess that on average half were burnt out, so let's say there were 14 on when the lights were on. That's 350 watts for the old fixtures. The new bulbs use 27 watts each, but there are only 6 of them, so that's 162 watts. If I had to guess at how much we use those lights, I'd say 4 hours per week night and 10 hours per weekend day, for about 160 hours of lighting per month. That means about 30 kWh saved per month, at a cost of around $3 per month. Even if I'm way over-estimating our lighting usage, half that savings is $1.50 per month which is pretty good.

I'll admit these are very rough estimates. But I think they clearly demonstrate that investing in energy efficiency offers great returns. Investing $250 at a safe withdrawal rate of 3% will give you around 62 cents a month for the rest of your life. Buying and installing new light fixtures in my basement cost less than $250, and is saving us somewhere north of $1.50 per month

It would have been even better if I didn't totally hate my basement light fixtures, and I could have just replaced incandescent bulbs with CFLs. As luck would have it, that's exactly what we did in our upstairs bathrooms.

Between the two upstairs bathrooms there are 18 light bulb fixtures. Here are the CFL replacements: G25 globe with medium base. They say they're 40-watt replacements but all the bulbs we had were 60-watt bulbs so that's an even bigger energy savings. At $20 per 3 bulbs, our initial outlay was $120. Here's the equivalent incandescent bulb at Home Depot, at $6.42 for 4 bulbs, or about $1.60 each (versus $6.67 each for the CFL version). The CFL says it lasts 9.1 years based on 3 hours per day, or around 9970 hours. The incandescent advertises 1500 life hours. So not only are CFL life hours cheaper, but CFLs are also cheaper to operate. How much cheaper? 3 hours per day, 30 days a month, times 18 bulbs at 60 watts each is 97.2 kWh. At ten cents per kWh that's $9.72 per month. For 40-watt incandescents that number is $6.48 per month. For CFLs it's $1.78 per month.

One minor word of warning: the bulbs take about a minute or two to warm up. During the warm-up time the interior CFL coil is visible so you may consider it unsightly. It's not something I mind now that I'm used to it, but it's something to be aware of.

We're saving $7.94 per month with the new bulbs (at 3 hours per day of use). That kind of income would take a stash of over $3k at a 3% SWR. Well worth the $120 outlay for the bulbs. And that's not even counting the lower cost to replace the CFLs.

Here's a chart summarizing the above data:

	40W Incandescent	60W Incandescent	CFL
Cost per bulb	$1.60	$1.60	$6.67
Life-hours	1500	1500	10000
Cost per thousand life-hours	$1.07	$1.07	$0.67
Cost per year (3hr/day, $0.11/kWh)	$4.81	$7.22	$1.32
Lumens	370	660	500

In conclusion, once you're debt free, your most profitable investments may be in energy efficiency upgrades.