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LED vs. CFL Costs: the Financial Crossover Point has Arrived

Last updated by on January 16, 2016

Ahh, the good ole’ lightbulb. Literally a century with zero technological enhancements in mass marketed products.


Coal-powered energy was damn cheap! In many ways, it still is. But it has risen to levels that can have a noticeable impact on budgets, over the last few decades. And the result has been a flurry of activity in bringing innovative, energy-saving light emitting technologies to the masses.

It couldn’t have come sooner. The incandescent light bulb needed an upgrade. It had a lifespan of about 1,000 hours, on average (merely days if you accidentally touched it with your skin and transferred body oil). It was incredibly unreliable (and occasionally explosive). But worst of all was its horrid inefficiency. At 60W of energy use, only 5% of consumption resulted in visible light – the other 95% as heat. Literally, 95% of your cash vanishing in to thin air. And, no… light bulb heat is not an efficient means of heating a house.

For these reasons, I had never purchased an incandescent bulb as a post-graduate consumer. I went straight to compact fluorescent lamps (CFL’s). CFL’s, which hit the mainstream in the late 1990’s, presented vast improvements over incandescents. They promised 10,000 hour lifespans, weren’t as unreliable, and (at the time) only used 20W of electricity to produce the same light output as a 60W incandescent – for an energy/cost savings of 67%. At about $5 each, they resulted in a positive ROI in year 1.

But CFL’s have always had their detractors.

First, there was the “they don’t turn on fast enough” objections. From my memory, this issue pretty much disappeared within the first year of mass production. Then there was the “the light isn’t incandescent-ey” crowd. This also disappeared within a few years (although the reputation has persisted). And finally, there was the “CFL’s have mercury – don’t buy them” concerns. This one grabbed me for a bit, but a few years ago an Energy Star study on CFL mercury levels showed that incandescents (through being powered mostly by mercury blasting coal plants) actually produced more mercury (5.5 mg) than CFL’s contained and produced, combined (1.6 mg). Check and mate.

Today’s CFL’s now come in at an even more economical 13W and their prices have dropped to about $1.50 per unit. With those efficiencies, the stubborn continued choice of incandescents over CFL’s proved to be an exercise in cutting off one’s nose to spite face.

Still, CFL’s have their downsides:

  • If you have the good (bad) habit of turning lights off when you left a room and on when you entered, CFL’s don’t last much longer than incandescents.
  • Any level of mercury is too much.
  • CFL’s have the ability to occasionally explode when dropped, or otherwise.

And for those reasons, I had always been hoping for something a bit more. Better technology was out there, it just hadn’t made its way to the mass market yet.

That wait ended about a year ago. I made my first switch to light emitting diode (LED) technology, with replacements for my kitchen track lights. These guys run on just 5W, versus a halogen’s 45-50W. The switch produced similar energy savings as the move from incandescents to CFL’s. ROI positive in year 1.

My second switch came when I decided to swap out an old-school 43W CFL in the most commonly used light in my household – the living room lamp. My replacement was the Philips SlimStyle LED. SlimStyle benefits include:

  • LED vs CFL costsJust 10.5W to produce the same light as a 60W incandescent.
  • An amazing 25,000 lifespan (25X that of incandescents and lets generously say 10X that of CFL’s).
  • Absolutely beautiful light.
  • Dimmable (dimmable CFL’s typically cost north of $10 each).
  • No mercury.
  • A 3-year warranty.
  • A hard plastic encasing that would prevent any sort of explosion scenarios (outside of anything short of taking a sledgehammer to it).

By all measures, the SlimStyle and its main competition (the CREE A19 LED) are superior to any of their incandescent, halogen, and CFL predecessors.

However, price has always been the barrier to LED mass market domination. But that is quickly changing. Philips lowered the price of the SlimStyle to $8.97. And recent Energy Star certification has led to prices as low as $1.97 in some states, with state and utility subsidies. I picked one up at Home Depot for $5.97. CREE’s A19 LED previously achieved Energy Star certification and lower pricing, but is still a few dollars higher. The CREE is slightly more energy efficient at 9W for the same output – and has a 10-year warranty vs. 3.

So why buy one? For starters, there’s the whole “we’re destroying the planet” thing. According to Energy Star, “If every American home replaced just one incandescent or CFL light bulb with a certified LED, it would save enough energy to light 3 million homes for a year, resulting in savings of about $680 million in annual energy costs and prevent 9 billion pounds of greenhouse gas emissions per year, equivalent to those from about 800,000 cars.” That’s a huge environmental impact.

What if you hate the environment and you only want only to watch out for el numero uno? What are the cost savings and ROI of switching to an LED? Lets assume 6 hours per day of use over the 25,000 lifespan for LED’s, 2,500 for CFL’s, and 1,000 for incandescents. And a $0.12 kWh electricity cost.

Versus incandescent, the SlimStyle (CREE #’s are close enough) would result in:

  • $167.53 in total savings
  • a 4.2 month payback
  • a ridiculous 3,271% ROI (good luck ever achieving that anywhere else)

Versus the CFL, the SlimStyle would result in:

  • $16.53 in total savings
  • A 50 month payback
  • an ROI of 270%

And this is just the start. As LED prices decline (they will) with more competition and adoption and energy prices increase (they will), the numbers will become even more favorable.

Now, until you see the discounted LED’s, it’s probably in your best financial interests to hold on to CFL’s in seldom used lights. But for heavy use LED’s, the economics are finally there. And in short time, with LED lifespans, there will rarely be a scenario where CFL’s come out ahead on purchase/energy pricing.

This LED mass market crossover point has arrived. RIP CFL’s.

Update: A lot has changed in the few months since I first published this article, and now LED bulbs have reached “foolish not to upgrade” prices with the new A19 Philips bulb at Home Depot.

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About the Author
I am G.E. Miller, & this is my story. My goal is financial independence ASAP. If you share that goal, join me & 10,000+ others by getting FREE email updates. You can also explore every post I have written, in order.

  • Ben says:

    I recently picked up Ikea’s 40W-equivalent soft white LED bulbs, which are only about $10 each, and plugged one in directly adjacent to two incandescent bulbs to compare them. The light produced by the LED bulb was absolutely indistinguishable.

  • Alyssa says:

    What do you mean by this:

    “If you have the good (bad) habit of turning lights off when you left a room and on when you entered, CFL’s don’t last much longer than incandescents.”

    Why don’t CFL’s last longer than incandescents if you turn lights on and off when you leave/enter? Is it “harder” on them to turn on and off and thus reduce their lifespan?

    I have never switched to CFLs from incandescent (according to your article, I hate the environment and only want only to watch out for el numero uno – just joking) because of the light they give off. I would love to switch for the energy savings, but they always give me headaches and just look like you’re in a hospital or something. Now that you’ve tried the LEDs, would you say those have the same weird light or is it similar to the incandescent light?

    • G.E. Miller says:

      Well, I noticed my CFL’s burn out much more frequently than they are supposed to. So I started wondering why and found this on Wikipedia, which comes from a US Dept. of Energy article “The life of a CFL is significantly shorter if it is turned on and off frequently. In the case of a 5-minute on/off cycle the lifespan of some CFLs may be reduced to that of incandescent light bulbs. The U.S. Energy Star program suggests that fluorescent lamps be left on when leaving a room for less than 15 minutes to mitigate this problem.”

      The track lights in my kitchen give off a bit of a greenish hue, not bad, but you can tell they are not halogen. The Philips SlimStyle puts off a very warm light. I don’t own an incandescent to compare them next to each other, but I can’t imagine the incandescent putting off a more aesthetically pleasing light.

    • Eric says:

      The color of the lamp depends on the Kelvin temperature. If you don’t want your house to feel like a hospital I would recommend a Kelvin temperature of 2700K (27K) or 3000K (30K). If you want your light to be more yellow than 27k [which is the color incandescent lamps put out] TCP has LED lamps as low as 2400K. Check your local electrical distributor; they would have more knowledge about this than some kid at a DIY store.

  • Dennis Patrick says:

    Yep I got a Cree LED lightbulb when they first appeared in home depots. They were pretty highly priced at the time about 14 bucks or something? It didn’t matter to me though. The idea that I could reduce power consumption so drastically, with such a long life span was just too powerful to pass up. Imagine if your lightbulb actually lasts 7 8 9 10 years. It’ll last longer than most marriages. lol.

  • Danny says:

    I really like the idea of using less energy although its a big problem when your in the rental market. For the last 6 years I’ve lived in 6 different places so when 1 bulb burns out I don’t want to shell out extra cash when I wont be there long enough to enjoy the savings.

    • G.E. Miller says:

      Why not just take an LED from rental to rental? Replace it with the burnt out incandescent or a CFL when you leave.

      Pretty soon, LED’s will be priced where you won’t even have to think twice, but until then, this seems like a solution.

      • Danny says:

        To replace all my lights would be quite cost prohibitive. Plus if I can hold out for a few years, I may be in a place to buy, in which case I would most definitely run the numbers to make sure I’ll be saving in the long run.

        Have you heard any word on the incandescent light bulb ban? I heard it was supposed to start at the beginning of the year, but I’ve been buying a few over the last few months.

        • G.E. Miller says:

          I’ve heard the same. Perhaps it was a ban on the manufacture and retailers are still allowed to sell through inventory?

          • Danny says:

            Well did some digging (your article and comments intrigued me…) Apparently they have been phasing out incandescent since 2007 starting with 100W then 75W and now 60W and 40W. Its rumored that Home Depot had 6 month supply in Jan so they should be out soon, looks like I’ll have to start buying LEDs then… Athough with LEDs you have to be careful, the ones that will last the full 25,000 hours are the ones that are cooled properly (think big heatsink) otherwise they are likely to fade out much sooner. Those also happen to be the more expensive ones. This is due to the power supply in the LED burning out. If you have a good one it will last a long time.


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