Energy Stocks

LED Bulbs: A Disruption We Can All Live With

Two of the most controversial articles I’ve ever written were on energy-saving compact fluorescent lightbulbs (CFLs) and light-emitting diode lightbulbs (LEDs).

When I wrote about CFLs, readers thrashed me for being a “government pawn.” After all, who does the government think it is, banning incandescent lightbulbs?

But back in 2014, that’s precisely what the U.S. did.

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The U.S. wasn’t alone either. Around the world, governments have passed legislation to phase out the energy-hogging incandescent bulb.

The rollout of LED bulbs was a big disruption to consumers. They probably wouldn’t have switched to them if it weren’t for the ban.

After all, they were just too expensive. But as manufacturing volumes increased, LED bulb costs dropped through the floor. Today, they’re nearly as cheap as incandescent bulbs were before their demise.

Just how good are LEDs? Let’s compare them with our old standard.

Incandescent bulbs heat up a tungsten wire filament until it glows bright enough to create visible light. Ninety percent of the energy produced is heat.

An LED bulb, on the other hand, uses a tiny semiconductor chip (about the size of a pepper flake) to produce light. Almost no energy is converted to heat. Plus, it emits light in a specific direction so diffusers and reflectors aren’t required.

In an incandescent bulb, the tungsten filament gradually burns up after about 1,000 hours. But an LED bulb has an average useful life of 25,000 hours or more.

A 60-watt incandescent bulb used two hours a day in an area that pays $0.11 per kilowatt-hour uses $4.80 worth of electricity annually. A 60-watt equivalent LED bulb will use only $1.00 worth of electricity.

But here’s the best part: A 60-watt equivalent LED bulb uses only 12 watts of electricity. That’s a 75% to 80% savings in energy use and cost.

I can tell you from personal experience, using LEDs will save you a boatload of cash.

Several years ago, I replaced all of the bulbs in my home, workshop, garage and barn with LED equivalents. It took me about a year and cost me about $2,000 (I have a lot of bulbs).

I measured my electrical use and cost before and after I installed the LEDs. Those expensive LED bulbs (which have dropped even more in price since I bought them) have paid for themselves already: I’m saving about $840 annually.

Today, there’s just no reason NOT to install LED bulbs, even if your incandescent bulbs are still working.

It’s a great way to save on one of life’s most basic needs. But individual consumers aren’t the only ones saving here.

Today, LEDs are popping up everywhere. From traffic signals and TVs to vehicles and streetlights, LEDs are fast becoming the new standard in lighting.

A decade from now, pervasive use of LEDs could save U.S. energy users 348 terawatt-hours’ worth of electricity. That’s equal to the generation of 44 big electric plants.

And you’ll be doing the Earth a big favor too.

Last year alone, LED bulbs reduced global carbon emissions by 570 million tons, which is equivalent to shuttering 162 coal-fired power plants.

That’s something we can all live with.

So if you want more money to invest in stocks, make the switch to LED lighting. You could put hundreds of dollars into your investment account every year.

Start by identifying the top five most frequently used lights in your home and swap them out them for LED equivalents. That alone will save you $75 annually.

Replace all your bulbs, and you’ll save even more.

Good investing,