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Financial benefits

Global energy savings from phasing-out inefficient ILs would result in cost savings of approximately 47 billion US$. The higher the price of electricity in a country, the greater the savings will be. In terms of how these financial savings relate to UNFCCC parties, it is estimated that Annex I would achieve 52% of the savings and non-Annex I countries 48%. 

 

Figure 1: percentage of financial savings arising from the shift from ILs to CFLs for Annex I and non-Annex I countries (world total of 47 billion USD)



Even though a CFL is more expensive than an IL, it is five times more efficient and lasts up to ten times longer. In addition to the direct energy savings and decreased energy bills, supplemental cost benefits result from the investments in power plants that would be made redundant as a result of decreased energy consumption. By shifting to CFLs, the world could save 136 coal-fired power plants, resulting in avoided investment costs of approximately 113 billion US$, exceeding the cost savings for energy by a factor of 2.4.

 

Figure 2: billions of US$ in investments saved from avoided power plants in Annex I and non-Annex I countries (world total 113 billion USD)




By phasing out ILs, peak power demand and black-outs in a large number of developing countries could be substantially reduced, making electricity available for other uses and helping to ensure energy security. When considering both aspects of the cost benefits – energy savings and saved investments – the transition to energy efficient lighting technologies is financially one of the most attractive projects worldwide, and the “lowest hanging fruit” when it comes to energy efficiency initiatives. And ILs are just one part of inefficient lighting technologies -  The elimination of less efficient linear fluorescent lamps in industrial and commercial lighting applications, as well as mercury lamps used in street lighting, would also contribute significantly to energy savings and CO2 emission reduction.

Payback periods of the shift to efficient lighting

The amortization times vary from one country to another for recovering the investment made in efficient lighting. This is influenced mainly by electricity prices and the total annual operating time of the lighting. Amortization times vary from one country to another and the total average results point at an amortization period of about one year. This is by far the fastest payback time for any known transition to an energy saving technology.

The cost of transition to efficient lighting

The Country Lighting Assessments have also estimated how much financing each country would require to move from inefficient to efficient lighting. Calculations in each country have taken into account the costs for the new efficient bulbs, setting up collection and recycling systems, monitoring and verification of product quality, developing legislation, norms and standards. Approximately 3/4 of these costs would be the cost for the efficient lamps, while the rest could be assumed by public finance, international or donor support. According to these calculations, approximately 3 billion US$ would be needed to support non Annex I countries which have not undertaken or are in the process of adopting market transformation measures.

1. What are the Country Lighting Assessments?
2. How to read the Country Lighting Assessments?
3. Methodology
4. Energy savings
5. Climate change mitigation benefits 
6. Financial benefits 
7. Country Lighting Assessments

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