Financial Benefits

The transition to energy efficient lighting would yield annual initial cost savings of approximately 109 billion USD. The higher the price of electricity in a country, the greater the savings will be. In terms of how these financial savings are distributed among the main two groups of UNFCCC signatories, it is estimated that Annex I countries would achieve 65 per cent of the savings and non-Annex I countries would achieve 35 per cent.

The initial cost of energy efficient lamps may be more expensive than the inefficient lamps they are replacing, but they can be four times more efficient and last up to ten times longer. Supplemental cost benefits accrue from the investments in power plants that could become redundant as a result of the energy savings. The construction of 252 large power plants (500 MW each) could be avoided, resulting in savings of approximately 210 billion USD.

When taking into consideration both aspects of the cost benefits – electricity savings and saved investments – the transition to energy efficient lighting technologies is financially one of the most attractive initiatives worldwide, and the simplest of energy efficiency initiatives. Peak power demand and black-outs in many countries could be substantially reduced by a rapid transition to efficient lighting, making electricity available for other critical applications, infrastructure improvements, and improving electricity supply security.

The amortisation times associated with a transition 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 hours for lighting. The average amortisation period globally is approximately one year. This is the fastest payback time for any transition to an energy saving technology.