Growers interested in purchasing supplemental or sole-source lighting need to be able to accurately predict the economics and cost of ownership for the many different types of fixture layouts and options available on the market. A useful financial estimate is the simple payback (or return on investment, ROI) of choosing one system over another. The ROI takes into consideration the initial capital costs as well as annual expenses required to run two different lighting systems. The calculation determines how many years until the two systems are equivalent to each other in terms of cost and when cash positive savings begin. Since LEDs cost less to operate there is a simple payback time in which the total costs between LED systems and legacy light systems become equal. This report presents a simple payback model using parameters and assumptions that the reader can alter at their convenience. Several of these parameters are changed to see how they impact the payback for two Illumitex LED fixtures compared to an HPS 1000W.
Table of Contents
- Model and Equations
- Payback Years Based on Electricity Cost and Photoperiod
- Cost Savings Over LED Lifetime
The three lighting systems compared in this study are the Illumitex Neosol DS, the Illumitex Power Harvest W10, and an average HPS 1000 W system. For the HPS fixtures, average values are used in the model to account for differences that might be seen based on brand or type of HPS light. Table 1 shows the PPF, Watts, and Cost for the Illumitex fixtures and average HPS fixture. Depending on the particular HPS, these PPF and prices may change slightly. Between the LED fixtures, the NeoSol has less PFF than the PowerHarvest, yet they are considered equal replacements in this report since the NeoSol contains additional optics that focus light toward the canopy, increasing photon density for certain applications.
2. Model and Equations
The simple payback equation for two systems can be shown as the following equation:
Initial Cost Difference
The initial cost difference refers to the difference in upfront capital investment for each system of light fixtures including additional costs for installation. For example, the Power Harvest uses a fan for cooling. Other LED systems may require water cooling and a recirculating system (pumps, lines, filtering, etc) which will add to the cost of installation. Depending on the building and space, there may be additional infrastructure or wires required for one system over another. In this report, only fixture costs are used for the initial cost difference. The model here does not include either additional installation costs or rebates and discounts. For a new lighting system utilizing 6 fixtures, the total initial lighting system cost is $7,194 for the NeoSol DS, $5,994 for the Power Harvest W10, and $2,442 for the 1000 W HPS.
Annual Cost Savings
The annual cost savings involves several parameters related to the annual energy consumption and maintenance required for each light system. In Table 3 the annual maintenance cost for HPS is calculated as $104/fixture, which is based on a lamp replacement of 2000 hours. For an average photoperiod over the year of 10 hours/day (or 3,650 hours/yr), the number of lamp replacements is 1.8/yr. Table 3 shows these calculations if the replacement lamp cost, labor, and disposal is $57. For a system consisting of 6 HPS fixtures, the maintenance cost is $ 624.15/yr.
For the energy analysis, the annual operating hours and cost of electricity are most crucial. The energy consumed due to the lighting system is not just based on the total watts used by the fixtures themselves but also by the cost of operating HVAC systems to keep the room environment temperature-controlled. In this report, a model that considers the refrigeration costs to be half the wattage of the fixture itself is used to approximate the energy used in maintaining room temperature. In some cases growers do not require the room temperature to be controlled but these systems typically suffer from lower productivity. The grower must determine the effects of temperature control vs. no control on productivity and calculate whether it is more economical in regards to their crop and productivity goals.
Some growers rely on the heat from HPS to warm their grow rooms in colder climates and they worry that switching to LEDs will require more cost associated with heating the rooms. It is true that HPS produces more heat than LEDs, however, this makes both heating and cooling more expensive in HPS light systems. When HPS lights are turned off for dark cycle, the temperature drops and HVAC heating must quickly ramp up to compensate in some environments. Using LEDs saves energy and money on heating since (1) there exist more efficient ways to heat plants and grow rooms than by the waste heat from HPS and (2) the change in temperature from on/off in HPS requires more intense energy load to temperature control systems. The calculations for heat compensation will vary greatly by application so for this model only the difference in cooling costs (estimated by half the wattage consumption of the fixture) are utilized. Table 4 shows the annual energy cost if the cost of electricity is $0.11/kWh. The annual refrigeration energy cost is half the cost of fixture lighting energy cost.
Simple Payback Time
The results of the total annual cost and simple payback calculations for the two LED systems compared to the 1000 W HPS system of 6 fixtures at $0.11/kWh are shown in Table 5. The NeoSol DS has a payback of 2.42 years and the Power Harvest W 10 is 1.97 years.
3. Payback Years Based on Electricity Cost and Photoperiod
LEDs use less electricity and require less HVAC load, thus as the electricity price increases the payback period decreases. Figure 1 shows the results for the NeoSol DS and the Power Harvest payback period using the base model parameters (6 fixtures, no additional capital costs or rebates, 10 hour photoperiod length, etc) for electricity costs up to $0.19/kWh.
As the daily photoperiod increases, the payback period decreases. Figure 2 shows that for a 16 hr/day photoperiod the payback is 0.98 and 1.2 years for the Illumitex Powerharvest 10 and Neosol DS, respectively. It should be noted that although the payback period is higher for shorter photoperiod length, the LED fixtures last longer under these conditions (60,000 hour rating) so that the grower will have longer LED fixture lifetime.
4. Cost Savings Over LED Lifetime
An LED fixture lifespan is designated by the IESNA L70 rating, which is the number of hours until the LED chips emit 70% of their original output. The Illumitex LEDs in this comparison have L70 ratings of over 60,000 hours. For the base model parameters (6 fixtures, no additional capital costs or rebates, 10 hour photoperiod length, etc) this equates to 16.4 years (Table 3). Figure 3 shows the total costs for the LEDs and HPS fixture systems if they continued running at the base model conditions for 16.4 years for 6 fixture system. The initial lighting cost is higher for LED systems but the energy and maintenance costs are significantly less. This assumes that the HPS fixture can last 16.4 years, if the fixture needs replacement then the cost will increase by the HPS initial lighting cost.
In conclusion, this report found that in a side-by-side comparison, the cost difference over time as well as the payback period are favorable for two Illumitex LED fixtures compared to a typical 1000 W HPS. These results are attributed to the decrease in energy required to operate the equipment, the decreased HVAC necessary, and (to a lesser extent) the decrease in maintenance. The model did not take into account other installation costs (such as with water-cooled systems) or rebates often available for growers purchasing LED systems.
This paper also looked at the effects of electricity cost and photoperiod, showing the general trend to increased use and decreased payback period. In the long-run it is quite clear that LEDs are the way to go for cost savings, dropping the bottom line and allowing increased profitability.
- Nelson JA, Bugbee B (2014) Economic Analysis of Greenhouse Lighting: Light Emitting Diodes vs. High Intensity Discharge Fixtures. PLoS ONE 9(6): e99010. doi:10.1371/journal.pone.0099010
- http://cpl.usu.edu/files/publications/poster/pub__9913943.pdf (Accessed 4/15/2016)
- Knight, Rebecca. “Modeling the Unknown – Why Light Calculations are So Hard”https://www.illumitex.com/modeling-the-unknown-why-light-calculations-are-so-hard/ (Accessed 4/15/2016)
- Knight, Rebecca. “Modeling the Complexities of Horticulture Lighting | White Paper” (March, 2016) https://www.illumitex.com/modeling-the-complexities-of-horticulture-lighting-white-paper/
- Illumitex Direct ecommerce site for direct purchase of horticulture fixtures: https://www.illumitex.com/illumitex-direct/ (Accessed 4/15/2016)