Key takeaways
- Commercial lighting retrofit ROI comes down to a few inputs: hours of use, fixture wattage before and after, the rate on your utility bill, and maintenance saved.
- Lights that run the longest pay back the fastest, so parking lots, warehouses and corridors usually come first.
- Controls such as occupancy sensors and daylight dimming reduce the hours of use, which is the other half of the savings.
- Utility programs can change the math, so check current CPS Energy programs before the project is priced.
Commercial lighting retrofit ROI is a question you can answer for your own building, without a sales pitch, using numbers you already have or can measure. A retrofit replaces older fixtures or lamps, often fluorescent, metal halide or high pressure sodium, with LED fixtures that draw less power for the same light. Whether it pays for itself, and how soon, depends on how long the lights run, how much each fixture draws now and after, what you pay for electricity, and how much maintenance the new fixtures save.
This guide walks through each input and how they fit together, so you can test a retrofit proposal yourself or decide which areas of a building are worth doing first.
Input one: hours of use
Hours of use matter more than anything else. A fixture that runs around the clock saves energy every hour of the day, while one that is on for a few hours a week saves very little. Walk the building and list each area with its fixture type and how many hours a day and days a week the lights are actually on. Parking lot and site lighting runs all night. Warehouses and distribution centers often run long shifts. Corridors, stairs and lobbies may never turn off. Private offices and conference rooms are often on far less than people assume.
If you are not sure, watch the building for a week, or check whether the lights are on a timer, a photocell or a time clock that shows the schedule.
Input two: fixture wattage before and after
The second input is how much each fixture draws now and how much its replacement will draw. The existing wattage is on the lamp, the ballast label or the fixture's nameplate, and older fixtures often draw more than the lamp rating because the ballast uses power too. The new wattage comes from the specification sheet of the proposed LED fixture.
The savings per fixture is the difference between the two, and the light level matters as much as the wattage. A retrofit that saves energy by leaving a warehouse aisle or a parking lot too dark is not a good retrofit. Ask for the light levels the new layout is designed to deliver, not just the wattage.
Input three: the rate on your utility bill
The third input is what you pay for electricity, which is on your bill. Commercial bills in the San Antonio area, where CPS Energy is the utility for most properties, can include both an energy charge for the kilowatt hours used and a demand charge based on the highest load the building draws. Lighting that runs during the building's peak can reduce both, while lighting that runs only overnight mainly reduces energy use.
Use your own bill rather than an average from somewhere else. If the bill is hard to read, your account representative can explain which charges apply to your rate.
Input four: maintenance saved
Energy is only part of the savings. Older lamps and ballasts fail more often, and replacing them can mean a lift, a technician and sometimes an after-hours visit. LED fixtures are rated for much longer life than the lamps they replace. If your property spends real money relamping parking lot poles or high bay fixtures in a warehouse, include that cost in the calculation.
Parking lot and site lighting is a common example, because every failed pole head means a lift truck. Our guide to LED lighting retrofits for parking lots and warehouses covers those two areas in detail.
Putting the numbers together
With those four inputs, the math is straightforward, and you can run it in a spreadsheet:
- Watts saved per fixture: the old wattage minus the new wattage.
- Energy saved per year: watts saved, times the number of fixtures, times hours of use per year, divided by one thousand to get kilowatt hours.
- Dollars saved per year: kilowatt hours saved times your energy rate, plus any demand savings and the maintenance you will no longer pay for.
- Simple payback: the installed cost of the retrofit divided by the dollars saved per year.
Run it area by area rather than for the whole building at once. The areas with the longest hours and the oldest fixtures usually have the shortest payback, and a project can start there and continue as budget allows.
A worked example, in words
Picture a building with two areas. The parking lot has pole lights on a photocell that run every night of the year. The offices have ceiling fixtures that are on during business hours on weekdays. Even if every fixture in both areas saved the same number of watts, the parking lot would save several times more energy each year, simply because its lights run so many more hours. Add the cost of the lift truck each time a pole head fails, and the parking lot is the clear place to start.
The offices may still be worth doing, especially if the ceiling is being opened for a remodel anyway, if the fixtures are failing, or if occupancy sensors would cut the hours further. Running the numbers area by area makes those trade-offs visible instead of hiding them inside one building-wide total.
Common mistakes in retrofit math
- Using the lamp wattage and forgetting the ballast, which understates what the old fixture draws.
- Assuming every light runs the same hours, when parking lots and private offices are very different.
- Using an average electricity rate instead of the rate on your own bill.
- Leaving out maintenance savings, which can be large where fixtures are hard to reach.
- Counting a rebate before confirming the program's current rules and whether it needs approval first.
- Choosing a fixture on wattage alone and ending up with an area that is too dark.
Each of these can make a retrofit look better or worse than it really is. A proposal that shows its inputs, fixture by fixture and area by area, is one you can check line by line.
Controls change the hours
Controls reduce the hours of use, which is the other half of the equation. Occupancy sensors turn lights off in rooms and aisles nobody is using. Daylight controls dim fixtures near windows and skylights. Timers and photocells keep exterior lights from running in daylight. The energy code adopted in Texas already requires many of these controls when lighting is replaced or a space is remodeled, so they are often part of the project anyway.
Rebates and incentives
Utility programs can change the math significantly, but they change over time, have their own rules and sometimes require approval before the work starts. Check current CPS Energy programs, or the programs of your own utility if you are outside its area, before the retrofit is priced, and keep the fixture specification sheets the program asks for.
Getting a retrofit priced
When you are ready, our LED lighting retrofit page explains how we plan and install retrofits, and our lighting installation page covers fixture work more broadly. Every retrofit gets a written bid with the fixture count, the fixture specifications and the controls, so you can run the numbers above against a real proposal. For the rest of what we do for businesses, see our commercial electrical services page, and if the project is part of a larger remodel, our guide to working with a design build electrical contractor explains how to budget it early.