If you’re making the move to LED lighting, you’re probably eager to see the cost benefits. You’ll easily see these cost-savings on your energy bill when it decreases after you install your LED lights. But some homeowners want to delve a little deeper into their savings analysis and see how much their actual energy usage decreases after switching to LEDs. To do that, you’ll need to understand how kilowatt hours work.

Kilowatt Hours

The Kilowatt Hour Rate

Electric costs are directly tied to your local kilowatt hour (kWh) rate. A kWh is the term used to describe one unit of energy that is equal to 1000-watt hours. Most energy providers bill their customers based on the number of kilowatt hours used each month. This number is then multiplied by a rate, usually cents per kWh, to determine the monthly energy bill.

Property owners who have high kWh rates will see the biggest decrease in energy bills by switching to LED lights, but anyone who moves from incandescent, CFL, or halogen lighting to LED lighting will see energy savings and electrical cost reductions.


How To Gauge Your Potential Cost Savings By Switching To LED Lighting

You can get a good idea of how much money you’ll save by switching to LED lighting using a simple calculation. All you need to know is 1) the wattages of the bulbs you have and the new bulbs you’ll be using, and 2) your cost per kWh. Use this equation to compare the cost of running different bulbs:


Bulb Wattage x Hours Used Per Day / 1000 x Cost Per kWh = Cost

Let’s compare a 50W halogen light with a 10W LED downlight.

50 W Halogen: 50W x 8 hours = 400/1000 = .4 x $.30 kWh = $.12 to run one halogen light for 8 hours for one day.
10W LED: 10W x 8 hours = 80/1000 = .08 x $.30 kWh = $.024 to run one halogen light for 8 hours for one day.

Those numbers are small and don’t convey the total cost of using lights. When calculating your total costs, be sure to multiple those final numbers by the number of bulbs you are using in your house and then by the number of days that are in your electric billing cycle or annualized out to 365 days.


Annual Halogen costs:
10 50W bulbs for 30 days, the cost is $.12 x 10 x 30 = $36 per month.
Annual costs are $36 x 12 = $432.


Annual LED costs:
Using 10 10W LEDs for 30 days is $.024 x 10 x 30 = $7.20 per month.

Annual costs are $7.20 x12 = $86.40

Cost Difference:
$36 – $7.20 = $28.8 in cost savings each month or $432 – $86.40 = $345.60 every year by switching 10 bulbs from 50W halogens to 10W LEDs.


To learn more about LED lights or to get an assessment on LED lighting in your home call 13 LEDS today or visit www.LEDified.com.au.