The other day the light bulb on my porch finally gave up the ghost and so I ran down to my favorite hardware store to pick up a new one. When I got there I was presented with a choice that many people struggle with: is it better to buy the regular old incandescent bulb or spend significantly more money for the energy efficient compact fluorescent light (CFL) instead?
In my case the CFL, priced at $7.50, was exactly six times more expensive than the incandescent bulb priced at $1.25! With a price difference like that it is not hard to see why many people are loathe to make the conversion to CFLs.
The big question, of course, was just how quickly would it take the energy savings provided by the CFL to cover the product’s purchase price?
How to Determine the Payback Period of Energy Efficient Bulbs
To answer that, one has to first determine the payback period for purchasing the more expensive CFL. So just how does a person go about doing that? The answer is to calculate the simple payback period, which in this case is defined as:
Simple Payback = (CFL Cost) / (Annual Electricity Savings)
By calculating simple payback you can easily determine just how long it will take to show a return on your investment in the more expensive CFLs. Although it’s true that simple payback does not take into account inflation rates, compounded savings, or replacement costs, it is a very useful tool nevertheless and more than adequate for this particular purpose.
Looking at the simple payback equation, all one needs to know is the cost of the CFL and the annual electricity savings. I found the former by simply looking at the price tag, but to get the latter I had to know two things: 1) how many hours per day the light was in use; and, 2) the number of watts saved by going from an incandescent bulb to a CFL.
For the first point, I conservatively assumed my porch light was on 2 hours per day – it’s on much less. To determine the second point, I simply looked at the labeled wattage ratings of the two bulbs; in my case, the incandescent bulb was rated at 60 Watts while the CFL’s rating was listed at a miserly 13 Watts, for a total power savings of 47 Watts.
Calculating Your Annual Energy Savings
With that information in hand, I was able to calculate my annual energy savings using this formula:
Annual Electricity Savings = ((Daily Hours Used x 365 days/year) x (Watts Saved))/1000 x (Cost of Electricity)
In my case, plugging in the numbers looked like this:
Annual Electricity Savings = ((2 hrs x 365 days/yr) x (47 Watts))/1000 x ($0.15/kWh)
…for an annual savings of $5.15.
Calculating the Payback Period
With our annual energy savings figured out, we can now calculate the payback. If the energy efficient product costs $7.50, and the annual electricity savings is $5.15 as shown above, the simple payback is:
$7.50/$5.15 = 1.46 years
It is interesting to note that if you intend on replacing all of the bulbs in your home with CFLs, increasing the number of bulbs being replaced does not decrease the payback period (assuming there are no economies of scale for buying additional bulbs); in my case it would still be 1.46 years. It will, however, increase your annual energy savings.
Evaluating the Payback Period
As a rule of thumb, payback periods of five years or less are often generally worth implementing, while projects with payback periods greater than ten years are generally not cost effective. In my case, the 1.46 year payback period made the decision to go with the CFL an easy one.
That doesn’t mean I am going to immediately replace all of my incandescent bulbs with CFLs, but I will begin transitioning to CFLs as my incandescent bulbs burn out. 
And For the Mathematically Challenged…
By the way, if you don’t feel like doing the long-hand calculations yourself, there are also handy web-based savings calculators that can be used to determine the payback periods and realized annual savings from using CFLs instead of incandescent bulbs. 
If you liked this article, please be sure to subscribe to my RSS feed!
Loading ...
via Email 
CFLs are absolutely worth it! I’ve been using the same one in my living room for over 6 years and it’s been on every day from 6-14 hrs/day.
Wow! If I did my math correctly, and assuming an average of 10 hrs per day, that’s almost 20,000 hrs of operation! Incredible!
Shouldn’t the numerator be CFL – incandescent cost since that is the increased investment of purchasing a CFL?
John,
It’s a very very fine distinction, but ‘simple payback’ only considers the amount of time required for the benefits to pay back the cost of a project. For that reason the numerator should not include the subtracted cost of the incandescent bulb. Ticky tack, I know.
Len
Definitely worth the initial cost of $5 or $6, considering the amount of incandescents I would have used over 6 years. It’s also a 3-way bulb and just recently moved with me from Virginia to Georgia, and still going strong.
That’s awesome, Jennifer. I’m beginning to think I should be including gasoline savings from the reduced number of trips required to buy new incandescent bulbs too…
In my home the porch light may very well be on all night as I like the place lit up. If not all night – at least 4 -5 hours. We have made the switch in our home and are looking forward to the savings.
Good for you, Sadie! I’m the opposite of you, though. I like the darkness, so my porch light is set on a motion detector. As a result, I’ll bet my new CFL porch light will last for close to a thousand years.
Great article! I know you were not considering it in your calculation, but CFLs also last 8 or more times longer than incandescents bulbs. So if you just figure on replacement cost alone, not electricity savings, (and excluding inflation, etc etc), you will save money over the lifetime of the CFL (1 CFL=$7.50, 8 incandescents bulbs= $10).
Hey, thanks, Emily!
And you are absolutely correct – and Jennifer’s CFLs are lasting even longer than that!
Len
CFL’s seem to be more resilient to power spikes etc. I haven’t had one blow from a power spike/lightning strike yet, but those event’s did successfully claim the lifes of several incandescent bulbs, nothing but CFL’s in the house now.
For living rooms use the warm whites for things like desklamps were you work by the light try cold whites(especially if you draw/paint)
In the philippines, a brand name 9 watt CFL like GE or phillips should cost around us$ 2.12. A chinese no-name brand maybe half that. Of course the chinese brands tend to die much earlier, maybe 1-2 years in my experience.
@S01: I just replaced two CFLs in two of my bathrooms that were almost 13 years old. They do last a long long time under the right conditions.
It’s truly great to see a cool blogpost , thx.
Keep in mind for indoor applications you have to consider in winter incandescents will reduce heat required, and in summer, if A/C is used will more then double the energy wasted, 75 watts of heat wasted may mean 150-300 watts of A/C usage to remove that heat
So then I guess for those of you who want to be as green as possible, use CFLs in the summertime and incandescent bulbs in the winter time.
Even in the winter, electric resistance heat (an incandescent bulb) is an expensive way to heat.
I’d rather spend a kilowatt-hour on my heat pump to get 3 kW-hour equivalent (or use the gas furnace if the temperature is below freezing)
I believe that your math may be off somewhat. You use the ENTIRE cost of the CFL. However, we are comparing two different bulbs here…thus, just as you compare the electrical usage difference, you should ALSO use the cost difference in your numerator (the bulbs.) In this case the additional cost (not the entire cost) of the CFL. In your example it would be $7.50 minus $1.25 = $6.25. This would result in an shorter payback period.
Respectfully,
Bill
As I mentioned above to another reader, the numerator does not include the subtracted cost of the incandescent bulb because I calculated the “simple payback,” which only considers the amount of time required for the benefits to pay back the cost of a project.
It is definitely better to get the name brand CFL’s. I’ve used a couple of different off brands, and most of the bulbs lasted only about as long a incandescents! A total waste of money. I now only buy better CFL’s, even if they are a little more expensive than the off brands.
Interesting! It would be great if you would share some of the better and worse CFL brands. Care to share some names with us?
LED lights do not YET provide the same lighting as other light bulbs. But prices have decreased immensely. Good ones you can already get for $20.
What you always have to consider is that it is not only the electricity normal bulbs consume. They also add immense heat making your hvac work harder!
Just go into your kitchen and place your hand underneath those big light bulbs…
Wow, this article is almost two years old now and still so very current.
I mean nowadays we still have the same question, although LEDs are on the market and getting cheaper and cheaper.
In my opinion the main problem still is that CFLs are so toxic. You cant just throw them away. They have to be recycled. If that makes sense…
I agree about the toxicity of CFLs being a big problem. Personally, I think they have been blindly pushed without any regard for this.
In the end, in exchange for the more expensive CFLs, we are given lower-quality light (that take about a minute to reach their maximum brightness), and the looming problem of mercury disposal after they burn out.
(By the way, I’ve had over 6000 comments here, but no one has ever had a longer surname than you, Gottingen — and I suspect no one ever will… unless one of your relatives stops by, that is! LOL)
The funny thing is that the United States is not the only country where they have done this mistake.
In Europe there are even laws that force people to buy energy saving lamps from (I think) 2012 on.
Crazy…
I m German. We sometimes have long names
The laws are crazy.
Do you know anybody with a longer last name than you?
I cant believe we are going to be forced to use these things. One more example of government intrusion into our lives. What would Thomas Edison think of this?
I think it is worth switching to CLF. It’s not just cost saving in the long run but energy saving too.
Hi Len, I am trying to contact you regarding a permissions request. Can you please contact me?
[...] Is the Payback Period on Energy Efficient Bulbs Too Long? Lee Penzo spends his days doing money management, so it’s no surprise he’s put a calculator to the money saving claims made by CFL manufacturers. Ever wonder if compact florescents are really a good deal? You’ll know for sure after you read this. [...]
[...] Penzo presents Is the Payback Period on Energy Efficient Bulbs Too Long? posted at Len Penzo . [...]
[...] Penzo presents Is the Payback Period on Energy Efficient Bulbs Too Long? posted at Len Penzo . [...]
[...] Is the Payback Period on Energy Efficient Bulbs Too Long? [...]