The Best Investment Ever

Fluorescent light bulbs have been around for a long time, but there are still a lot of households that don't use them.  They should. 

Let's do a back-of-the-envelope calculation about how much one of these bulbs is worth.

Assume that we replace a traditional 100-watt traditional incandescent bulb with a 23-watt fluorescent bulb.  The traditional bulb costs $0.50 and lasts for 2,000 hours of light, whereas the fluorescent bulb costs $X and gives 10,000 hours of light.   Electricity in Applied-Genius land costs $0.135 per kilowatt-hour these days (twice the 1999 rate!)  Finally, assume for the sake of argument that you're flat broke and would have to buy the bulbs on your credit card, paying 20% APR for the privilege.  Solving for the price $X that exactly equalizes the cost of doing it the old incandescent-bulb way vs. the new fluorescent-bulb way gives us the Net Present Value of buying an incandescent bulb.

The Net Present Value of buying a fluorescent bulb under these assumptions is -- ready? -- a little over $72.  For each bulb.  If your money's worth only 8%, the NPV rises to $90+.   For each bulb.

At Amazon, these 100-watt replacements are $17 for a 4-pack.  At these prices, your NPV exceeds your cost for an gain of $271 per 4-pack.  In other words, buying a houseful (20 bulbs) is like winning $1355 in the lottery (and you don't even need to pay taxes on it!)  And that's ASSUMING that you need to pay the outrageous 20% interest on your card.

Another way to look at the attractiveness of this investments is the Internal Rate of Return (IRR) method.   A $10 bulb returns 172% annually on your investment.  A $6 bulb returns 232%; a $4.25 bulb returns 248%, and a $1 bulb returns a whopping 555%.  Note that these bulbs are frequently available in dollar stores, as well as at Big Lots and other discount retailers; brand-name GE bulbs are available at Sam's Club for approximately $3 each.  (Canadian dollar stores even offer entry-level Sunbeam fluorescent bulbs for $1 Canadian, and their electricity rates are higher than in the USA.)   

Note that these are far, far better returns than Warren Buffett has gotten at Berkshire Hathaway, and basically risk-free (and tax-free) to boot.  I suspect that Warren, a legendarily sensible sort of fellow,  knows about fluorescent lights, and may even have a few in his Omaha childhood home; he'd undoubtedly invest billions in 248%-return risk- and tax-free ventures if they were made available.

(The Applied Genius Bulb Spreadsheet allows you to do these calculations for your situation, including your local electricity rates and the number of hours per day that you use the light.)

Just to beat the already-dead horse to death and beyond, there are a few additional and important (but difficult-to-quantify) benefits as well.

(a) If you air-condition your home, you should realize that you're paying close to twice as much, because most of the energy used by a traditional incandescent bulb is thrown off as heat.  You pay twice for that energy:  first when it's emitted from the bulb, and again when your air conditioner spits it out of your house.

(b) Fluorescent lights don't require changing nearly as often. You'll spend less time on a ladder changing hard-to-reach bulbs, as well as less time at the store buying them.  (Interestingly enough, it's this maintenance-cost savings which drove adoption of fluorescents in commercial buildings, not the power savings.)

(c) Saving electric power means slower increases for future electric power prices.  (OK,  you're sharing this benefit with everyone in the world, so the direct effect on your own electric bill of you choosing fluorescents is really, really small.  But you can feel good about it, knowing that you're in harmony with the first formulation of Kant's Categorical Imperative, which is often inaccurately equated with the Golden Rule but can be better paraphrased as "Do only that which you wish everyone would do.")

(d)  Last but not least, you can brag to your friends about how smart you are.  (But you should, eventually, 'fess up and tell 'em where you read about the business case for fluorescents.)

Get thee to the bulbery!

Comments

[pheon]

This savings plan does not work for me. For reasons I do not understand, the compact fluorescent bulbs do NOT last anything like 10,000 hours. I replace them as often as I replace the incadescent bulbs. Which also do not last 2,000 hours. I suspect that there is something "rough" about my electric supply, but I don't know that.

[Windypundit]

Then there are folks like me. There are parts of my home where I want to leave the lights on almost all the time. Fluorescent lamps make that easy and cheap. Because I leave the lights on all the time, there's probably no real energy savings, but I get a tremendous improvement in convenience.

[Mycroft]

Pheon -- I feel your pain. Frankly, my cheap bulbs only seem to last about 12 months, which is like 4000 hours the way I use them. To take an extreme case -- if your fluorescent bulb lasts only 2000 or so hours, and the incandescent bulbs are completely free, the fluorescent still has an NPV of $18.13 -- not quite as dramatic but still a winner. The key is that 2000 hours of saving 75% on wattage is a much bigger total savings now than it was 5 years ago!

Windy -- I'm certainly spendthrift with fluorescent lights in certain parts of my house. The incentive to go around the house turning the lights off is certainly dampened, isn't it? But knowing that it's only a few 9-watt bulbs makes me smile every night when I go to sleep.

[Ron]

Had me worried... The link to 1000bulbs doesn't have the 23-watt compact flourescent you are talking about. It starts off with several 13-watts, which equate to 60 watts. But they equate 28w to 105w incandescent, so it looks like you have it right.

Good spreadsheet.

[Douglas2]

Came here from VP's Dynamist blog. Beware, I bought a
bunch of "dollar-store" compact flourescents last summer
and the color was simply horrid. But the good major-
branded ones have been pretty good on color, considering
that they were flourescent lamps.

[pheon]

Mycroft - I don't follow your logic. If the incandescent bulbs and the fluorescent bulbs both last 2000 hours --- which is about what I suspect, though I have only just started keeping track of when I change them --- and the fluorescent costs me several dollars more, how can it have an NPV of $18.13?

(Mycroft replies) Pheon -- those 2000 hours of light use many, MANY fewer kilowatt-hours of energy, at 13.5 cents each. Saving 75% on power is where the main savings come from, not the small amount of saving $ on light bulbs.

[Dim Bulb]

(Found you via Virginia Postrel, who is famous for reminding us that beauty is worth something, too.)

Lighting is one of the cheapest, easiest ways to redecorate your home.

Problem: Fluorescent bulbs look awful. They make a home look like a 7-11. While currently expensive, LEDs last even longer, are even more efficient, and are available in small form factors such as night lights. Also, I find they look less awful.

Another option: I have had excellent results using incandescent and halogen bulbs on dimmers. Unlike fluors, dimmable lights are beautiful. Decorators often counsel putting dimmers in every room. I have done so, and find that I rarely want/need the lights at 100%. I often run them at 50% or so, which (a) uses less electricity, (b) imparts a warm color, and (c) makes the bulbs last much longer.

[NickP]

Dim Bulb:
Unfortunately incandescents on dimmers don't really save very much energy. If you adjust a incandescent to be, say, 50% as bright, it is still using 80-85% of the energy as running on full. What happens when you dim them is that you shift the light output into the infra-red, so they are generating more heat, instead of light. Their inefficiency goes up more as you dim them more.

Do a web search on "kill-a-watt meter".