Philips $50 LED Light Bulb

Philips $50 LED Light Bulb

The new green light bulb carries a hefty price tag even though it won a $10 million prize, called the “L Prize” from the Department of Energy. Let’s see how a light bulb can cost $50.

Last year the US Department of Energy tried to spur a faster adaptation in replacing the traditional light bulbs with a more energy efficient but affordable equivalent by announcing a $10 million award, also called the “L Prize”. Manufacturers were supposed to create a green and at the same time affordable light bulb. The competition was also supposed to encourage the product to be made in America.

The existing, much less costly light bulbs are being forced out of the market not by market forces but mostly by government directive. Energy legislation in 2007 banned the use of certain light bulbs. The sanction would phase out 100 Watt incandescent bulbs in 2012 and ban 75 Watt and 60 Watt bulbs each year after that. However, there is some political push back against the ban. Part of the reason is a lack of viable alternatives. The award was probably one of the attempts to bring these alternatives out to the market as the deadline was approaching.

The award winning light bulb is on the market now (at least it is announced) and the price tag is $50. How can a $50 light bulb replace something that costs less than a dollar? The answer is that it probably cannot. What about the other alternative, the CFL light bulb. Compact Fluorescents already have some market penetration. The comparison is not so simple either. In order to make a fair assessment all the costs associated with a bulb need to be taken into account. Let’s first look at the different technologies and then return to the full cost of operating a light bulb.

The new bulb uses a completely different technology compared to the traditional incandescent light bulb introduced by Edison. The incandescent bulb uses a filament that has electrical current flowing through. The electrical current heats up the filament and the hot metal emits photons in a wide spectrum. Part of that spectrum is visible and it is processed by the human eye as light. Some of it is invisible and felt as heat. That is the reason why the efficiency is not very good. A good portion of the energy is converted into heat and not light.

CFL (compact fluorescent light) bulbs use a different approach. The bulb holds argon and mercury vapor in a spiral-shaped tube (curly bulb). An electric current passes through the gas, exciting the molecules that emit photons in the ultraviolet spectrum as they return to their lower energy state. The ultraviolet light then excites the molecules in the fluorescent coating on the inside of the tube. As these return to their lower energy state they emit visible light.

The human eye sees different parts of the spectrum differently. The sensitivity changes with the wavelength; that is why the output of light sources is measured in lumens. It is a measure of the power of light as it is seen by the human eye. Therefore a valid way to compare two light sources is to compare the light output in lumens. A 60 Watt light bulb (the most common household bulb) emits around 800 lm (lumens). The same light intensity is produced by a CFL light bulb that uses between 13 and 15 Watts. A lot less electrical power produces the same amount of light, as it is perceived by the human eye.

LED light sources may do even better. LED lights use between 10 and 15 Watts to produce the same amount of lumens. That is not a lot of improvement over a CFL bulb. However, CFL bulbs contain mercury (hazardous material), they are not dimmable using traditional dimmers, and their life expectancy is (eight to fifteen times of the incandescent bulbs) a third to half of the LED’s.

LED (Light Emitting Diode) light sources work by exciting electrons in a semiconductor material. As the electrons return to their normal energy state they emit a photon. These photons are at a very specific frequency. There is no energy loss in this regard. However, one wavelength means a specific color. In order to generate white light a certain mix of colors need to be generated. LED light is also very directional. In order to make it more useful it has to be dispersed better.

The $50 light bulb is an LED lamp. It also has to include other circuitry to transform the common 110V AC input to a low voltage DC that is needed for the LED. So after understanding how the different lighting technologies compare, let’s see what the total cost of operating a light bulb is.

An easy way to look at the issue is to start out with a LED bulb and see how much it costs to operate the other two types of bulbs for the same time period. The average life span of a LED bulb according to the manufacturer (Philips gave the same numbers for the $50 light bulb) is 30,000 hours (using 3 hours of operation a day that translates to a little over 27 years). The incandescent bulb has an average of 1,000 hour life expectancy. The CFL bulb has about 10,000 hours before it needs to be replaced. Therefore it would take 30 incandescent bulbs or 3 CFL bulbs to do the same job. The price of electricity varies around the country. It is about 8 cent per kilowatt hour on the low end and 25 cents on the high end. In order to calculate the total operating cost the cost of the bulb and the total price of electricity used throughout the 30,000 hour time period needs to be added together.

The incandescent bulb uses 60 Watts of electricity. That means 60 times 30,000 over the lifetime of the 30 bulbs (1,800 kWh). It comes out to be $162 on the low end $450 on the high end. The cost of the 30 bulbs is about $30. Therefore the total operating cost is between $192 and 480. This method does not account for any fluctuation and the change in electricity price over such a long period of time. The same numbers for the CFL are 3 bulbs consuming 450 kWh. The electricity cost is $36 to $112.50. The total operating cost is between (each bulb costs about $5 and three replaces the one LED) $51 and $127.50. The LED bulb at $50 uses 300 kWh of electricity. The cost of electricity is between $24 and $75. The total operating cost is between $74 and $125.

The calculations show that the total operating cost of an incandescent bulb is much higher than the same value of a CFL or LED bulbs. The difference between the two more recent technologies is not much even with the numbers selected generously for the LED. The example also shows why the green movement is encouraging higher electricity prices. All the green technology makes more sense when it is high not to mention that the alternative power generation methods are more competitive as well.

The analysis accepts all of the manufacturer’s claims. The life expectancy of 30,000 hours is difficult to confirm. However, when the claims for the CFL bulbs are looked at, they should certainly be taken with a grain of salt. Many customers have much more experience with these types of bulbs. Several of these break after using them for less than 10 hours. The high early mortality rate should certainly lower the average life expectancy. The real life environment probably yields much lower values than the numbers measured in the lab. It is partly due to the stress induced by the frequent turning on and off of the power. LED light sources have another characteristic that makes the comparison more complex. LED lights decrease in output throughout their life. There are two different effects that happen simultaneously due to self-heating, switching on and off and environmental causes. One is the performance depreciation when the actual lumen output decreases. The other one is the change in color. They both cause the human eye to detect a decrease in brightness. The rate changes between manufacturers based on the actual processes used.

Another factor is the time value of money. Usually higher initial investment ($50 light bulb) performs much worse if the time value is looked at as well. The famous example of the compound interest of some beads that were paid for Manhattan Island actually exceeding the current value of the real estate in New York City shows that money paid today can cost a lot in the future. So taking into account that the $50 paid today for a light bulb may be a lot of money in 27 years, the comparison may not be as beneficial for the expensive solution. However, such an analysis would be difficult with so much uncertainty surrounding the cost of electricity and the effective interest rate.

So is the $50 light bulb the solution? Did the government subsidy work and provided a better solution than what was available? It does not seem so. The analysis showed that the CFL bulb may be a better solution if the overall cost of operation is looked at. However, CFL bulbs contain mercury (disposal cost not added to the equation) so a broken bulb becomes a health hazard. CFL bulbs also require special dimmers that do not work. Does taking these facts into account tip the scale to the side of the $50 light bulb? Maybe if the other already existing LED light bulbs are not taken into account.

Home Depot and other retailers already sell a Philips product, the Ambient LED 12-Watt (60W) A19 Light Bulb (E) (Model # 409904) for $25 (half the price). The light output is the same 800 lumens. However, the life expectancy is 25,000 hours and the energy use is more by 20% compared to the new, $50 model. The full operating cost for 30,000 hours (took the price at 1.2 times) is $58.80 at the low end and $120 on the high end (depending on the price of electricity). So the operating cost is lower than for the $50 version. What did the $10 million prize buy after all? It looks like it gave the consumers a lesser product (unless the price of electricity goes way up). The buy American protectionist approach never benefits consumers. It does not even benefit the country as a whole. However, even if it is looked at as a benefit that some of the $50 light bulb is manufactured in the US it does not mean that this technology will not go overseas eventually.

The new $50 light bulb is not in stores yet. However, the design looks very similar to its $25 counterpart. The less expensive model already has a track record. Based on the experiences, consumers are happy with the intensity and the color of the light. The energy saving is minimal compared to CFL but the mercury free quality may make a difference for consumers. The light dims well and starts quickly as long as there are no other kind of bulbs on the same circuit (do not mix CFL, incandescent and LED lights on the same circuit). The negatives are loud humming (probably from power converter, not the best fit for a night stand) and the dispersion of the light (self-shadowing effect of the cooling strips and some light bleeding through the yellow area, not a good look for a decorative fixture like a chandelier).

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  1. Pliny the not so old says:

    Don’t forget the government subsidy bought a congress critter some votes, put some extra moohla in the pocket of a CEO who turned around and invested it overseas, and maybe even caused a couple workers to be hired. The alternative would have been more money in taxpayers pockets, a more efficient market, and more workers everywhere else with lower corporate taxes.