LED Retrofit ROI Calculator

What each input means

State (for average rate) sets the default cents-per-kWh from EIA commercial averages [eia-epm-5-6-a]. Override with your bill rate when you have it.

Fixtures replaced is the count of luminaires in the project scope. Partial-room retrofits should use only the fixtures you plan to change in year one.

Existing fixture wattage is measured input power including ballast or driver losses. A double-ended 1000 W HPS commonly draws 1,050 to 1,100 W at the meter.

Replacement LED wattage is input power for the new fixture at target canopy intensity. Top-bar LEDs delivering comparable photosynthetic photon flux density often land at 600 to 700 W. The DesignLights Consortium horticultural qualified products list sets minimum efficacy standards for listed fixtures [dlc-hort-v3]. Resource Innovation Institute benchmarking shows LED operations achieving lower energy intensity per unit of canopy than HPS baselines [rii-led-study-2020].

Hours lit per day follows the photoperiod (typically 12 hours in flower, 18 in veg).

Installed cost per fixture includes fixture, mounting, wiring, and labor. Default $1,100 is a mid-range placeholder; get vendor quotes for your ceiling height and layout.

Total rebate or incentive subtracts from gross project cost. Utility programs vary; confirm with the administrator before counting [comed-ee-business].

Cooling savings factor (% of lighting kWh) estimates how much additional HVAC energy you avoid. Every watt of light becomes heat; removing lighting watts reduces chiller and dehumidifier work. The default 30 percent means HVAC saves 0.30 kWh for every 1 kWh of lighting reduction in a sealed, mechanically cooled room.

The math step by step

Assume 200 fixtures, 1,000 W old, 650 W new, 12 hours/day, $1,100/fixture, $0 rebate, 30% HVAC factor, 14.53 cents/kWh:

Step	Formula	Result
Lighting demand reduction	(fixtures × (old W − new W)) ÷ 1,000	(200 × 350) ÷ 1,000 = 70 kW
Annual lighting kWh saved	saved kW × hours/day × 365	70 × 12 × 365 = 306,600 kWh
Annual HVAC kWh saved	lighting kWh saved × (HVAC factor ÷ 100)	306,600 × 0.30 = 91,980 kWh
Total annual kWh saved	lighting + HVAC	398,580 kWh
Annual dollar saving	total kWh × (cents/kWh ÷ 100)	398,580 × 0.1453 = $57,914/year
Net project cost	(fixtures × cost/fixture) − rebate	200 × 1,100 = $220,000
Simple payback	net cost ÷ annual saving	220,000 ÷ 57,914 = 3.8 years

Simple payback ignores discount rates, maintenance, lamp replacement, and revenue effects from yield changes. It answers: "If savings stay flat, when do energy dollars recover the check I wrote?"

What this tool leaves out (and why it still matters)

Demand charge savings. Replacing 70 kW of simultaneous lighting load lowers the interval that sets your monthly peak when rooms start together. On a $14/kW tariff, 70 kW of peak reduction is roughly $980/month ($11,760/year) before ratchets. Pair results with the demand charge estimator.

Dehumidification interaction. Less sensible heat can shift the latent load profile. See dehumidification load for why humidity control may not fall one-for-one with lighting cuts.

Yield and quality. This model assumes production stays constant. If PPFD or spectrum changes affect grams per square foot, energy cost per pound moves independently of payback.

Rebate timing. Some incentives pay after installation and inspection; cash-flow timing can differ from simple payback.

Assumptions and limits

• Old and new fixtures run the same hours every day for 365 days.
• One flat electricity rate all year. No time-of-use or seasonal rate change.
• HVAC savings scale linearly with the factor you enter. Actual savings depend on HVAC sizing, setpoints, and envelope quality.
• No maintenance, financing cost, or 280E tax effects (confirm tax treatment with your advisor).
• Fixture cost and rebates are user inputs, not quotes.

For a technology comparison with cited efficacy data, read LED vs. HPS energy cost. For a real-world rebate path, see the Michigan cultivator LED retrofit case study. To isolate lighting kWh before adding HVAC, run the wattage to cost converter twice with old and new wattages.

Sensitivity: what moves payback most

Three inputs dominate simple payback: installed cost per fixture, watts removed, and cents per kWh.

Cost per fixture. At 200 fixtures, each $100 change in installed cost moves net project cost by $20,000. Vendor quotes should separate fixture, labor, and electrical upgrades. High-bay rooms cost more than single-tier rooms.

Watts removed. Going from 1,000 W to 650 W saves 350 W per fixture. Going to 550 W saves 450 W. Verify PPFD and uniformity at the lower wattage with your cultivation team before you model aggressive cuts.

Rate. At 398,580 kWh saved annually, each 1 cent per kWh moves annual savings by about $3,986. High-rate states shorten payback even when kWh saved is identical to a low-rate state.

Cooling factor. At 306,600 kWh lighting savings, changing HVAC factor from 20 percent to 40 percent adds 61,320 kWh to annual savings. Greenhouses with ventilation may use 10 to 20 percent; sealed indoor rooms often justify 25 to 40 percent.

Run best, base, and worst cases by adjusting these four fields before capital committee review.

Rebates and net cost timing

Utility programs may pay prescriptive dollars per DLC-qualified fixture [comed-ee-business]. Some pay after inspection; others pay upfront to trade allies. If rebate cash arrives six months after install, cash-flow payback differs from simple payback even when net cost is correct.

Confirm measure life and program caps. A rebate capped at 50 percent of project cost changes net cost non-linearly.

State cannabis regulators sometimes require efficiency plans independent of utility rebates. Rebate eligibility does not guarantee regulatory credit; track both.

Production risk not in the model

LED retrofits can change spectrum, canopy temperature, and humidity profile. Yield per square foot may rise or fall independently of energy math. Energy cost per pound is the operational metric that combines kWh saved with grams harvested.

RII benchmarking shows LED cohorts achieving lower energy intensity at comparable production tiers [rii-led-study-2020], but your cultivar and SOP still govern outcome. Pilot one room before fleet-wide rollout when payback is borderline.

Demand and supply interaction

Lower simultaneous kW reduces utility demand charges and may reduce capacity pass-through on supplier bills in capacity-tag markets. The example in the main section showed roughly $980/month from 70 kW peak reduction at $14/kW. Add that to annual dollar savings before comparing to supply-only procurement.

Order of operations: fix rate class and supply if you are on default at high cents, run LED project in parallel if payback under five years with rebate, then re-bid supply with updated load forecast.

Maintenance and life-cycle beyond simple payback

HPS lamps and ballasts need replacement on shorter cycles than LED drivers. Simple payback ignores avoided lamp cost. A ten-year horizon often favors LED even when simple payback is six years.

Financing adds interest expense not modeled here. On-bill utility financing may preserve rebate eligibility; confirm program rules.

For horticultural fixture specs, use DLC V3 requirements as a filter [dlc-hort-v3]. For HVAC interaction after cutover, read HVAC sizing cannabis grow rooms.

Phased retrofit vs. big-bang

Running 50 fixtures in year one and 150 in year two changes cash flow and peak kW gradually. Model each phase separately in this tool and sum net costs and savings for portfolio payback.

Partial retrofits leave mixed peaks: HPS rooms still set demand until converted. Demand savings lag lighting kWh savings when peaks come from unconverted rooms.

Communicate phased plans to suppliers at renewal so bandwidth forecasts match staged load.

When payback is too long for capex approval

If simple payback exceeds your hurdle even with rebate:

• Compare supplier contract savings first; procurement may beat capex payback.
• Negotiate utility financing or lease of fixtures where programs allow.
• Pilot one room and measure PPFD, yield, and meter delta before fleet approval.

Energy efficiency under Section 280E still improves margin when deductions are limited; confirm accounting treatment with your advisor.

Trade press and RII studies support LED intensity gains [rii-led-study-2020], but capital committees want site-specific pilot data. Budget three months of meter comparison for one room before full rollout.

Financing and lease impacts on payback

Cash purchase uses net project cost in the payback denominator. Operating lease or PPA structures move payments to OPEX and may preserve rebate eligibility differently by utility. This tool models cash capex only.

Interest on equipment loans extends economic payback beyond simple payback. Model IRR in finance if hurdle rates require it.

Utility on-bill repayment may attach to the meter rather than the tenant. Confirm lease allows pass-through before assuming on-bill programs.

Post-retrofit verification

After cutover, compare twelve months pre and post on the same meter. Adjust for production changes by normalizing kWh per square foot, not raw kWh alone.

Re-run the grow light wattage to cost converter with new wattages to confirm lighting kWh dropped as modeled. Re-run demand charge estimator if peak kW fell.

Document rebate inspection dates. Failed inspections delay incentive payment and shift cash-flow payback rightward even when simple payback math unchanged.