Financial benefits

The phase-in of energy efficient lighting represents one of the most cost-effective policy measures that a government can undertake. The total global electricity savings from on-grid opportunities totals approximately 120 billion USD. Global savings for off-grid lighting, where solar-powered LED lanterns displace kerosene and candles, totals approximately 25 to 33 billion USD. The higher the electricity or kerosene/fuel price in a country, the greater the savings will be and the shorter the payback period.

For on-grid countries, the financial savings are distributed among the two main groups of UNFCCC signatories. It is estimated that Annex I countries would achieve 57 per cent of the savings and non-Annex I countries would achieve 43 per cent. For the off-grid countries, the most savings accrue to the non-Annex I countries.

The initial cost of energy efficient lamps and solar-powered LED lanterns may be more expensive than the inefficient lamps and lanterns that they replace. However, because of avoided expenditure on electricity or fuel, these energy-efficient light sources often have short payback periods which help consumers and businesses enjoy equivalent or better lighting service at a lower total cost.

For on-grid lighting, the lamps may be four times more efficient and last up to ten times longer. Supplemental benefits also result from the avoided investments in power plants that would no longer be needed due to the energy savings from the efficient lighting. The savings estimate of 1034 TWh in on-grid electricity obviates the need to invest in the construction of 280 large base-load power plants (500 MW each).

For off-grid lighting, solar-powered LED lanterns are energized by the sun and therefore, have no operating costs.  They often provide a far better and safer lighting service, particularly compared to kerosene and candles. If fully implemented, energy efficient off-grid lighting has the potential to displace 25.6 billion litres of kerosene and 1.4 million tons of candles each year.

Considering both aspects of the cost benefits - energy savings and deferred investment in power plants - the transition to energy efficient lighting technologies is financially one of the most attractive and simplest energy efficiency initiatives. Peak power demand, black-outs and kerosene shortages in many countries could be reduced substantially by a rapid transition to efficient on-grid and off-grid lighting, freeing up scarce resources for other critical applications and improved infrastructure and national energy security.