13 Mar 2012

Communicating the energy efficiency and $ savings of Philips’ L-Prize award-winning LED light bulb: electricity prices and rebates matter

Written by Jim Pierobon

The "L Prize"-winning bulb. CREDIT: Philips Lighting USA

Even before a major push to mass market LED (light-emitting diode) bulbs can be found on retailers’ shelves in U.S. markets in April, there is confusion over their purported $50 price tag and what consumers ultimately will pay.

Judging by one attempt, even the newspaper of record in the U.S. capital — The Washington Post — inexcusably had trouble making sense of the bulb’s economics under this headline on the front page: “Affordability award goes to a $50 light bulb.”

It all began with the awarding last year of the so-called “L Prize” by the U.S. Department of Energy to Philips Lighting, which, under the competition’s rules, earned the company $10 million. Retailers such as Home Depot now are preparing to stock their shelves — but not without a significant rebate by utilities to inspire sales expected to reduce the purchase price by as much as one-half.

Apparently mis-calculating, or not understanding, how electricity prices can vary widely from one state to another, the Post’s initial front-page report in the Friday, March 9 editions got it way wrong with an “info graphic” and that data was reflected in the article. See the graphic, below.

In the article, the Post tried comparing the incandescent bulb’s cost to the LED bulb and assumed the price of electricity is 1 cent per kilowatt hour, or kwh. That’s right, 1 cent per kwh.

No consumer, residential, commercial or otherwise, pays anywhere 1 cent per kwh. The widely used national average residential price is about 11 cents a kilowatt hour. The devil’s and the benefits are in the not-too-hard to grasp value of LED bulbs’ delivering real savings once the net purchase price is recouped.

If you take the Post’s approach from its early Friday editions, the incandescent technology, at $1 per bulb purchased 30 times, uses $18 of electricity @ 1 cent.¬† With the corrected price of 11 cents per kwh, the total cost should read $228, not $48.

The Post also mis-stepped on the price for the LED bulb to be paid by the consumer. In fact, it underestimated it by about half. While the correct nominal cost may be around $53, which the Post corrected to read $83, rebates of $10 to $30 are expected to bring the consumer’s out-of-pocket cost — including electricity– down to at least $73 and maybe as low as $53 or so during its first year on the market (power consumption included). A corrected version of the Post’s graphic can be found here.

Ed Crawford, CEO of Lamps, Lighting systems and Controls for Philips Lighting North America, says “the ultimate price¬† . . . of the bulb will arrive through a partnership between the manufacturer and utility partners across the country.” He said the “target (purchase) price” of $22 can be achieved with a $30 utility rebate.

How could a nationally-recognized newspaper get it so wrong? TheEnergyFix emailed the reporter, Peter Whoriskey and the two graphics personnel credited, Patterson Clark and Bonnie Berkowitz, to no avail. The Post reportedly yanked the original graphic off its web site very soon after Post personnel learned of the mistake.

As you might guess, the Post’s treatment unleashed a flurry of reprisals against the L-Prize. That has overshadowed the context about cleaner energy sources being more expensive up front and how they earn back the investment quickly and deliver savings for years into the future.

It also ignored the rationale for the L-Prize competition in the first place: provide a compelling incentive for an organization to replace the standard 60-watt incandescent bulb with an LED bulb that saves energy, lasts longer and provides the same amount of light with better quality. Philips LED bulb has been tested by independent laboratories, field assessments with utilities including long-term “lumen” (light output) testing under extreme conditions.

The company says it is plowing the $10 million back into further R&D and already has improved it from the one that earned the award. You can see the difference in the watts needed and the price online now where both LED bulbs are for sale, sans rebates, here. There you can see the 12-watt dimmable Philips bulb for about $34 and the 10-watt dimmable Philips bulb for about $60.

Look at the bottom rows comparing estimated incandescent bulb costs to the L-Prize bulb costs. The $18 incandescent cost is based on electricity at 1 cent per kilowatt hour, not the national average of 11 cents per kilowatt hour. That line in bold should have read $228 not $48 as it does in the corrected version online. CREDIT: Patterson Clark and Bonnie Berkowtiz / The Washington Post


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