Onsite solutions: edie explains LED lighting

In the first of a brand new series investigating the costs, benefits and legislative backdrop of onsite sustainability solutions for your business, edie takes a closer look at LED lighting.

The return on investment on a complete LED retrofit is between two and three years for a typical office block

The return on investment on a complete LED retrofit is between two and three years for a typical office block

LED lights can make a major contribution to energy savings in both a commercial and domestic context. They use around one third of the energy of traditional fluorescent lighting, brighten instantly and last up to 25 years.

While incandescent light bulbs pass electricity through a filament, LEDs produce light through the use of a semi-conductor that emits light energy when an electrical current is passed through it. 

They also save energy by virtue of being directional – all light produced is directed at whatever needs illuminating, unlike, for example, a halogen tube which would send half of its light straight into the ceiling.

It is therefore unsurprising that LEDs top the priority list of energy solutions for businesses. According to an exclusive edie energy management survey, 76% of energy managers said that energy-efficient lighting systems are the main technology focus for their organisations this year. 


The costs of retrofitting an LED lighting system vary drastically with the size of an office, factory or warehouse. A typical office light fitting (four lamps in a 600mm by 600mm fitting) costs around £70 to replace with LEDs. These systems can light approximately three square metres of office space.

The return on investment on a complete LED retrofit is between two and a half and three years for a typical office. For a warehouse operating 12-hours a day, the payback can fall to just under two years, while a school can take up to five years thanks to the lower light usage.


There is a plethora of financing options available, including energy-efficiency specialist loans. Many LED installers offer financing arrangements where companies do not pay anything upfront for the installation and pay back less each month than they are saving in energy costs.

Those still wary of the capital expenditure can de-risk their installation through a leasing scheme, where a company essentially provides lighting as a service, with maintenance included. If the technology fails, the buyer simply stops paying the lease.

Those in the public sector can also take advantage of the Salix scheme which offers interest-free loans for organisations looking to improve their energy efficiency.


As well as the Salix scheme, the Carbon Trust offers interest-free loans for LED upgrades for SMES in Wales and Northern Ireland.

Several big businesses including Sainsbury’s and Travis Perkins recently received subsidies of up to £830,000 to encourage LED installations under the Government’s Electricity Demand Reduction (EDR) pilot. The scheme was intended to reduce the strain on the UK power grid during winter weekday evenings. However, DECC has not made it clear whether another round of funding will become available for this scheme.

Non-monetary benefits?

Companies installing LED technology as part of a broader energy efficiency programme can see reputational benefits through various certifications like BREEAM or ISO schemes.

Emissions are indirectly reduced - every kWh saved by LED technology saves the equivalent carbon footprint associated with its generation. A recent report from Phillips lighting claimed that a global LED rollout could cut 2.3% of global emissions.

Business example

In December last year, Spanish bank Santander announced a £17.5m LED lighting retrofit programme across 800 UK branches and 14 offices. Around 90,000 LED lights are being installed, cutting emissions by approximately 7,000 tonnes annually and energy use by 50%

The UK Green Investment Bank (GIB) and Sustainable Development Capital Limited (SDCL) invested £8.4m in the lighting project, with private sector investment making up the remaining £9.1m. GE is the installer, providing maintenance and management over a 10-year contract. The lighting-as-a-service approach means that Santander has no initial outlay and will pay out less than they are saving each month.

Watch the video below to hear Land Securities retail energy manager Stu Meades discuss the property development company's approach to LED lighting. Meades will be speaking at the edie Energy Management conference on 20 April.

Brad Allen


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