Smart Lighting Payback and ROI Calculator
Estimate how quickly your smart lighting upgrade pays for itself and the total return on investment over the system's lifetime.
Current Lighting System
Smart LED Upgrade
Formulas Used
Annual Energy (kWh)
Old = (Wold × N × Hannual) / 1000
New = (Wnew × N × Hannual) / 1000 × (1 − Dimming%/100)
where Hannual = Hours/Day × Days/Year
Net Investment
Net Investment = (Cost/Fixture × N + Installation Cost) − Rebate
Total Annual Savings
= (Energy Saved kWh × $/kWh) + (Old Maintenance − New Maintenance)
Simple Payback Period (SPP)
SPP = Net Investment / Total Annual Savings
Net Present Value (NPV)
NPV = −Net Investment + Σt=1n [Annual Savings / (1 + r)t]
Discounted Payback Period
Year at which cumulative discounted cash flows ≥ Net Investment (interpolated)
Lifetime ROI
ROI (%) = (Total Lifetime Savings − Net Investment) / Net Investment × 100
IRR
Solve: 0 = −Net Investment + Σt=1n [Annual Savings / (1 + IRR)t]
(Newton-Raphson iteration)
CO₂ Avoided
Annual CO₂ (kg) = Energy Saved (kWh) × 0.386 kg CO₂/kWh
Assumptions & References
- US average grid emission factor of 0.386 kg CO₂/kWh (EPA eGRID 2022 national average).
- Dimming/occupancy savings are applied as an additional percentage reduction on top of the wattage reduction, reflecting real-world smart controls (ASHRAE 90.1-2019 allows 10–30% credit; up to 60% is achievable in some applications).
- All cash flows (savings) are assumed to occur at year-end for NPV and IRR calculations.
- No inflation adjustment is applied to energy prices or maintenance costs; use the discount rate to account for the cost of capital.
- Typical smart LED retrofit: 60–80% wattage reduction vs. legacy fluorescent/HID; 15–25 year rated life (DOE SSL Program, 2023).
- Utility rebates vary by region; check the DSIRE database for current incentives.
- IRR is solved via Newton-Raphson (up to 1,000 iterations, tolerance 1×10⁻⁸); displayed as N/A if no positive real solution exists.