Friday, November 16, 2007

Banning Incandescent Bulbs: What are the Economics?

We have all heard the mantra about the virtues of replacing tungsten (incandescent) lights with compact fluorescent lights (CFLs). Here is a typical, effusive projection:

CFLs are four times more efficient than standard, incandescent bulbs and last nine to thirteen times as long. If everyone bought just one CFL and replaced their old standard bulb, America would save $8 billion in energy costs, prevent the burning of 30 million pounds of coal, and save greenhouse gas emissions equal to two million cars. Convert all the bulbs and the savings would be in the tens of billions of dollars.

Government programs like Energy Star make the same claim:

ENERGY STAR estimates that if efficient lighting were used throughout the country, the nation's annual demand for electricity would be cut by more than 10%. This would save ratepayers nearly $17 billion in utility bills.

Sounds pretty good, but should Oregon and Washington ban incandescent lighting (as they are reportedly planning to do) ? The short answer is, "not necessarily". In fact, they make little sense in a cool climate, either from an energy conservation, environmental or consumer cost standpoint.

The Forgotten Physics

An incandescent bulb does, indeed, use about four times the energy to produce roughly equivalent illumination of a CFL. But contrary to the simplistic logic on the CFL packaging, that energy is not "wasted". The theory of physics tells us that energy is conserved; it does not simply disappear. Indeed, essentially all of the extra energy that is used by an incandescent bulb is dissipated as infrared radiation or convection heat. In other words, the incandescent light bulb is heating--as well as lighting-- the room.

Whether this heating effect is a "waste" or not depends upon the climate and heating conditions. If the house is heated, by a gas or electric furnace, the excess heat produced by the light bulb reduces the net demand on these heating systems. This is called the Heat Replacement Effect.

In a home heated and lit by electricity, the waste heat losses of energy at the light bulb are offset nearly exactly by the reduced demands on the heating system. In such a setting, there is virtually no effect on either the cost of electricity to the consumer, or the amount of greenhouse gasses emitted in the production of the electricity used. If the home is heated by gas, it is possible for there to be energy, cost and GHG differences.

For example, if electricity is produced by hydroelectric power, using CFLs will increase GHG emissions as the heat of the bulbs is replaced by increased fossil fuel home heat. If electricity is produced in fossil fuel plants, on the other hand, decreasing the electric load and increasing use of a gas furnace will reduce energy, cost and GHGs slightly due to the relative efficiencies of electric power plants and home furnaces.

But in general, the net benefits of the CFL will be much smaller than the gross effect advertised on its packaging. A 2004 British study concluded that the net energy savings were only about 14 percent of the gross savings. A previous study had found essentially no net energy savings (actually, slightly negative savings) in the UK context. So it is clear that there are no net savings under every circumstance.

The Cost of Bulbs

The discussion above addressed only the on-going costs of running bulbs or CFLs. What about the costs of the bulbs? it is claimed that one CFL lasts 10 times longer than a regular bulb. So a reasonable cost comparison is between the cost of 10 incandescent bulbs and one CFL, bought at the same time. The unsubsidized cost of a CFL is about twice the cost of ten incandescent bulbs. For 60-watt equivalent bulbs, this Excess CFL Cost. is about three to five dollars.

It will make economic sense to replace regular bulbs with CFLs only if the future stream of cost savings (net of the Heat Replacement Effect) is greater than the Excess CFL Cost. It is easy to determine this balance. If the CFL saves 70 percent in energy costs over the regular bulbs, but none of that savings remains after considering Heat Replacement, the net energy savings is zero. Each one percent net savings (as a proportion of gross savings) yields a saving of 63 cents (over the 10,000 hour bulb life at 15 cents per kilowatt hour).

The Bottom Line

A call for universal replacement of regular bulbs by CFLs makes no sense; the viability of the replacement depends on many conditions. Yet, even university scientists make misleading statements in this regard, in their enthusiasm to be "green":

Any time you can substitute a more efficient light source for an incandescent bulb - DO it!

For those of us in cool climates, it may make little financial sense to incur extra bulb costs of three to five dollars to save a few cents. Consideration of GHG emissions issues may push this logic slightly one way or the other, depending upon the nature of the electricity and heating sources. Also, the convenience of not having to change bulbs as often has value as well, in favor of CFLs. But CFLs contain mercury, and pose a greater recycling burden and environmental risk than regular bulbs.

On balance, in cool climates where buildings are heated during low-light seasons of the year, it is not at all obvious that a blanket policy of banning incandescent bulbs makes either economic or environmental sense. They may make sense in regions where additional air conditioning load would be required to offset the incandescent bulbs' heat, but those of us in the coastal northwest should think twice.