LED Lighting: Total Cost of Ownership Calculations

Using an LED Total Cost of Ownership Calculation: Part I

TCO Graphic


A competent and comprehensive total cost of ownership analysis amplifies a product’s relative strengths and weaknesses, informs the user on the economic realities of the technology, and lays the groundwork for managing the most costly physical asset of the farm over the long term.

That’s a lot to digest. Let’s start by defining what qualifies as a ‘competent and comprehensive’ TCO analysis.

Comprehensive is the harder of the two. It should include every cost related to the light system from its ‘cradle-to-cradle’ lifecycle, a  term that includes recycling or disposing of the materials at the product’s end of life, and replacing it if the farm is expected to continue operating beyond the equipment’s expected life. Granted, some of these costs are going to be difficult to estimate, in particular those that require assumptions about the future. However, that should not dissuade you from attaching a cost to a future event as basic as replacing a light system that has passed its planned useful life. And industry measures like Lx and TM21 measures are intended specifically for this type of quantitative analysis.

Competent is easy to define. It means accurate, relevant and reliable metrics. Relevancy requires ‘normalization’ of the comparative data set. The best example of this is light intensity. Comparing three lights with intensities of 280 PPFD, 305 PPFD, and 350 PPFD is useless unless the three are ‘normalized’ to one another. Light vendors should supply a photometric model using a normalized intensity specified by the buyer. From that point, all the meaningful distinctions between the lights will begin to emerge, including the number of light fixtures required, the geometry of the configuration, relative energy consumption, and more. Other examples include elements like installation costs and maintenance that seem mundane but can be significantly different when examined closely. Installing five two-inch wide ‘light bars’ costs more than installing a light ‘panel’ that covers the same area. Maintenance of the two is very different as well. And never believe that LEDs don’t fail or have zero maintenance. In some instances, individual arrays within a light will fail which has a direct production impact if not replaced. And the simple process of frequent ‘surveillance’ of failed lights has a cost attribute. A light system that automatically notifies the operator of failures through the control system may carry a higher upfront cost but save thousands of dollars of maintenance expense.

And of course, your data source has to be reliable (objective and trustworthy). It may be your product vendor – especially if the share complete details of photometric models, L80 Certificates, IP Ratings, and provide documentation of electrical consumption. Or you may want to assess the reliability of the data yourself and use an independent ranking of products on these very data points like our LED Performance and Quality Rankings.

The Importance of a Comprehensive TCO Data Set

How great is the impact of these nuanced differences in products? In some instances it can be huge! If two products have a big spread in TM21 Ratings – an L70 vs L80 at 50,000 hours for example – you will likely be confronted with a choice of replacing the former a year earlier, or accept lower crop production and revenues. If you haven’t allocated capital for the event, the economic consequences are significant. You can go back to your investors and explain why you need more money, or explain to them why your revenues keep falling. I can promise you that will not be a pleasant conversation.

So the details do matter, and sometimes the devil is in the details. A good TCO will force them to the surface. In our next blog, we’ll drill down on the sensitivity / impact of each of the numerous components of an LED TCO calculation.


Risks of LED Lighting – Part III: More on LM Losses

Why Don’t Manufacturers Want to Talk About LM Losses?

We received dozens of comments about our lumen maintenance loss article, often with a recommendation of a useful information source. In more than one instance, readers referenced Philips Greenpower LEDs, and a provided a link to a 39 page brochure with the tagline ‘there’s more to light’.

We searched for lumen maintenance references in the brochure. After all, the readers posted the link as an anecdote to an article on LM losses. Here’s what we found:

The brochure mentions light recipes (13 times), plant growth (12 times), increased results of some type (12 times), light intensity levels (5 times), and long life (3 times).  There was no mention of LM80 testing, Lx ratings, or TM21 estimates of useful life. 

So we checked the Philips Greenpower specification sheet for details of lumen maintenance losses, and there it was. An L90 rating of 25,000 hours. There is no L80 or L90 ratings. There is no TM21. There  is also no indication of the drive current or testing temperature – both of which had a material impact on LM losses. Why not?

We checked with two of Philips closest competitors. Neither publish LM related information on their horticulture light specification sheet. We probed a little deeper with one of the two and found a spec sheet for a non-horticulture light that uses the same basic LED component and configuration. There we found a single LM-related data point – L70 point is greater than 75K hours at 40ºC.

To make comparisons, we thought we would chart the two data points along with TM80 data for a high quality Cree LED component which had the most detailed dataset. Take a look at the graph below and see if you can tease out any meaningful information.

Lumen Maintenance Data

If it seems like an apples-and-oranges comparison, you’re right. Philips provides an L90, but nothing more. The competitor an L70, but no L90 to compare. And perhaps most confusing – the competitor uses a test temperature that is lower than the prescribed minimum of the IES testing standard. This is problematic. Why? Fixture temperatures will vary based on variables outside of the manufacturers control – how closely the fixtures are arranged to each other, airflow around the fixtures, the consistency of cooling the building, etc. So long as both manufacturers use the same standard test temperatures, the local variances will be roughly the same for both fixtures (like a basketball team both playing on 10′ baskets). In this case, however, the competitor is supplying a figure that would have to be considered to be ‘in the best possible circumstances’ (like a basketball team playing on 8′ baskets). You just can’t compare the two.

So what is the takeaway?

  1. Comprehensive, standardized LM data is almost never included in specification sheets, even though that is the purpose of LM80 testing.
  2. Horticulture LED Manufacturers don’t want to talk about LM losses.

So why not? We think the relative differences between manufacturers is large enough to have a greater (negative) impact on total farm production over time than the relative differences in ‘light recipes’. In other words, the buyer should give equal or more weight to LM loss differences than to light recipe differences because the former will have a greater impact on their economics. Unfortunately, you won’t get that information unless you demand the data and do the math yourself.

The Risks of LED Lighting Technology – Part II

The Impact of Lumen Maintenance Losses (a thought experiment)

It’s what you don’t know – you don’t know, that will hurt you.

Here’s a thought experiment that illustrates the impact of lumen maintenance losses.

Let’s say you have two shifts of employees working on your packing line. Each shift works 10 hours, with an hour break, for a total of 18 hours of work effort.

Your second shift of employees are less dedicated and leave work 15 seconds early on their first day, then 30 seconds early the second, 45 seconds the third day, and so on. By the 30th day, they leave 7 minutes early. You might not even notice. After all, their shift ends at midnight.

On the 180th day they leave 45 minutes early. Hmmm. You might notice that. Or you might notice that they didn’t finish packing the full harvest, which is starting to pile up on the shipping floor. Fast forward to the end of their first year. They’re leaving 90 minutes early – every day. Wait, what’s going on. You’re still paying them for a full day’s work, but they’re working less. In order to avoid produce piling up, you reduce your upstream production. Because you cut production, you shipped about 4% less produce than when you started.

It continues. At the end of year two; they are leaving 3 hours early – every day. They’re giving you just 6 hours of work effort every day! You have to slow production a bit more, and now you’re producing 8.5% less than when you started. Third year, 5 hours early, your slow everything else down again. Your production is off 12.7%. Fourth year, 17%. Fifth year, 21%. Sixth year, 25%. Seventh year – almost 30% less production.

Oh yes, I forgot to mention that when you hired them, you signed a seven year no-termination contract that paid them regardless of the number of hours they worked!


Are you sure? That’s what you do when you buy a lighting system that has an L70 rating of 50,000 hours, and plan to use it for all 50,000 hours. The light output of LEDs gradually degrades over time (all light sources degrade). And of course, less light output translates to longer growing cycles.

So to draw the analogy to our story above. When your L70 rated LED lighting system nears its useful life of 50,000 hours, it produces 30% less light and it takes you 30% longer to complete the growing cycle. And there is nothing you can do about it. The energy consumption doesn’t decrease at all. Just like continuing to pay your employees at the same rate, you are still spending the same amount on electricity to power the lights (as well as cooling the building). And the economic impact isn’t just the fixed cost of electricity – as you cut back your production, your variable costs (other than electricity) were also reduced (assuming you can layoff some employees).  The real cost is the ‘opportunity cost’ associated with having less produce to sell. Depending on the produce and your net margins, that number can be quite large.

Lumen maintenance losses matter – a lot!  But don’t all LEDs have roughly the same useful life ratings? Here it gets a little more complex. It is true that LED components from the best manufacturers are relatively close. However, the decisions the fixture (entire light system) manufacturer makes about the drive current and thermal management has a major impact on lumen losses. Put another way, two light system manufacturers can use the same LED component, from the same manufacturer, and have very different lumen maintenance losses.

When evaluating LED lighting, you should evaluate the differences in LM losses between different product suppliers as closely, and perhaps more closely, than claims of higher growth from a special ‘light recipe’ (spectrum). There is no question the right light spectrum will increase growth, but the improvements could be completely wiped out by high LM losses.

This is one reason our Association publishes the LED Performance and Quality Rankings. It ranks individual products by 30 different measures, including LM losses. You can get the First Edition for free here.

The Risks of LED Lighting Technology – Part I

How much do buyers really know about the most expensive part of indoor growing?

If you’re involved in controlled environment agriculture, you know that conventional (field) agriculture faces numerous challenges including limits of arable land, chemical use, declining quality and a changing climate. Moving crops into controlled environment (greenhouses or warehouses) can solve many of these problems. But this requires the use of technology managed by farmers who must become technologists . . .  or the masters of the technology.

Of course, much of the agricultural technology has been used for decades in greenhouses, But the technologies that enable the full transition to both types of indoor growing, including soilless platforms, organic fertilizers, mechanization, systems automation (IT) and especially artificial lighting, are all in their infancy. As is the case with any new technology, they are not completely understood (by anyone), and they are evolving rapidly. The farming ‘technologist’ is only as good as his or her understanding of the technology.

It isn’t what you don’t know that will hurt you (you can learn). It’s what you don’t know – that you don’t know, that will hurt you.

The enabling technologies listed above inherently fall into the realm of the category of what you don’t know – that you don’t know. Even the inventors are unsure of the things they don’t know. It is constantly changing. With this in mind, ask yourself what you don’t know – that you don’t know, about LED lighting technology.


Light Image narrow height

  • Do you know about LED bins – the designation that manufacturers give to differences in the quality of individual diodes due to inconsistencies in the manufacturing process? The bin affects light output, spectrum and voltage – meaning diodes used in your lights from a lower bin may perform differently than you expect.
  • Do you know about lumen maintenance losses, and about the impact on your operations?
  • Do you know that the ‘level’ of electrical current (called drive current) determines light output, efficiency, lumen maintenance losses, expected life and even the spectral power distribution (spectrum). And did you know that fixture manufacturers can manipulate the current level to boost light intensity, at the expense of all of the other attributes?
  • Do you know how poor light uniformity affects your production and plant quality? Do you know that the placement of the diodes, their optic, their lense, and the quality of heat sinks determines light uniformity?
  • Do you know an LED component must be tested for a minimum of 6,000 hours before the manufacturer makes an estimate of useful life and lumen maintenance losses? Do you know there are manufacturers who list the useful life (or LM losses) even if the LED components they use haven’t been tested for the minimum required hours?
  • Do you know that as LED components age, their spectrum changes? Do you know that this effect is amplified by the bin, the rate of lumen maintenance losses, the drive current, operating temperature, and the quality of phosphors?
  • Do you know that cheap power supplies can be as much as 10% less efficient than their high quality counterparts? Do you know who pays for that in energy costs?
  • Do you know that there are another dozen nuances just an mind-numbing as those above?
  • Do you know that design and manufacturing process used by your light manufacturer determines all of the above? And do you know that light manufacturers make trade-offs (compromise) in order to achieve a specification they think will appeal to buyers?

The truth is that there is no easy way to navigate through marketing literature and sales chatter to really understand the details of the technology. To fill that void, the Association of Vertical Farming Economics created the LED Performance and Quality Rankings – a quarterly review of LED lighting products that compares 30 different measurements related to the technical nuances referenced above. The report ranks products in each of the 30 categories so the buyer can make an informed decision. Click here to learn more.

For LED suppliers, the Rankings are an alternative method to reaching buyers, albeit in a manner that exposes product weaknesses in the same way that it highlights product strengths. However, it makes for a more informed buyer, which most suppliers prefer. LED Suppliers who join the Association provide the product details and specifications. They take a leading role in putting the interests of the buyer, and the health of the industry, ahead of their own, and in doing so, help the industry to grow more rapidly. Suppliers can Learn more here.