LED Lighting: TCO Part II – The Cost of the Lighting System

Breaking Down the Costs of Owning and LED Lighting System

TCO Graphic Part II

The Total Cost of Ownership is buried within the lighting system design, individual components, and manufacturing process. Some can be easily identified, while others are virtually impossible to discern without the manufacturer’s help.

PURCHASE PRICE: The LED Lighting Kit. A ‘kit’ is the complete set of individual components that make up the light system:

  1. The Fixture
  2. The Light Engine
  3. The LED Component
  4. Power Supply
  5. Power Cables

The Fixture can range from a simple extruded aluminum bar to a complex housing containing the heat sink, cooling fans, the electrical interface, power circuitry, power controls and control interfaces, sensors, and both light optics and protective lenses. In most instances (but not all), the fixture also holds the Light Engine. The entire fixture is priced (appropriately) as one unit. Fixtures have related installation and maintenance costs. Fans (active cooling) are more expensive to operate and maintain than a fixture that uses heat sinks only.

The Light Engine holds the LED components (or chips) that emit light. Light Engines are analogous to a bulb, but are typically integrated into the fixture (can’t be removed or replaced). High quality Light Engines are made of a metal-core printed circuit board (PCB) that holds the LED chips and makes the electrical connection between the incoming electrical current and the LED chips. The PCB boards are bonded to the heat sink to conduct heat away and maintain the operating temperature of the LED chips. Alternatively, individual LED chips with a metal substrate (often called a chip-on-board of COB) can attached individually to the heat sink with electrical connections made between each COB. The method of the connections vary widely in quality. Poor quality connections result in more frequent maintenance costs. Because Light Engines are integrated into the fixture, when they fail (and they do fail), the entire fixture must be replaced. The product warranty will pay for the replacement, but not the labor to monitor the lights, identify failures, remove the fixture, and replace it. An undetected Light Engine failure reduces crop production, as does the delay between replacements. Individual LED chip failures occur (much more often than the salesperson will tell you) and exasperate the problem. The higher the quality of the Light Engine, the fewer failures and the lower the maintenance costs. In most cases, the added cost of buying quality is worth it. We know of just one manufacturer who uses a replaceable Light Engine, which provides a number of advantages over an integrated Light Engine – the most obvious of which is avoiding replacing the entire fixture when a Light Engine fails. For all other systems, the Light Engine and Fixture are bound to each other, with the failure of any of the components causing the failure of the total system.

The LED Component (chip) deserves a separate discussion thread. They are the most important part of the entire lighting system, and vary widely in terms of performance and quality. There are only a dozen or so manufacturers of suitable LED chips (globally), and among these, there are only a handful that stand out in terms of performance and quality. Evaluating the quality of the epitaxy, bin, phosphor, and optics of the LED chips is beyond the scope of this article, however, there are two heuristic measures that summarize the differences; efficacy (performance) and L80 ratings (quality). Efficacy is the measure of light output to energy input, and has (by far) the largest economic impact on costs related to the lighting system. Further complicating the analysis is that efficacy is different for each spectra (color) of LED chip, requiring an efficacy calculation for the entire fixture. And the variance of fixture-level efficacy can be large – from less than 1.0 PPF/watt to 1.8 PPF/watt – a stunning difference, considering that the latter requires 80% less energy to produce the same amount of light. Our LED P/Q Rankings focus on fixture efficacy as the primary attribute of performance. The higher the efficacy, the lower your cost/lb of food will be. (note: we will discuss LED chip quality in a future article).

The Power Supply is typically separate from the Fixture and is almost always manufactured by a third party and priced separately. The Power Supply converts AC current to DC current (in most instances), and contains the circuitry for current control and dimming. These processes result in electrical losses of 8% to 15%, which you pay for in the form of electricity you have purchased (at the wall plug) but which is lost before it can power the Light Engine. The efficiency differences between Power Supplies is second only to LED chip efficacy as a cost consideration. The difference between a 15% loss and an 8% loss in significant in terms of your electrical costs. The efficacy measure of the LED P/Q Rankings encompasses a measure of the Power Supply efficiency, meaning it’s the best way to evaluate the energy costs of the entire system.

The Power Cable varies only slightly from one product to another, with the primary consideration being the distance (length) of the Power Cable between the Power Supply and the Fixture. All cables have ‘line’ losses that increase as the distance increases. When Power Supplies are located in close proximity to the fixture, these losses are trivial, but if Power Supplies are located away from the grow room, they can become meaningful.

Installation Costs. The cost of installing the fixture is almost always underestimated – and it can vary considerably from one product to another. Installing several light bars is more costly than installing a light panel that covers a greater area. More costly still is the cost of electrical wiring. AC connections require an electrician, so minimizing them reduces the installation costs. In general, you should plan for installation to add between 15% and 20% (in labor costs) to the initial purchase price of the light system (note: we will address thermal management, controls, sensors, optics and lenses needed for IP ratings in a separate article).

We noted earlier that identifying all of these costs without the help of the manufacturer is impossible. This is the main reason we work with manufacturers to aggregate the data and provide it in the form of the LED P/Q Rankings. We can’t emphasize enough how valuable we believe the Rankings are to you in your equipment evaluation.



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.