Friday, March 09, 2012

Affordability: Government Style

Government-subsidized green light bulb carries costly price tag



The U.S. government last year announced a $10 million award, dubbed the “L Prize,” for any manufacturer that could create a “green” but affordable light bulb.

Energy Secretary Steven Chu said the prize would spur industry to offer the costly bulbs, known as LEDs, at prices “affordable for American families.” There was also a “Buy America” component. Portions of the bulb would have to be made in the United States.

Now the winning bulb is on the market.

The price is $50.

Retailers said the bulb, made by Philips, is likely to be too pricey to have broad appeal. Similar LED bulbs are less than half the cost.

“I don’t want to say it’s exorbitant, but if a customer is only looking at the price, they could come to that conclusion,” said Brad Paulsen, merchant for the light-bulb category at Home Depot...

Gee, aren't people dumb? To equate the affordability of a product with its price.

OK, let's do some math.

A cheapie incandescent 60 Watt bulb (1500 hour) would cost out this way, using it 10 hours a day for the life of the bulb:

Cost of bulb: $0.61
Cost of Operation @ $0.12 kWh: $11.28

Total Cost: $11.69

The Phillips L Prize bulb over the same time period:

Cost of bulb: $59.95 (the best I could find)
Cost of Operation for 1500 hours @ $0.12 kWh: $1.92

Total Cost: $61.87

I use a max of 12 60 Watt bulbs in my house at any given time, so the total outlay for me were I to transition to these bulbs would be $742.44 (plus tax!) for the first 1500 hours of use.

Granted, over the long run, you would get ahead making the switch as the new bulbs are supposed to last 20 times longer. (We shall see. In my experience, CFL bulbs came no where near providing the longevity they promised. I'll believe it when I see it.) So, to get to 30000 hours of use it would cost $233.80 using standard bulbs, and $98.35 cents for the new LED.

However, to get to 31500 hours of use the cost would be $245.39 to $160.22 (at current prices.)

So, it takes buying and using seven incandescent bulbs before the LED bulb starts paying off (a little less than three years of use @ 10 hours a day.)

What it comes down to is I can buy bulbs to light my entire home today for $7.32, or I can light my house for $719.40. Does the average American probably have more pressing concerns that $712 could address?

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