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Is A Subsidy On LED Lighting Economically Viable?

The governments in many countries have been nudging their citizens to move away from electricity guzzling incandescent bulbs to greener alternatives like LED. Incandescent bulbs are, in fact, banned in a number of countries. According to an estimate, the ban on the use of incandescent bulbs has helped Europe save as much as 40 TWh of electricity each year, not to mention reduction of CO2 emissions by as much as 15 million tons.

But the switch to LED is not going to be easy, at least in poor and developing countries. Despite the dramatic fall in prices of LED bulbs over the past several years, they are still five to ten times more expensive than incandescent bulbs. That is not to say that LED bulbs are not a better alternative. Studies show that LED bulbs can have a lifespan of over 50,000 hours. To give this some perspective, the corresponding figure for an incandescent bulb is just 1,200 hours. In other words, if you were to run a bulb for twelve hours every day, an incandescent bulb would last for just 100 days. In comparison, the LED bulb could last well over 11 years.

These studies however may not make much sense to the average daily wage worker who might be more concerned about the higher capital investments required to install an LED bulb. To such a consumer, the per-unit costs matter more than the lifespan.

More here.


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