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Commodity Investing

Goodbye Incandescent Light Bulbs… Energy-Efficient CFLs Are the Future

An Investment U Classic from 2010:
Goodbye Incandescent Light Bulbs… Energy-Efficient CFLs Are The Future

by David Fessler, Investment U Senior Analyst
Tuesday, July 19, 2011 : Issue #1559

Editor’s Note: This week Investment U Senior Analyst, David Fessler, is in Seattle for an annual investment conference. Given his priorities to his subscribers, Investment U will be running one of his classic pieces on energy efficiency, originally posted on Friday, April 9, 2010. The article does not accurately reflect David Fessler’s current thinking on CFL light bulbs or the legislation mandating their adoption. We regret the error…

In 2012, one of the most common household items will go the way of the dodo.

Extinct.

Instead of lighting up living rooms across America, the trusty incandescent light bulb will have a new home in the Smithsonian. Right next to Alexander Graham Bell’s original telephone and Marconi’s radio.

After December 31, 2011, the federal ban on the 100-watt incandescent light bulb will take effect. Two years after that, the 60-watt and 40-watt versions will disappear from stores, too.

And the remarkable thing?

A massive 82 percent of Americans are totally unaware that this will happen.

So what’s the deal here? In short, it’s all about energy efficiency…

Phasing Out Traditional Light Bulbs and Increasing Energy Efficiency

When it comes to the energy sector – specifically, increasing our energy independence and energy efficiency – you may know that I’m not afraid to bash our elected officials in Washington for their collective snooze-fest.

But Congress does get a gold star for passing the Energy Independence and Security Act in December 2007. And it’s this that mandates the phasing out of the traditional light bulb.

You see, while incandescent bulbs do the job, they’re actually a bigger problem than most people think.

Thomas Edison deserves plenty of credit and respect for inventing the light bulb. But they’re incredibly wasteful. Around 90 percent of the energy created is heat and ultra-violet light, with only about 10 percent going towards the bulb’s intended use – creating visible light.

Why the Incandescent Light Bulb is a Complete Waste of Energy

In this day and age, the United States and the rest of the world desperately need to cut down on wasted energy.

Consider this…

  • About 57 percent of the energy we start with in various products is wasted.
  • For the electric industry, it’s even worse: 69 percent of the energy used in coal, natural gas and nuclear power generation never does useful work as electricity.

So what happens to it? It’s lost through heat at the generating plants. It’s lost in the wires on the way to your house. And when the power finally does reach you, the inefficiency of the appliances it’s powering also wastes energy.

Reducing wasted energy is one of the easiest ways to mitigate our insatiable demand for energy. And given that one of biggest power users in the home is lighting, one of the easiest ways to address the problem is to make it more efficient.

What’s more… it’s one of the simplest things to fix…

Solving America’s Energy Crisis… One Light Bulb At a Time

There’s no doubt about some of the most profound and urgent issues that America faces…

  • Energy consumption
  • Rising gasoline costs
  • Rising utility bills
  • Greenhouse gas emissions
  • Dependence on coal
  • Dependence on foreign oil
  • Global warming

Now imagine if by doing just one thing, we could solve some of these.

And what if that one thing was as simple as changing an incandescent light bulb? Is it really viable? I think it is. Here’s why…

  • There are 110 million households in the United States.
  • The average home has between 50 and 100 light sockets.

My own home isn’t particularly large, but we have a few other buildings in addition to the main house. I asked my son to do an inventory and he determined we have 206 sockets. Yikes.

Obviously, we don’t use all 206 outlets. But regardless, it’s a terrible waste of energy to use ordinary incandescent light bulbs. So about a year ago, I started to replace my used bulbs with compact fluorescent bulbs – or CFLs for short.

CFLs (also known as “swirl bulbs”) emit the same amount of light as incandescents, but use 75 percent to 80 percent less energy.

If each American home changed just one 60-watt incandescent bulb to a CFL, the resulting energy savings would be enough to power a city of 1.5 million people. Or all the homes in Delaware and Rhode Island.

To put it another way, changing one 60-watt bulb is the equivalent of taking 1.3 million cars off the roads. It’s the law of large numbers in action.

And America’s largest retailer is playing an active role…

Install a Compact Fluorescent Light… And See a Return on Your Investment

Walmart (NYSE: WMT) operates more than 3,200 stores, each one boasting a huge array of ceiling fan displays. The company has ditched incandescent bulbs in all of them in favor of CFLs. Annual energy savings? $6 million.

Now before I get emails about the hazards of all the mercury inside the CFL bulbs, it’s actually a miniscule amount. And it’s expected to decline by about 80 percent over the next year or two. Properly disposing of them is a small price to pay for the energy savings gained.

The truth is, CFLs are…

  • More Efficient: In a CFL, you get 60 lumens (a measure of light output) per watt of power. In an incandescent, you only get 15. Therefore, CFLs are four times more efficient than Edison’s baby.
  • More Cost-Effective: Most CFLs burn for around 8,000 to 12,000 hours. So although you’ll spend around $1.43 per 60-watt equivalent CFL bulb (based on an eight-pack of GE 13-watt Energy Smart bulbs), you save as much as $38 in electricity costs over the life of the bulb.

That’s an approximate 2,657 percent return on your investment. At my house, I stand to save over $7,533.42.

What’s your number?

There aren’t many energy investments that pay you back in as little as five months. But CFLs do – in the form of energy savings. The time has come for CFLs – and switching to them is a great idea.

Good investing,

David Fessler

Note: The article was originally published last year on Friday, April 9, 2010 in this space, and David was not consulted before the republication. The article does not accurately reflect his current thinking on CFL light bulbs or the legislation mandating their future adoption. We regret the error. – Investment U


About

As a degreed electrical engineer, Dave served as vice president of two successful tech businesses: LTX Corporation and Quality Telecommunications Inc. He now provides unique and groundbreaking insights into the energy sector. His new book, The Energy Disruption Triangle: Three Sectors That Will Change How We Generate, Use, and Store Energy, quickly became a best-seller. Dave is the Energy and Infrastructure Strategist for the Profit Trends free daily investment e-letter.

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