Consider the old-fashioned incandescent light bulb. Many public agencies promote replacement by compact fluorescents that consume less electricity. However, incandescent light bulbs create a cogeneration benefit by warming the indoor spaces they also illuminate; they can be viewed as little resistance heaters attached to a source of light. A consumer willing to use them selectively in winter can save fossil fuels otherwise used for heating, while avoiding the corresponding increase to summer air conditioning demands that year-round use would cause.1
Compact fluorescents also give off heat, but less, because their wattage is lower for the same light output. As well, some consumers may prefer an incandescent for other reasons, such as the color (or temperature) of a light, how quickly it turns on, whether it can be used with a dimmer switch, whether it will fit an existing lamp or fixture, or whether it has a pleasing appearance.2
When cogeneration heat is factored in, old-fashioned light bulbs can sometimes be the best choice for cool-season use. The best scenarios for this involve locations where electricity generating costs are low, and where consumers heat with home heating oil or propane. Even where compact fluorescents are more economic, a homeowner in a cold climate may be doing the right thing for himself or the environment by keeping incandescent bulbs due to habit, or for the quality of light.
It is perhaps odd to speak of one of the oldest available electrical devices in terms of modern energy efficiency. However, it serves as a quirky, if useful, example of how consumers can be better empowered to find efficient adaptations the more they face energy prices based on marginal costs—particularly including time-of-day or seasonal rates for electricity.
Table 1 shows a common analysis used to promote bulb changeout.3
These calculations compare a single 10,000-hour compact fluorescent bulb with the 10, 1,000-hour incandescent bulbs it would replace. At the assumed electricity rate of 10 cents/kWh, the cost advantage of the compact fluorescent bulb is apparent.4
This analysis can be extended to include the heat output of the bulbs, using the standard relationship as follows:5
One Watt = 3.414 Btus/hour
Thus, a single 100-W incandescent bulb will produce 100 x 3.414 = 341.4 Btus/hr. By contrast, a single 27-W fluorescent bulb will produce 27 x 3.414 = 92.18 Btus/hr.
Table 2 shows the heat content of three home heating fuels, their typical efficiency in home furnaces or heaters, and their approximate prices as of October 2005.6,7
This information leads to these costs per 1,000 BTU of home heating:
$2.65/gallon / 128 MBTU/gallon = 2.07 cents/MBTU.
Natural Gas: $13.50/MMBTU/ 850 MBTU/MMBTU = 1.59 cents/MBTU.
$1.94/gallon / 77.6 MBTU/gallon = 2.50 cents/MBTU
A consumer’s out-of-pocket heating-cost savings is shown in Table 3, for a 100-W incandescent bulb or its compact fluorescent equivalent.
Stated another way, for a kilowatt-hour of electricity consumed by incandescent lights as compared with fluorescent equivalents, the net heating fuel savings is 5.2 cents for fuel oil, 4.0 cents for natural gas, and 6.2 cents for propane. These heating savings figures may be more impressive when compared with the current national average retail electricity rate of 7.95 cents/kWh.8
Because the DOE cost-justification analysis considered a 10,000-hour cumulative comparison, its results would be modified as shown in Table 4, if all bulb usage occurred at times when heating was needed.
Here, the compact fluorescent bulb is still more economical for oil and gas heat, while the two bulb types have equivalent total costs compared with propane heating. Present-value discounting (at 10 percent) modifies these figures slightly more, giving light bulbs a slight advantage over propane heat (see Table 5).
Thus, a seasonal analysis yields considerably different answers for cold-region customers who heat with propane or fuel oil. For them, light-bulb heat can serve as a potentially efficient partial substitute. Note that this analysis does not merely trade off energy use versus the higher initial cost of an energy-saving device. It also involves potentially significant savings in fossil fuel used for home heating.
We can move to other scenarios (beyond the above numbers) to see whether light-bulb heat could ever be more than a curiosity. To that end, we consider a consumer who might change out types of bulbs seasonally, as is done with snow tires, or perhaps turn on different lamps (with different bulbs) in winter versus summer.9 We also replace the DOE-assumed 10-cent electricity rate with the residential retail average of 9.3 cents. Assuming an illustrative six month heating season produces the results in Table 6.10
Once again, while compact fluorescents come out slightly ahead when compared with two of the three fuels, it may be a reasonable choice for an oil or propane heat consumer to use incandescent bulbs when heating is needed.
Other modifications also are possible. Reducing the assumed purchase price of compact fluorescent bulbs (from the $14 in the DOE analysis) does improve their economics.11 For example, at a $5 bulb purchase price, the present value of using compact fluorescents all year improves by $5.59 for each fuel, making bulb-switching uneconomic in each case.
Finally, the retail price of electricity typically contains costs that are not avoided if electricity use is cut (such as for distribution poles and wires). For a societal analysis, the better comparison is to marginal generation and transmission costs of the electricity that is consumed (or saved) by consumer choices about which lights to use.
Of course, the marginal cost of electricity generation will vary depending on the seasonal generation mix in a region, the availability of transmission, current system demand, and other factors. For example, wholesale prices in the Pacific Northwest traditionally have been lower when water flows permit substantial hydroelectric generation. If low prices occur when heating demand is high, the economics of incandescent light cogeneration (or resistance heating in general) improve.
As an example of the societal perspective, an autumn 2005 price for firm off-peak electricity in the Pacific Northwest was about 8 cents/kWh; a corresponding winter 2006 price was about 4 cents.12 Those prices produce the results shown in Table 7 for the winter bulb-switching approach.
Notably, at a four-cent winter marginal electricity cost, there is a distinct social cost advantage to customers practicing bulb switching under these assumptions, and that advantage persists even if compact fluorescent bulbs fall to a $5.00 purchase cost.13 Under these conditions, using compact fluorescents in winter would be the wrong economic choice for society.
A final sensitivity test involves a winter price for natural gas. At a January 2006 level of about $9, the winter bulb switch retains a present value advantage of $3.50 at a 4-cent winter marginal electricity cost.14 However, these commodity prices have been especially volatile of late, a point also addressed below.
A finer look at electricity pricing can reveal unexpected energy efficiency opportunities. Some interesting results occur when we recognize incandescent bulbs as fairly efficient heaters that happen also to produce some light—for consumers who might be willing to use that heating selectively when it is needed.
Based on national average retail electricity prices, these results do not suggest rethinking the use of compact fluorescents as a general matter, but they do suggest a niche opportunity for some consumers willing to change light bulbs seasonally—if those consumers could gain access to more time and seasonally sensitive retail electricity prices.
At a minimum, a homeowner living in a cold climate with low-cost off-peak electricity may not be making a large mistake by hanging onto incandescent bulbs due to habit, or a preference for their aesthetics. Since using less of one energy source (electricity) can require using more of another energy source (e.g., heating oil, natural gas, or propane), the best conservation choice is not necessarily to minimize electricity consumption.
Consumers, and society in general, can lose when substitute energy sources are priced in ways that do not yield consistent price signals to customers. Many such distortions are in play here. Marking up variable electricity usage prices to recover fixed-distribution costs artificially discourages the use of electricity by raising its marginal price to the customer, possibly causing more fossil-fuel use for heating. By contrast, pricing based on embedded or average costs can give consumers a too-low price signal in economic terms, encouraging overuse of electricity for heating.
Retail electricity rate averaging also occurs on a time-of-day and seasonal basis. Indeed, if hydroelectricity is truly on the margin, resistance heating probably is the most efficient approach and should be encouraged.15 Likewise, marginal generation costs may be lower in evenings and at night when light and heat tend to be needed. But consumers never may receive those price signals if their electricity usage is priced at a fixed per-kilowatt-hour figure for all times of day.
While the selective use of incandescent light bulbs may seem an odd possibility, customers never have the chance to explore any number of creative adaptations to the genuine cost of electricity (and, perhaps, gain savings on their electricity bills) until they are provided the opportunity by time-differentiated pricing.
Retail pricing distortions have implications for “green” energy policies. Where customers pay per-kilowatt-hour rates that include a large premium over marginal generation costs during the time lights tend to be used, they already are receiving a price signal that artificially encourages more conservation (and in this instance, bulb replacement) than is economically justified. Such conditions ought to make it more difficult to justify rebate programs, subsidies, or prescriptive new building codes to force bulb replacements that consumers won’t willingly perform on their own.
Another disjuncture concerns changes in commodity prices for home heating fuels versus retail electricity prices kept low or smoothed by embedded-cost rate setting (such as for federal preference hydroelectric power), or through a mix of generating resources, as is intended by regulatory policies emphasizing generation resource diversity.16 However, if home-heating fuel quickly grows costly while electricity retail price increases are tempered by regulation or average-cost pricing, consumers artificially may be encouraged to substitute electricity for other home heating in a way that ultimately could consume more fossil fuel.17 Recent increases in the market price of oil bring this possibility to mind.
A good energy policy should include economically efficient pricing. Whether the commodity is electricity, fossil fuel, or some other source, providing a marginal-cost-based price for at least some marginal usage can help promote economic decision making by consumers—even including the occasional counter-intuitive opportunity, such as helping to heat one’s home with light bulbs efficiently.
1. Lawrence Berkeley National Laboratory 2005; California Energy Commission 2005.
2. For example, incandescent bulbs can project light further and provide a more pleasing color rendition than do fluorescent bulbs (United States Department of Energy 2005a). Many fluorescent bulbs cannot be used with a dimmer (California Energy Commission 2005). Incandescent bulbs also reach full light output almost instantly, while fluorescents suffer a brief delay.
3. United States Department of Energy 2005a.
4. On a present value basis at a 10 percent discount rate, the compact fluorescent has a $46.28 advantage.
5. Lighting Design Lab.
6. Source: United States Department of Energy 2005b. Oil and gas efficiency figures are “typical,” electricity efficiency is for baseboard heat.
7. Home heating oil price is the national average delivered price. United States Department of Energy 2005c. Natural gas price is approximate spot price reported at Henry Hub for Oct. 13, 2005. United States Department of Energy 2005d.
8. EIA 2005, data for the first eight months of 2005. Average rates for customer segments were as follows: 9.3 cents/kWh for residential, 8.51 cents/kWh for commercial, and 5.47 cents/kWh for industrial.
9. Analyses of commercial building heating upgrades show that added summer air conditioning costs tend to offset winter heat savings for year-round incandescent bulb use. Energy Star 2004, p. 50; Lighting Design Lab.
10. To reach the full assumed lifespan of a compact fluorescent bulb used half time, this present value analysis extends just over nine years.
11. For example, some off-brand compact fluorescent bulbs of 25-27 W are available for $5-$8 plus applicable tax and shipping through Internet sales. Bulbs.com 2005, 1000bulbs.com 2005.
12. Dow Jones 2005, 2006a. The firm, off-peak price (California-Oregon and Nevada Oregon borders) for Oct. 12, 2005, was $80.72/MWh; for Jan. 18, 2006, it was $40.43/MWh. We use off-peak prices as representative of evening hours when light bulbs are more likely to be used.
13. As the resulting $5.59 change in present value would still leave a benefit to bulb switching in Table 6, under that scenario, for each heating fuel.
14. Dow Jones 2006b. The reported Henry Hub natural gas price was $8.84 for Jan. 18, 2006.
15. For example, at a two cents per kilowatt hour marginal electricity generation cost, incandescent bulbs are more efficient if even a sixth of the bulb’s heat output replaces natural gas heating—the most economical of the three fossil fuel options. This assumes a flow-based scenario for hydro generation where the water cannot be stored for use at higher-cost times.
16. State of California 2003.
17. Direct use of natural gas in a home furnace is more efficient, per delivered BTU, than is using gas to generate electricity to deliver to the same home for resistance heating. Note that a $13.50 natural-gas price, as used above for heating costs, would imply about a 13.5 cents/kWh electricity marginal generating cost.