When people start researching alternative energy and efficiency, they either start out with the intention of reducing their future utility costs, or in the process, they try to determine the "pay-back" from installing particular technologies. Either way, the lifetime energy savings and up-front cost are invariably punched into a calculator to try to figure out whether what one is contemplating purchasing is "worth it". However, rarely do people factor in inflation!
Let's face it, doing compound inflation calculations is not easy, so it's easy to neglect it. And how much of a role can inflation play anyway? Turns out, quite a bit. The power of compounding is significant. At only 3% inflation, prices double in 24 years -- about the rated lifespan of a photovoltaic panel. If inflation goes into the double-digits again like in the 1970s and early '80s, which is rather likely with the Fed's "quantitative easing", then prices can double in under 5-7 years. Wouldn't doubly expensive electricity be a powerful component in any calculation of "pay-back" from an initial investment today? I would say yes.
I decided to apply this train of thought to the relative efficiency and costs of various types of light bulbs. I created an
interactive calculator where you can plug in your current cost of electricity, the number of light fixtures you have, how many hours those fixtures are on per day on average, and what you think the inflation rate might go to. The calculator will show you how much it will cost you based on which kind of light bulb you use -- incandescent, ESL, CFL, or LED.
Think incandescent bulbs are cheap at only 60 cents each? Don't want to spring for an $18 40-Watt equivalent LED? At only 2% inflation, the "cheap" incandescent bulbs will actually cost you $19.53 over the lifespan of the LED. At 10% inflation, the "cheap" bulbs will cost $66! That's pretty significant. But if you think that's interesting, check out what the difference in electricity costs will be!
Click here to try it out with your own assumptions. Feel free to share the link with any friends or family who still buy the "cheap" bulbs.