Industrial Lighting Retrofits: A Facility Manager's ROI Playbook

Industrial lighting represents one of the largest controllable operating expenses in warehouses and manufacturing facilities. For facility managers tasked with reducing costs while improving operations, HID-to-LED retrofits offer a rare opportunity: significant energy savings, reduced maintenance burden, and improved working conditions, all backed by a clear financial return.

This guide provides the framework you need to build a compelling business case for your C-suite and secure approval for your lighting retrofit project.

The Hidden Cost of Legacy HID Lighting

Metal halide and high-pressure sodium (HPS) fixtures have powered industrial facilities for decades, but their true cost extends far beyond monthly energy bills.

Energy Inefficiency

A typical 400W metal halide high bay fixture consumes approximately 458 watts when you factor in ballast losses. The LED equivalent delivering the same light output typically draws 150-180 watts. That is a 60-65% reduction in energy consumption per fixture.

For a 100,000-square-foot warehouse running 250 high bay fixtures for 4,000 annual operating hours, the math becomes compelling:

• HID annual consumption: 458W x 250 fixtures x 4,000 hours = 458,000 kWh
• LED annual consumption: 165W x 250 fixtures x 4,000 hours = 165,000 kWh
• Annual savings at $0.10/kWh: $29,300

Maintenance Burden

HID lamps typically require replacement every 15,000-20,000 hours. In a high bay application at 30 feet, each lamp change requires a lift, a technician, and production disruption. LED fixtures rated for 100,000+ hours eliminate most lamp replacements for 15-20 years.

Calculate your current maintenance costs: lamp costs, labor hours, lift rental, and the opportunity cost of production interruptions. Many facilities discover maintenance savings that rival energy savings.

Light Quality Degradation

HID lamps lose 30-50% of their light output before failure. Facilities often operate with inadequate lighting for months before scheduled replacements. LED fixtures maintain 90%+ output throughout their rated life, ensuring consistent illumination and worker safety.

Building the Financial Case

Securing C-suite approval requires translating technical benefits into financial metrics executives understand: payback period, internal rate of return, and net present value.

Total Project Cost Components

Develop a comprehensive cost estimate that includes:

• Fixture costs: LED high bay fixtures range from $150-400 depending on wattage, optics, and features
• Installation labor: Typically $50-100 per fixture for direct replacements
• Controls integration: Occupancy sensors and daylight harvesting add 10-20% but accelerate payback
• Electrical modifications: May be required for older facilities with incompatible circuits

Utility Rebates: The Accelerator

Utility rebate programs can offset 20-40% of project costs. Most utilities offer prescriptive rebates for HID-to-LED conversions:

• Metal halide to LED: $50-150 per fixture
• HPS to LED: $40-100 per fixture
• Occupancy sensor additions: $20-50 per sensor

Contact your utility early in the planning process. Many programs have annual funding caps and first-come, first-served allocations. Some utilities also offer custom incentive programs for larger projects that exceed prescriptive limits.

Calculating Payback Period

The simple payback formula for lighting retrofits:

Payback = (Project Cost - Rebates) / (Annual Energy Savings + Annual Maintenance Savings)

Using our 250-fixture warehouse example:

• Project cost: $75,000 (fixtures + installation)
• Utility rebates: $20,000
• Annual energy savings: $29,300
• Annual maintenance savings: $8,000
• Payback period: 1.5 years

For CFO presentations, also calculate IRR (internal rate of return) and NPV (net present value) over a 10-year horizon. LED retrofits commonly deliver IRRs exceeding 40% and substantial positive NPV.

Beyond Energy: Operational Benefits

Smart facility managers frame lighting upgrades as operational improvements, not just energy projects.

Improved Light Quality and Safety

LED fixtures provide:

• Higher Color Rendering Index (CRI): 80+ CRI versus 65-70 for HPS, improving visual acuity for quality control and safety
• Instant restrike: Full light output immediately versus 15-20 minute warm-up for HID after power interruption
• Uniform distribution: Better optical control reduces shadows and dark spots
• Flicker-free operation: Eliminates stroboscopic effects that can cause headaches and fatigue

Productivity Gains

Studies consistently link improved lighting to productivity improvements. While difficult to quantify precisely, even a 1-2% productivity gain in a manufacturing environment can dwarf energy savings in dollar terms. Include this as a qualitative benefit in your proposal.

Sustainability Reporting

LED retrofits directly reduce Scope 2 carbon emissions. For organizations with sustainability commitments or ESG reporting requirements, lighting upgrades provide measurable, verifiable emission reductions.

Implementation Strategy

Phased vs. Full Replacement

Weigh the options:

Full replacement maximizes energy savings immediately and simplifies utility rebate applications but requires larger upfront capital.

Phased approach spreads costs across budget cycles and allows learning from initial phases but may complicate rebate timing and extends the period of mixed lighting technologies.

Timing Considerations

Optimal retrofit timing factors include:

• Utility rebate availability: Confirm program funding before committing
• Production schedules: Plan installation during low-production periods
• Budget cycles: Align with capital planning timelines
• Current fixture age: Prioritize areas with oldest equipment or highest operating hours

Commissioning and Verification

Proper commissioning ensures you achieve projected savings:

• Verify light levels meet specifications using a light meter
• Confirm dimming and occupancy sensors function correctly
• Establish baseline measurements for savings verification
• Document everything for utility rebate applications

Presenting to the C-Suite

Structure your proposal around metrics that resonate with executives:

1. Financial returns: Lead with payback period, IRR, and total savings over 10 years
2. Risk mitigation: Emphasize reduced exposure to electricity rate increases and maintenance cost volatility
3. Operational benefits: Frame improved lighting as a productivity and safety investment
4. Sustainability alignment: Connect to corporate environmental commitments
5. Competitive positioning: Note that modern facilities signal operational excellence to customers and employees

Include a sensitivity analysis showing payback under various electricity price scenarios. This demonstrates thorough analysis and addresses the most common executive concern.

Moving Forward

Industrial lighting retrofits represent one of the highest-ROI capital improvements available to facility managers. With payback periods commonly under two years, utility incentives covering a significant portion of costs, and operational benefits beyond energy savings, the business case nearly writes itself.

Start by auditing your current lighting inventory, documenting operating hours by area, and contacting your utility about available rebates. With accurate data in hand, you can build a proposal that earns C-suite approval and delivers lasting value to your facility.