We bought them more than a decade ago. Several sets of Christmas lights. Every year we decorate the tree listening to Willie Nelson’s Pretty Paper, the greatest Christmas album of all time. We have two boxes, adding up to a whopping 800-count of little white incandescent bulbs. They put out a beautiful warm yellow light and have survived 10+ seasons of use and storage.
But they must use a horrendous amount of electricity, right? Are these lights ancient history, like the bulb in Catherine Wolfram’s basement? Should I be a Grinch and put these out to pasture? Is it time to replace these lights with LEDs?
I still have the original boxes, but they don’t say anything about electricity consumption. No problem. This is why everyone needs a “Kill-A-Watt” at home. I plugged the first set of lights into the Kill-A-Watt and, bam!, 51.5 watts.
This is for 200 lights so the full set of 800 lights (36 feet) draws 206 watts. This is a lot of electricity. But we only have these lights plugged in about 50 hours per year. Just a couple of hours each evening for about three weeks. By January we are usually pretty sick of Willie Nelson (sorry Willie!) and we pack everything up and put it away.
So 200 watts multiplied by 50 hours yields 10 kilowatt hours annually. We are on Pacific Gas & Electric’s “Time-of-Use” rate and most months in the third-tier so we face a price of about $.30 per kilowatt hour. Thus our annual expenditure for Christmas lights is $3.00. Wait. Only $3.00? Yep. The lights are electricity-intensive, but on for so few total hours each year that it probably wouldn’t make sense to replace them with LEDs.
But what about externalities? How much carbon dioxide are we emitting? PG&E customers emit 0.391 pounds of carbon dioxide per kilowatt hour, so my 10 kilowatt hours lead to about 4 pounds of carbon dioxide emissions. Valued at $36 per ton, this is only about 7 cents per year. Even if you assume a social cost of carbon of $200 per ton, the damages are only 39 cents per year. In fact, the $.30 per kilowatt price is already higher than social marginal cost unless you think the social cost of carbon is stratospherically high. And keep in mind that those new LED lights would require resources too, for manufacturing, packaging, and shipping.
Economics tells us that we live in a world of finite resources, so investments must be made where they yield the greatest return. With energy this means the big ticket items: car, furnace, home insulation, perhaps refrigerator — but not holiday lights that are used only a few hours each year. Unless your house looks like these homes below or you leave your lights on until St. Patrick’s Day, then it probably does not make sense replacing your lights with LEDs either to save yourself money or to save the planet.
So go forth and enjoy your holiday lights! Crank up the Frosty the Snowman and enjoy this holiday season with your family and friends. We will be back next year recharged and ready to engage once again on the world’s most pressing energy challenges. Happy holidays from the Energy Institute!
The blog will be on vacation next week but will return on January 4.
Lucas Davis is the Jeffrey A. Jacobs Distinguished Professor in Business and Technology at the Haas School of Business at the University of California, Berkeley. He is Faculty Director of the Energy Institute at Haas, a coeditor at the American Economic Journal: Economic Policy, and a Faculty Research Fellow at the National Bureau of Economic Research. He received a BA from Amherst College and a PhD in Economics from the University of Wisconsin. Prior to joining Haas in 2009, he was an assistant professor of Economics at the University of Michigan. His research focuses on energy and environmental markets, and in particular, on electricity and natural gas regulation, pricing in competitive and non-competitive markets, and the economic and business impacts of environmental policy.