LED vs Metal Halide Cost Comparison: Real ROI Analysis (2026)

In 2026, the question isn’t whether LED beats metal halide. Everyone knows LEDs use less electricity. The real question is when the savings pay back the upfront cost, and whether the numbers on the supplier’s ROI calculator hold up under real operating conditions. I’ve analyzed retrofit projects where the claimed 18 month payback stretched to 34 months because the calculator used new fixture lumens instead of maintained lumens, ignored the cost of disposal for old MH lamps, and assumed electricity rates that were 30% below actual. This guide gives you a transparent, line by line comparison with real numbers you can plug into your own spreadsheet.

Key Takeaways

• Electricity savings alone typically cover the LED premium in 14 to 18 months. Add avoided maintenance (lamp replacement, ballast failure, lift rental for re-lamping) and the payback drops to 10 to 14 months.
• Metal halide loses 30 to 40% of its output in the first 8,000 hours. Most facilities don’t relamp on schedule, so operators are working under half the original light level without knowing it. LED output stays above 90% for 50,000+ hours.
• The maintenance savings are often larger than the electricity savings. A 400W metal halide lamp costs $15 to $25 and takes 30 minutes of labor at $40 to $60 per hour to replace. At 2 to 3 year lamp life, that’s $30 to $50 per fixture per year just in maintenance. LED: zero lamp replacements for 10+ years.
• Disposal costs and environmental compliance add $2 to $5 per lamp. Metal halide lamps contain mercury and require hazardous waste handling. LEDs contain no mercury and are classified as electronic waste in most jurisdictions, with simpler and cheaper disposal requirements.

Key Definitions

Simple Payback Period

The time required for cumulative savings to equal the incremental upfront cost. Formula: (LED Cost – MH Cost) / Annual Savings. Does not account for the time value of money. For a more accurate analysis, use net present value (NPV) with a discount rate, but simple payback is adequate for projects under 3 years.

Lumen Depreciation

The gradual decline in light output over operating hours. Metal halide: L70 at roughly 8,000 to 12,000 hours (2 to 3 years at 4,000 hrs/yr). LED: L70 at 50,000 to 100,000 hours (12 to 25 years). The gap is the single biggest operational difference between the two technologies.

Ballast Loss

Metal halide fixtures require a ballast that consumes 10 to 15% of the lamp’s rated wattage as waste heat. A “400W” MH system actually draws 440 to 460W from the grid. LED drivers are 92 to 95% efficient, adding only 5 to 8% overhead. A “200W” LED draws roughly 210 to 216W from the grid.

Re strike Time

Metal halide lamps require 5 to 15 minutes to cool down and restart after a power interruption. During this period, the space is dark or lit only by emergency lighting. LEDs restart instantly. In facilities with frequent voltage dips or scheduled shutdowns, re strike time creates a safety and productivity gap that doesn’t appear on the energy spreadsheet.

Total Cost of Ownership (TCO)

The sum of purchase cost, installation, energy, maintenance, lamp replacement, and disposal over the system life. TCO is the correct metric for comparing LED vs MH, not upfront fixture price. Over 10 years, the upfront cost represents roughly 15 to 20% of TCO for an LED system and 5 to 8% for MH. Energy and maintenance dominate both, but LED wins both categories by wide margins.

Head to Head: 200W LED vs 400W Metal Halide

This comparison uses a standard warehouse scenario: 100 fixtures, 8m ceiling, 4,000 operating hours per year, $0.12/kWh electricity. The 200W LED produces 28,000 lumens (140 lm/W) maintained. The 400W MH produces roughly 32,000 initial lumens but only 22,000 maintained lumens after 8,000 hours. The LED delivers more useful light at the work plane despite lower initial lumens because of better optical efficiency and less depreciation.

Annual electricity: 455W x 4,000 hrs / 1,000 x $0.12 = $218.40. 215W x 4,000 hrs / 1,000 x $0.12 = $103.20. Lamp replacement assumes MH lamp life of 12,000 to 15,000 hours (3 to 3.75 years at 4,000 hrs/yr), annualized cost of $30 to $50 including labor and disposal.

Payback Analysis: Three Real Scenarios

Payback varies significantly by operating hours, electricity rate, and labor cost. Here are three real world scenarios. All assume 100 fixtures, 200W LED ($230 avg) vs 400W MH ($100 avg), $13,000 LED premium.

The single shift scenario is the most conservative. Even there, LED pays back in 18 months and generates positive cash flow for the remaining 8+ years of service life. The 24/7 scenario is compelling enough that keeping metal halide is arguably an operational liability. At $27,600 per year in savings, every month of delay costs $2,300.

The Hidden Costs That ROI Calculators Miss

Most supplier provided ROI calculators use three inputs: wattage, hours, and electricity rate. That gives you a directional number. But it misses the costs that actually drive facility manager decisions. Here’s what to add to your own spreadsheet.

Air conditioning load reduction. Metal halide fixtures convert roughly 70% of input power to heat. In air conditioned facilities (pharma, food processing, electronics assembly), that heat adds to the HVAC load. LEDs convert roughly 40% to heat, reducing the cooling burden. For a 100 fixture install, the heat reduction is roughly 24kW. At a COP of 3.0 for the HVAC system, that saves about 8kW of cooling power, or roughly $3,800 per year at $0.12/kWh for a single shift operation. This saving alone can cut the payback period by 2 to 4 months in climate controlled facilities.

Relamping disruption cost. Replacing a burned out MH lamp in an active warehouse aisle means shutting down that aisle for 30 to 45 minutes. If the aisle generates $500 per hour in throughput, each lamp replacement costs $250 to $375 in lost productivity. Multiply by 33 lamps per year (100 fixtures, 3 year lamp life) and that’s $8,000 to $12,000 in disruption cost that never appears on the energy spreadsheet.

Insurance and safety. Some insurers offer reduced premiums for facilities with LED lighting because of lower fire risk (LEDs operate cooler than MH) and elimination of the mercury hazard. The premium reduction is typically 2 to 5% of the property insurance cost. On a $20,000 annual premium, that’s $400 to $1,000 per year.

10 Year Total Cost of Ownership: 100 Fixtures

Assumptions: 4,000 hrs/yr at $0.12/kWh. MH lamp life 12,000 hrs (3 yr). MH ballast replacement at year 6. Disposal $5/lamp. Labor $40/hr. Excludes disruption cost and insurance savings, which would add another $10,000 to $15,000 to the LED advantage.

Light Quality: What the Spreadsheet Doesn’t Capture

Cost is important. But there’s a reason facilities that switch to LED rarely go back, even when the payback math is marginal. Three quality factors that don’t appear in the TCO table:

CRI. Metal halide CRI is 65 to 70. LED is 80+ standard, 90+ for inspection areas. That’s the difference between “that pallet looks brown” and “that pallet is labeled with the correct SKU.” In warehouses where color coded labels or wiring identification matters, CRI below 80 is a source of picking errors that cost far more than the electricity difference.

Instant on. Metal halide’s 5 to 15 minute warm up means lights are often left on in intermittently used areas because turning them off means waiting for re strike. LEDs turn on instantly at full brightness, enabling occupancy based control that saves 30 to 50% in low traffic zones. The control savings are on top of the fixture efficiency savings.

Dimming compatibility. Metal halide dimming is expensive, unreliable below 50% output, and shortens lamp life. LED 0 to 10V dimming costs roughly $10 per fixture, dims smoothly to 10%, and doesn’t affect driver life. Daylight harvesting in warehouses with skylights is only practical with LED. The combination of occupancy sensing and daylight harvesting typically saves an additional 40 to 60% on top of the fixture level efficiency gain.

Standards & References

• IES LM-79-19 — Validates LED fixture efficacy. The difference between claimed and tested lm/W drives the difference between projected and actual payback.
• IES LM-80-20 + TM-21-19 — Lumen maintenance testing and projection. Confirms that the LED fixture will still deliver useful light at year 10, unlike MH which has dropped below 70% by year 3.
• DesignLights Consortium (DLC) Premium V5.1 — North American qualification standard. DLC Premium listed fixtures meet minimum efficacy (typically 130+ lm/W), lumen maintenance, and driver efficiency requirements. Required for most utility rebate programs.
• ENERGY STAR Luminaires V2.2 — Alternative qualification path for fixtures not covered by DLC categories.
• ASHRAE 90.1-2019 — Energy Standard for Buildings. Sets maximum allowable lighting power density (W/sq ft) for warehouses, which metal halide typically exceeds and LED typically meets with margin.
• EU Directive 2011/65/EU (RoHS) — Restriction of hazardous substances. Metal halide lamps contain mercury and face increasing regulatory pressure. LEDs are mercury free and RoHS compliant.

Frequently Asked Questions

ROI Verification Checklist

• ☐ Used maintained lumens (not initial) for both LED and MH in the comparison
• ☐ Included ballast/driver losses in the system wattage for both technologies
• ☐ Used your actual electricity rate from a recent bill, not a regional average
• ☐ Included lamp replacement cost (material plus labor) annualized over lamp life
• ☐ Included ballast replacement cost in year 5 to 7 for the MH system
• ☐ Included hazardous waste disposal cost for MH lamps
• ☐ Added HVAC savings if the facility is air conditioned
• ☐ Checked DLC Premium listing for utility rebate eligibility
• ☐ Verified LED driver brand and rated life on the spec sheet
• ☐ Requested LM-80 and TM-21 reports to confirm L70 projection
• ☐ Calculated simple payback and 10 year TCO, not just annual electricity savings

The ROI case for LED over metal halide in warehouses closed years ago. The only remaining question is which LED supplier’s numbers hold up and which ones are built on inflated efficacy claims and ignored maintenance costs. Verify the LM-79, check the driver brand, and insist on a DIALux simulation with maintained values. The math is solid. The supplier is the variable.