Commercial Lighting Costs Between Now and January 2027: What Facility Managers Should Expect
What is happening: Three forces are converging on commercial lighting budgets before the new year: the darkest stretch of the calendar, a wave of utility rate changes scheduled for January, and the end of a long-running federal deduction for energy-efficient building upgrades. Here is how the next few months are likely to play out for a typical facility, and what businesses can do while there is still time.
October and November: The Lights Stay On Longer
Daylight saving time ends on November 1, and from that point sunset arrives earlier almost every week. By December, the sun sets before 5:30 p.m. across much of the country. For warehouses, retail stores, schools, healthcare facilities, and parking lots, that means lighting systems run more hours per day than at any other point in the year, and exterior and security lighting works hardest during the evening shift change.
Older fixtures, such as fluorescent, metal halide, and high-pressure sodium, use significantly more electricity than LED for the same light output. When the lights run longer, the gap between old and new technology widens on every bill. Facilities that notice their winter bills jumping are often seeing this effect, not a billing error.
December: A Federal Incentive Winds Down
Section 179D, the federal tax deduction for energy-efficient commercial building improvements including interior lighting, no longer applies to projects that begin construction after June 30, 2026. Industry reports indicate projects that started before that date may still qualify under existing rules, so owners who began work earlier in the year should confirm their status with a tax professional.
For everyone else, other tax strategies, such as bonus depreciation and qualified improvement property rules, may still help with the cost of a lighting upgrade. Because tax treatment depends on your situation, it is worth asking your accountant before year-end about how an LED project fits your plan. We are not tax advisors, but we can provide the project documentation your accountant will need.
January: New Utility Rates Take Effect
Many utilities phase rate increases in on a set schedule, and January is a common step date. For example, AES Indiana's approved rate increase takes a second step in January 2027, following a first step in July 2026. Similar scheduled changes appear across the country as utilities recover grid and fuel costs.
When rates step up, every kilowatt-hour your facility avoids becomes worth more. That is why the payback period on an LED retrofit often shortens as rates climb, rather than staying fixed.
What Businesses Can Do Before January
Schedule a lighting audit now. An audit identifies which fixtures cost the most to run and which areas save the most when upgraded.
Check current utility rebates. Rebate programs vary by provider and can change when a new program year begins, so confirm what is available today.
Talk to your tax advisor about timing. Year-end decisions can affect how an upgrade is treated for tax purposes.
Prioritize high-hour areas first. Parking lots, warehouse aisles, corridors, and 24-hour spaces usually deliver the fastest payback.
Consider adding controls. Occupancy sensors and dimming reduce run time during the long, dark evenings.
Frequently Asked Questions
Why do my lighting costs go up in winter? Shorter days mean lights run for more hours, especially exterior, parking, and security lighting. Higher run time multiplies the cost difference between older fixtures and LED.
Is the Section 179D deduction gone? It no longer applies to projects that begin construction after June 30, 2026. Projects that began earlier may still qualify under existing rules. Check with your tax professional about your specific project.
Will my utility rates change in January? Many utilities schedule rate adjustments in January, though it depends on your provider and state. Check your utility's published rate schedule or your latest bill notices.
How fast does an LED retrofit pay for itself? Payback depends on your current fixtures, hours of operation, local rates, and available rebates. A facility audit gives the most accurate estimate for your building.
Can an LED upgrade be done during the holiday season? Yes. Many businesses schedule installation around slower periods, and phased installs can keep operations running. Discuss your calendar with your provider early.
Plan Ahead for the Winter Lighting Season
The next three months are when outdated lighting costs the most. Reach out to our team for a facility lighting audit, and we will help you see what an LED upgrade could save before the new year's rates arrive.