* LEDs optimal for always-on public lighting
* The longer they burn, the shorter the payback time
* Old bulbs yield 16 lumen per watt, LEDs 130 lumen
* LEDs still too expensive for residential use
By Maria Sheahan and Jens Hack
FRANKFURT, May 31 (Reuters) - Light-emitting diodes are taking over public spaces, saving thousands of euros in energy costs, although the price will deter households from making the switch for some time.
LEDs are up to eight times more efficient than incandescent bulbs used in most homes but are still at least 10 times as expensive.
The more expensive a lamp, the longer it needs to burn to write off the price, so it is more viable to use them in streets and hospitals than in homes where lights are off more than on.
The town of Langen on Germany's North Sea coast has done the sums and two years ago became the first in Europe to replace its 2,583 street lights with LEDs at a cost of 1.7 million euros ($2.2 million).
The town now spends about 79,000 euros a year to run its street lights - more than 60 percent less than before.
"The best kind of power is the power that you don't need," Mayor Thorsten Krueger told Reuters.
As LEDs need replacing about every 12 years rather than every 3 to 5 for conventional lamps, maintenance costs are also down 94 percent. The Philips lights Langen uses are about 75 percent more expensive than regular street lights, the town hall said.
New EU legislation to halt the sale of mercury street lamps from 2015 means more towns will follow Langen, which funded almost all of the switch to LED with a low-interest loan from state development bank KfW.
Consultancy McKinsey sees the LED market growing to almost 65 billion euros by 2020 from 9 billion in 2011, boosting sales at leading suppliers like Philips, Osram and Cree .
While the efficiency argument is clear, the cost of LEDs is still higher than other alternatives to incandescent bulbs, like compact fluorescent lamps (CFL), as semiconductor-based LEDs are made using expensive materials like sapphire and rare earths.
McKinsey estimates that an LED bought for the home in 2011 will take until 2025 to pay off. But by 2020, prices will have dropped and performance improved so much that it will take only half a year.
That assumes lights are on for four hours a day. In offices and hospitals, where lamps burn longer, payback is shorter.
The 587-room Marriott hotel in Frankfurt spent about 13,000 euros to replace lights in corridors and stairwells, which are on 24 hours a day, and expects to make that back within seven months.
"It's not just the reduced electricity consumption that saves money but also the fact that the lamps don't create as much heat," said Andreas Grosse, the hotel's engineering director. "We're saving thousands of euros on air conditioning."
Lighting companies are trying to cut LED prices by developing technology that uses silicon instead of sapphire in the manufacturing process, although for now silicon-made LEDs do not perform as well.
Sapphire prices have fallen by a third in the last year, but that has still not brought final prices down enough.
Osram plans to cut prices next month but its bulbs will still be just under 10 euros against less than 1 euro for 40 watt incandescents. Cree sells comparable LED bulbs for less than $10 in the United States.
"LEDs are not becoming as cheap as traditional bulbs anytime soon," Osram Opto Semiconductors CEO Aldo Kamper told Reuters.
But there are already advantages for those with money.
The Rijksmuseum in Amsterdam switched to LEDs because of their low heat, lack of ultraviolet rays and range of spectrum that highlight details almost unseen under traditional light.
"For example, there is a little sculpture right behind us made of clay," said Rogier van der Heide, chief design officer at Philips Lighting. "You can now actually see the fingerprints of the artist in the surface."