Navigant Research Blog

From Connected Street Lights to Smart Cities

— April 5, 2018

Chicago’s program to replace 270,000 city lights over the next 4 years with LEDs and intelligent controls is a good example of the growing scale and ambition of street lighting projects. This initiative could eventually save Chicago $10 million a year in energy costs. The latest edition of Navigant Research’s Smart City Tracker includes smart city projects in 221 cities, a quarter of which are deploying smart street lighting ranging from initial pilots to citywide and regional deployments that span tens and even hundreds of thousands of lights. This is far from an exhaustive list of street lighting projects, but it is a further sign of the growing momentum behind the deployment of connected lighting solutions in cities. Navigant Research expects 73 million connected street lights to be deployed globally by 2026.

First Step Toward the Future

Smart street lighting is being recognized by many city leaders as a first step toward the development of a smart city. In addition to increasing the energy efficiency of the city and reducing energy costs, carbon emissions, and maintenance costs, intelligent lighting can also provide a backbone for a range of other city applications, including public safety, traffic management, smart parking, environmental monitoring, and extended Wi-Fi and cellular communications.

However, while an increasing number of cities are recognizing the value of upgraded lighting networks, there are still financial and organizational barriers to be addressed, including:

  • Finance: Although the energy savings from street lighting upgrades is well proven, it can still be a challenge for many cities to approve financial packages for the necessary upfront investment. The pragmatic benefits and long-term cost savings of deploying intelligent controls at the same time as upgrading to LEDs are not always easily fitted into existing approaches to procurement and financing.
  • Customer understanding: A lack of understanding of newer lighting technologies may also be a barrier to the adoption of LEDs and networked solutions. While the LED lighting market is getting over this hurdle, controls lag further behind since customers are less familiar with these technologies. The issue is not about quality, but rather a lack of knowledge about the business case for the additional benefits intelligent lighting brings, particularly for secondary applications.
  • Utility-owned street lights: Where street lighting is provided by a utility, building the business case for energy efficiency may depend on the incentives set by regulators. This means that some utilities have been reluctant to invest in lighting network upgrades. However, attitudes are changing due to the pressure to reduce carbon emissions and to recognize street lights as an asset and potential revenue source. Indeed, many utilities now see street lighting as a pathway to a range of new service offerings while they look to opportunities in the Energy Cloud.

Join Us and Learn More

In the forthcoming Navigant Research webinar, From Connected Street Lights to Smart Cities, I will discuss current trends in smart street lighting with Troy Harms and Terry Utterback from Acuity Brands and Dan Evans from Itron. We will be discussing how intelligent street lighting can provides a platform for urban innovation, and how leading cities are addressing some of the remaining barriers.

Please join us on April 10, 2018 at 2:00 p.m. EST. Click here to register.


LEDs Experience Growth but Commercial Lighting Market Revenue Declines

— April 7, 2017

According to the US Energy Information Administration (EIA), lighting in the commercial sector (which includes commercial and institutional buildings) and public street and highway lighting consumed 11% of total commercial sector electricity in 2016. LEDs provide more efficient lighting alternatives to traditional lighting options–such as incandescent, fluorescent, halogen, and even compact fluorescent lamps in the commercial market. The increased efficiency, decreasing prices, and longer lifespan of LEDs have spurred their growth in the lighting market. Lighting is considered low hanging fruit for efficiency upgrades in commercial buildings, as these technologies are cheaper than other building upgrades focused on efficiency.

Decline of the Commercial Lighting Market

According to Navigant Research’s recent report, Market Data: Energy Efficient Lighting for Commercial Markets, global lamp revenue is expected to decline at a 0.8% compound annual growth rate (CAGR) between 2017 and 2026. The decline is modest due largely to the expected number of replacement lamps needed for burnouts during the forecast period. While total global market revenue is expected to decline, LED revenue is the only lighting technology revenue expected to experience growth during this time. The total global number of lamp shipments is expected to decline at a quicker pace than revenue due in large to part higher priced LEDs.

Lamp Revenue by Lamp Type, World Markets: 2017-2026

(Source: Navigant Research)

The Implications 

When we think of a thriving market, we think of an ever expanding market where there is room for all interested parties to get a piece of the pie. However, due to LEDs’ increased efficacy, long lifespan, and continued market penetration, the overall lighting market is declining. This means there is an oversaturation of lighting manufacturers that will experience revenue declines.

The declining market is experiencing fierce competition. Smaller companies are suffering because they have less resources and might not be equipped to compete against the largest lighting incumbents. In order to stay competitive, lighting companies must shift how they generate revenue. Today, lighting companies are finding alternative ways to generate revenue that are changing the lighting industry. Some companies have been successful with new technologies, such as visible light communications for indoor positioning, some are expanding their lighting controls offerings, and others are experimenting with new business models, such as lighting as a service. Lighting companies will need to define their offerings and demonstrate their competitive edge to solidify their place in the changing lighting landscape.


LED Street Lights Experience Continued Growth

— November 10, 2016

The declining costs of LEDs have made the technology a more economical choice for cities and municipalities interested in upgrading street lighting. These reduced costs, coupled with the longer lifespan and higher efficiencies of LEDs over incandescent, high-pressure sodium (HPS), metal halide, and compact fluorescents, have ensured a strong LED presence in the future of street and outdoor lighting.

Recent LED Street Lighting Projects

Long Beach, California recently announced the completion of the first phase of its LED street light retrofit project. Phase one included replacing roughly 1,750 HPS street lights with LED versions. This first phase was funded through a $659,000 Port of Long Beach Community Mitigation Grant. The second phase of the project will replace about 24,000 HPS street lights with a cost of roughly $6.1 million, which will be offset within 4 years by the energy savings and rebates offered by Southern California Edison, which total $3.2 million. The new LED street lights are expected to last 24 years when operated 12 hours per day, and the total lifetime savings for this project are expected to be approximately $15.1 million.

Further north, West Kelowna, Canada will be converting 1,750 HPS street lights to LEDs. Initially, the city will replace 193 street lights with LEDs during a pilot project, costing an estimated C$60,000 ($44,746), including a C$10,000 ($7,457) grant from electric service company BC Hydro. The LEDs from the pilot project alone are expected to save the city C$4,500 ($3,361) over a 1-year period. West Kelowna has estimated that the full retrofit project will save C$13 million ($9.7 million) over a 15-year period once the installation is complete. San Francisco, California also recently announced it will install LED streetlights to decrease maintenance costs and improve the safety of city residents. It plans to install about 18,000 LED lights within a 14-month period.

The Future of LED Street Lights

Long Beach, West Kelowna, and San Francisco are only a few of the numerous cities transitioning to LED street lights. According to Navigant Research’s recent report, Outdoor Lighting Systems, global shipments of outdoor lighting luminaires are expected to grow from 24.1 million units in 2016 to 30.3 million units in 2025. These figures include outdoor lighting for street lighting, including highways and roadways, city parks and public areas, sports parks, commercial site lighting, parking lots, and university and college campuses. LED luminaires currently lead the market for outdoor lighting, accounting for an estimated 67.9% of unit shipments in 2016—by 2025, that share is expected to grow to 93.8%. Whether for increased energy savings, reduced maintenance, improved safety, or other motivating factors, cities are poised to continue to transition to LED street lights.


The Human Benefit Potential of LED Lighting

— July 1, 2016

LEDsHumans are visual creatures. Accordingly, the type of light we are exposed to can affect human behavior. Unfortunately, though, the extent to which light affects the brain is not well-known. Indeed, we understand very little about the brain overall, but the extent to which light affects the brain has until recently been largely unstudied. The emergence of LED lighting has enabled scientists to design experiments to ascertain what links exist between light and behavior. LEDs have immense controllability; they can be turned on and off rapidly (even faster than the human eye can perceive) and their color and brightness can be easily tuned. As scientific studies establish the myriad connection between light and behavior, lighting is expected to become an increasingly important part of business strategy, and not just the purview of a facilities manager.

Do You Want Fries With That?

A recent study published in the Journal of Marketing Research quantified the impact that lighting in restaurants has on what and how people eat. The researchers found that brightly lit rooms prompted diners to be more alert, increasing the likelihood of ordering healthy foods by 16%-24% over orders in dimly lit rooms. The study attributed the difference to alertness through comparison of results to follow-up studies that increased diners’ alertness through the use of a caffeine placebo or by prompting diners to be alert.

The human responses to lighting are not limited to inside buildings, either. The American Medical Association issued guidelines for communities to select LED lighting options to minimize potential harmful effects. LEDs emit more blue light than conventional lighting. Though the blue light appears white to the naked eye, it can worsen nighttime glare and decrease visual acuity. Additionally, blue-rich light adversely suppresses melatonin and can potentially lead to reduced sleep times, dissatisfaction with sleep quality, excessive sleepiness, impaired daytime functioning, and obesity. The effects are not limited to humans—outdoor LED lighting can disorient some bird, insect, turtle, and fish species.

The Future Is Bright

Lighting is ubiquitous in the built environment, and as such, the potential to modify human behavior is immense. In the future LED utopia, it will be easier to wake up in the morning, eat healthily, be more productive at work, and be a better person. Beyond personal implications, lighting presents opportunities to businesses as well. Whether it is attracting top talent or increasing sales, many of the challenges businesses face may be addressed by lighting. As we better understand the impact of light on behavior, savvy businesses will be able to translate this effect into better performance.


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