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Moving from Oil lamps to LEDs: Right-Sizing your Lighting Program to your Market

As a lighting consultant for DNV GL I am frequently asked “what is the next big thing after LED?” While this is a worthy question, it is disconnected from the reality of the current lighting market. A 2015 study by the Department of Energy found that LEDs have penetrated 3% of the installed market[1]. I am reminded of this every time I take a flight and see the city below me awash in the omnipresent glow of high-pressure sodium orange. The question about LEDs instead highlights how disruption has become the new norm for the lighting market. While LEDs became commercially viable in 2011, in many ways they feel like old news. For over a century, little changed in how lighting was manufactured and sold. Consequently, there was little change in utility lighting programs.  But new technologies are changing the lighting landscape, and utilities have an opportunity to find new ways of capturing and incorporating these changes into their lighting programs.

Understanding the global lighting market is a complex endeavor.  It is highly fragmented, making it difficult to implement a generic strategy across all geographies. Utilities are tasked with maximizing kWh savings while navigating this disruption—essentially, creating a program that meets the needs and the size of the market. Before we can address specific strategies for right-sizing your lighting program, I want to put the disruption into context and explain how and why LEDs are disrupting the lighting marketplace.

A Brief History of Lighting up to LEDs

Humans have pursued artificial light since our first ancestors began hollowing out rocks and soaking moss with animal fats to create the first crude oil lamps. Since that innovation, nothing in the artificial lighting world changed until the first electric incandescent lamp was invented in 1854 by Heinrich Goebel in Germany. However, society did not reap the benefits of this change until 1909 and the invention of ductile tungsten wire. In 1926, Edmund Germer patented the first fluorescent lamp. By the 1930’s, a link between lighting and productivity was established and businesses began to install fluorescent technology en masse. Early fluorescent lamps produced about 40 lumens per watt (l/w) and low energy prices in the post -war era hindered market adoption of more efficient technology. The most inefficient part of early fluorescent lighting systems was the standard magnetic ballast. The Energy Crisis of the 70s moved the market to produce new systems that were more energy efficient and propelled the use of a new electronic ballast that had been invented in the 1960s.  In 1981, compact fluorescent lamps (CFL) were introduced to the market. The 1992 federal Energy Policy Act (EPAct 1992) spurred the initiative to retrofit inefficient T12 technology with the more efficient T8 technology. Thirty-two watt T8s produce 90 l/w, representing a major improvement in efficacy from T12s. In 1999, breakthroughs in solid state lighting (SSL) saw improvements in efficacy and color and the first white LED was produced[2]. By 2011, LED efficacy had improved to over 100 l/w and the technology began to become commercially viable. The rapid adoption of LEDs is due to the technology’s high efficacy, inherent controllability, and relatively high ability to render color.

The LED Revolution is on a Fast Pace

T8s first entered the marketplace in 1981. Over the course of 35 years, this technology has become the dominant luminaire for the commercial and industrial (C&I) sector. National changes to the energy efficiency landscape, like EPAct 1992, helped create the conditions to fuel the transition. When looking at LEDs, we can expect the transition to take half the time as the switch to T8. The Department of Energy expects LEDs to comprise 80-100% of the installed market by 2030.

Since LED adoption will happen twice as fast as the switch to T8 utilities will need to adjust their lighting programs accordingly. More than a new iteration of an old technology, SSL represents a transformational change to how luminaires are manufactured. LEDs are changing how lighting is designed and controlled and utility programs must adapt with these changes. While it’s possible to characterize the rapid speed of change, how these changes get implemented in each market is far from known.

Know your Market to Capitalize on the LED Transition 

All 50 states have their own energy codes. While some overlap exists, it’s hard to generalize about the role LEDs and lighting controls play across the various state codes. Understanding your market’s current code and anticipating changes to it is a good first step when trying to right-size a lighting program. If your state has a strict building code, like California’s Title 24, then your lighting program should look to incentive measures that help futurize savings, like advanced lighting controls (ALC).  If your state lacks an energy code, or allows municipalities to create their own energy codes, then a direct install (DI) style incentive may be right for the majority of your market, with an ALC offering for early adopters.

Another step is to understand the norms of your market. When you survey your market, do you see many LEED® accredited buildings? If so, the norm for your market may be to design buildings that surpass energy codes. In this scenario, a utility may wish to offer a variety of specialty programs which help designers implement more advanced technology which complements LED lighting to drive deeper kWh savings and avoid lost opportunities at the time of construction. If your market has a less progressive design community, then programs that focus on 1-1 replacement of fluorescent technology may be more appropriate.

A final step is to understand why your customers are pursuing a lighting upgrade. Customers define the value that a lighting upgrade brings by the sum of the energy benefits and non-energy benefits. How your customers define this mix is unique to them and their goals. Markets with lots of commercial office space tend to pursue a lighting upgrade to lower operating costs and increase worker productivity. A well-crafted incentive here would focus on technologies that can easily verify savings through real-time usage reporting. If your marketplace has lots of cold storage or manufacturing, research suggests these customers value safety and reduced operations and maintenance (O&M) costs. An appropriate incentive here would focus on implementing best practices in lighting design to improve visual acuity.

Utility incentives are critical for helping lower project costs. With lower acquisition costs, a project’s return on investment (ROI) improves and increases the likelihood of the project moving forward.  Understanding your market is imperative to ensuring that your lighting program incentives match the needs of you customers. No one size approach can work for every market. The smartest solution is to design a lighting program around best practices but crafted to meet the needs of each individual market.

Knowing your market is the first step in determining the appropriate lighting program for your utility to offer. In my upcoming series of blogs on ALC I will be discussing the benefits that an ALC incentive can deliver to a utility.

DNV GL and Advanced Lighting & Controls

DNV GL has successfully designed and implemented Advanced Lighting Control projects on behalf of our utility clients for four years. Our team has significant project experience in both retrofitting and new construction of lighting projects. We work through the project life-cycle to identify, justify and evaluate energy saving measures and provide post-installation engineering review to verify savings.

Our team is available to work directly with large institutions to assist them with advanced lighting  control projects. For more information, please contact Wesley Whited or visit our Advanced Lighting Controls knowledge hub.

[1] https://energy.gov/sites/prod/files/2015/07/f24/led-adoption-report_2015.pdf

[2] http://www.ies.org/lighting/history/timeline-of-lighting.cfm

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