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Advanced Lighting Controls – Market Feedback Required

This author no longer works for DNV GL.

It is no secret that utilities are exploring ways to diversify their energy efficiency portfolios. One of the major trends right now is the movement away from offering only widget-based programs to encourage customers to adopt a systems approach. At the Connected Lighting Systems meeting held by the DOE in November 2015, a representative from the Design Lights Consortium gave a presentation on why lighting systems need to evolve beyond the “one-for-one” replacement. Utility programs are recognizing the value in accelerating this evolution, and are using Advanced Lighting Controls (ALC) pilot programs and program offerings as the mechanism to do so. The ALC programs are meant to encourage the market to adopt a new technology that most customers are unaware of. DNV GL has introduced this program offering into several markets and is seeing a variety of results thus far. The uptake in interest has varied tremendously; however we have found that once the message gets out there, it starts a snowball effect. As DNV GL has implemented advanced lighting projects, we have gathered some critical feedback about these projects and utility programs from stakeholders in the advanced lighting market.

One incentive structure, many customer types

Incentive structures are a critical feature for Advanced Lighting incentive offerings. However, finding a single incentive structure that helps the financial case for customers small to large, warehouse to office, indoor and outdoor has proven to be a challenging task. DNV GL has rolled out this program offering into three different markets and all of the markets have approached this challenge differently. However, this offering is meant to—and will have to—evolve after gathering market feedback. We have already seen incentive structures change and requirements evolve throughout the life of the program pilots and initiatives.

Utility support is more necessary than ever

The financial support from utility incentive programs is an obvious need for any project. However, the market has indicated that other support is necessary to help sell these projects. The utility “stamp of approval” in a sales meeting for advanced lighting controls has helped move customers from a “maybe” to a “yes” because they know that there isn’t any other vested interest for the utility outside of encouraging efficient, cutting-edge technology. To support the case for ALC, trade allies and other stakeholders have requested trainings, case studies, and other marketing materials that focus solely on this technology. These are all effective ways to describe the benefits of ALC and convince customers that this technology is beneficial, although trainings are especially helpful in increasing knowledge about ALC components and how the technology works.

Cost is still a barrier, but having a long-term view helps

The high first cost for advanced lighting projects is still a barrier to moving the projects forward. The budget that customers set aside for their traditional lighting projects typically does not include the cost of controls outside of standalone sensors. However, as market awareness increases and businesses continue to raise the importance of sustainability goals, sales professionals are better able to get in the door to talk about advanced lighting controls. The key message that market players are relaying to us is that customers must shift their mindset from simple payback to lifetime cost savings to truly appreciate the value of ALC. And with LEDs being the common light source for advanced lighting projects, these installations are anticipated to last well beyond 15 years.

Long sales cycle, cross program-year projects

With sales cycles ranging from nine months to three years, there is the expectation now that projects from lead to payment will cross program years. This is one of the major areas where advanced lighting projects differ from simple retrofit lighting projects. Utility programs will have to adjust to waiting for savings from a lighting project; this is an established understanding for HVAC and custom projects, but a new frontier for lighting projects. However, advanced lighting is future-proofed. ALC programs that are set up now will be able to claim savings in future program years, even with the most stringent anticipated code changes, where other lighting measures are likely not to be able to claim savings due to those .

As more and more ALC programs are implemented, more feedback from the market will be available, so utilities will be able to continually tailor and refine programs as the market evolves.  While ALC programs may appear to have significant barriers to adoption, these can be overcome with a better understanding of the value of this technology and the market—now and in the future.

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