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LEDs and Advanced Controls: The Dynamic Duo Driving a New Era for the Lighting Industry

By Posted on January 28, 2014
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Originally written as a guest blog for Noesis Energy 

If you are reading this article, I likely don’t need to convince you that LEDs are a solid investment.  By now, we’ve heard a great deal on their value propositions: significant energy savings, long-life, low maintenance costs, better light quality, and greater control, to name a few.  Instead, I’d like to focus on the benefits of the last value proposition – control – and its significant impact on economic activity, market movement, and entrepreneurial activity.

While the LED and lighting control markets are experiencing monumental growth independently, together, they are fueling a robust, dynamic market evolution that is poised to significantly influence the built environment. It’s a perfect synergy where the whole really is greater than the sum of its parts.

The main drivers behind this dynamic duo are:

  1. LEDs are inherently controllable (and much more so than some of their counterparts) and are opening up a greater demand for advanced lighting control systems.
  2. Because lighting control systems have advanced significantly, they are enabling greater cost and energy savings in lighting systems resulting in more sales of LEDs.

Essentially, it’s the ultimate win-win for both industries.

Current situation & potential for growth

Currently, technology in most existing buildings borders on archaic.  The Department of Energy (DOE) has cited that less than 10 percent of commercial buildings have automation systems.  And Greentech Media indicates that “only about 10 percent of lights are controlled on an IT network”.

Why is this significant? Think for a second about the aerospace industry and, being from Detroit, I need to tip my hat to the automotive industry. Airplanes can practically fly themselves and we’ve already developed autonomous vehicles that will soon be introduced into the market.  Buildings are next in line for an advanced technology upgrade, much of which is already available, or is currently in development.

Leading industry studies cite significant expected growth no matter how you cut the data.  Revenue, market share, number of sockets, etc.  It’s all headed one direction: up.

On its own, the LED industry has already achieved tremendous growth, and that’s only the start.  Of the 12 billion sockets worldwide, LEDs only account for seven percent of the penetration rate. However McKinsey & Company has predicted LED lighting will account for almost 50 percent of all lighting unit sales by 2020 and the DOE’s Solid-State Lighting Program forecasts that annual energy savings potential could reach 3.9 quads by 2030.  This all adds up to plenty of opportunity.

And these opportunities have some serious legs – during the first six years of market introduction alone, LEDs have already significantly outpaced compact fluorescents.  On the lighting controls side, commercial networked lighting systems are expected to grow from $1.7 billion in 2012 to more than $5.3 billion by 2020, according to a new report by Navigant Research.

Potential savings

In addition to the significant economic activity and global competitiveness, (much of the research, development and intellectual property is generated in the U.S.) the benefits of the LED and advanced controls pairing also include energy savings and more money circulating in local economies.  A 2012 meta-analysis conducted by Lawrence Berkeley National Lab evaluated lighting control studies and concluded that control systems provide average savings of 38% for combined lighting control approaches in commercial buildings.  And nationally, this could produce energy savings of 19%.

If we focus in on the LED market again, DOE reported savings could equal $37 billion in the nine indoor and outdoor markets analyzed in its 2013 study (if everything was switched over to LED).

Technology advancements

Although much of the research, development and manufacturing is coming out of large, established lighting companies, there is plenty of room for others to benefit, contribute and play in the lighting control space.  Ventures such as Digital Lumens and Enlighted (both highlighted as 2013 Global Cleantech 100 companies) represent a shift toward software-based energy efficiency solutions. Additionally, the wireless control systems that Relume,Intellistreets, and Kanepi are bringing to the market represent a shift in how a greater diversity of early stage companies are beginning to define the space.

Conclusion

There are enormous opportunities ahead of us, including room for entrepreneurs to enter and companies of all sizes to grow in this space.    Investment and job creation already exist – and is expected to continue – in research, engineering, design, manufacturing, financing and installation services across the supply and value chains.  This equates to economic growth in the US and billions of dollars circulating in local economies.

This is an exciting new era full of nothing but positive outcomes for our economy and our environment. I’m excited to be a part of it and am anxious to see it play out over the coming years. If you’re a building owner, municipality, or property owner with a lighting system, I strongly encourage you to evaluate the options and take advantage of these technology advancements that can significantly impact your bottom line.

 

 

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Join the discussion One Comment

  • Joe says:

    That’s right on mark! Opportunities in this segment are indeed enormous! In coming years, I guess we’d no option but to consider using newer technologies. More companies, especially those who’ve got thousands of lighting units in each complex they operate in, are likely to consider the energy they can save by having a centralized IT system. New entrepreneurs definitely stand to gain.

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