Monday, June 18, 2012

Innovation: Current Event - LED street lighting trial in 12 of world’s largest cities shows up to 85% energy savings


According to an article retrieved from The FINANCIAL, by testing LED lights on public streets, reveals a dramatic decrease in the cost of energy of up to 85% in savings. This is a very crucial issue for local and national government agencies who seek the environmental and financial benefits of preserving energy in order to reduce the effects on the environment as well as cutting public sector costs. Although other forms of alternative energy appear to be expensive, the lighting industry has shown the ability to cut energy costs by modifying and developing new light bulb technologies. This technology can open doors for other sectors to research and develop new ways of producing the same amount of output with less input from traditional fossil fuels.
Overview
The full report was produced by The Climate Group as part of “The Clean Revolution”  campaign at the Rio +20 UN Global Compact Corporate Sustainability Forum, , with sponsors by Phillips Electronics and supported by HSBC Climate partnership.  Some key points of the report are:
  • ·         LED lighting lifespan ranges from 50,000 to 100,000 hours demonstrating an extraordinary return on investment
  • ·         19% of global electricity is used to produce lighting  which consumes  around 6% of global greenhouse gas emissions
Expected Outcome

The CEO of the “The Climate Group” explains that LEDs are ready to move to the public streets across the globe, are expected to be efficient, and will have a positive impact on the local community. In order to expedite this new low carbon technology, the group hopes to demand the government to relieve the policy barriers as fast as possible.  According to Harry Verhaar, a Phillips Lighting executive, “A full switch to the latest energy-efficient LED lighting solutions provides significant energy savings, a reduction in CO2 emissions, and will transform urban environments”. The company believes that this lower cost solution and new technology can transform lower income communities and social welfare of the environment.  According to a local roadside business owner who enjoys the benefits of the LED technology, “sales figures have gone higher”, and claimed that the white lights have benefited their business by allowing the customer to differentiate between the colors of green and blue.  One can see that the new lights not only benefit the environmental and financial sectors of a local government, but also can assist the private sector including local businesses that depend on public goods, such as lighting in the streets.  This effort of lighting efficiency is also expected to “boost global prosperity”, by cutting the energy from lighting by 40%,  reducing demand that is equal to 198 medium sized power stations, which could save a country like the U.S. around $53 billion a year.
Implications

After reviewing the report by The Climate Group, one can conclude that although it seems like a brilliant idea, where will the funding come from for such a large project? Finding the capital to finance a global project seems absurd considering the highly volatile economy that has been affecting every market across the world. Another issue involves the government and if they are willing to remove the policies that are preventing from this type of project to be initiated.
In my opinion, it will be difficult to get government approval unless there is documentation of the financial ability to raise funds for this project that would essentially affect the largest cities across the globe. If there isn’t proof that the companies involved have the capital to invest, then the government may feel they would be liable if the company went bankrupt, because it involves the public sector market.  As an outside investor, one may be skeptical that this “environmental revolution” may be not be as great as it’s hyped up to be given the high costs of research and development and production of these new technologies. 

 Also see : LED Street Lighting Trial in 12 of World’s Largest Cities Shows Up to 85% Energy Savings

8 comments:

  1. The catch is, of course, the huge upfront expense converting all of the city's (world's?) streetlamps over to the new technology. It's the same choice many of us make in our homes right now. Do the energy savings make up for the upfront cost? Over how long of a time period? I'm guessing it doesn't make economic sense to make the switch at this point, otherwise it's likely it would already have been done.

    I'm inherently wary of studies funded by the companies who stand to benefit from the outcome (Philips in this case) but it does sound like very cool tech. I certainly hope that municipal engineers consider this option at least for new construction in the future.

    Enjoyed reading the post, thanks!

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  2. I work for an electrical engineering and construction and in the last year we have seen a major shift in lighting projects we do for the chemical and refinery companies shift to LED lighting. I remember a couple of year ago when a salesperson from Dialite came by office and showed me an industrial LED fixture and he told me we would start seeing requests from our clients for this technology. At the time I looked at the cost of the current light fixture we were installing on projects compared to the LED light fixtures and the costs were not feasible, but in the last year LED fixtures have come down in price and now our clients are having us replace current working fixtures in their plant with LED light fixtures due to the engegy and maintenance cost savings.

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  3. Mike,

    Thanks for replying to my blog entry. I agree that studies funded by the company who will recieve the benefits may not be as trustworthy as an outside source. It just seems that this idea may be too large of a project to implement so quickly, even though it looks good on paper knowing that its better for the environment and costs for the public sector. I believe the best way for any new type of technology to enter into the market is by having a test market in each potential country that they want to launch it in. Then if the results and response are positive, gradually reach out to other cities and regions. It will be interesting to see if they follow through with their initial plan.

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  4. Joel,
    That is interesting how you personally noticed that there has been a shift toward the new LED technology. I am sure the cost savings made it very attractive to that company, so that is why they made the switch. I believe the only way for this technology to fully replace the old lights is for the costs to come down to compete with the older technologies and also prove energy savings. As soon as the cost to manufacture decrease enough that it is affordable to the masses, I believe LED will be the way of the future for light industry.

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  5. If the numbers produced by the researchers are correct, even though it is costly implementation, if the npv of the whole investment is not significantly low in minus, governments should support this initiative. Sustainability has become so very important and state agencies around the world are pushing private sector organizations to improve sustainability by reducing CO2 footprint. Such projects taken up by government will show country's good faith commitment to help reduce CO2 footprint.
    Sustainability projects normally do not give +ve NPV. However, these projects are very important for community.

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  6. It is a very good step towards energy savings and money savings for future but it will require nice amount of funding to get started. I agree with Michelle, they should just start with smaller market and gradually increase if the response is positive.
    I personally do have preference on LED light bulbs, they are bit costly but it lasts you longer and saves energy.

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  7. I think this would become a positive thing in the long-run for energy savings. It would all probably experimental at first in order to get started but once it has become something that we begin to adapt to, it will be very positive for most people. Like Krupa I also have my preference of LED light bulbs, not everyone feels this way but I believe as time goes by people would begin to adapt and more will prefer it as well.

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  8. I have noticed they replaced a few of the street lights on Highway 146 in Baytown with the new LED lights. I can say that I personally think they are way safer then the old orange lights. With the new LED lights you can see alot farther down the road then with the older lights. I think people would be more likely to pay higher taxes to cover the costs for the new lights becuase I think it will significantly reduce the number of accidents on the highway.

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