News Article
September 5, 2012

The LED Transformation: How Lighting Can Join the Technology Contracting Fold

Lighting accounts for more than 30 percent of the energy required to operate buildings and is often the first technology examined for energy efficiency upgrades because of its relatively short payback.  Over the past five years, new light-emitting diode (LED) technologies have begun entering the market, shifting the discussion away from the traditional change out of incandescent bulbs for fluorescent lamps and CFLs.  LED solutions provide integrated light and circuitry and are highly efficient. As lamp prices continue to fall – and as the technology improves – building owners will also benefit from LEDs’ affinity for integrated sensors, dimming, and scheduling services, all delivered via the Internet and IT infrastructure. This lighting technology transformation has potential to significantly-reduce operating costs and energy use in commercial buildings. Building occupants will also benefit, since LEDs offer higher-quality, diverse-spectrum lighting, along with controls that can optimize lighting for changes in daylighting and occupancy.

Over the next 10 years, Pik Research anticipates that more than 52 percent of conventional lighting will be replaced with LEDs.[i] As these products account for a larger share of the market, technology suppliers will see the size of the lighting market shift – due in part to the longer life of LEDs. Product manufacturers today see future markets linked to
their ability to provide advanced controls, automation, and integration for new lighting systems. As such, the lighting market may adjust to focus more strongly on technology contracting as its emerging model. 
Technology Contracting and LED Lighting Systems
In the past, building equipment and systems operated in silos and depended on manual controls. Today, smart building technologies leverage IT infrastructure, share data, and integrate building components and systems. Technology contracting is a concept in which one vendor designs, integrates and commissions all low-voltage building systems during design, construction or a retrofit. This new approach takes advantage of the convergence of today’s more advanced building technologies and IT systems, allowing a lighting vendor or an energy service company (ESCO) to sell “smart” IT integrated technology solutions or to optimize building performance across technologies.
Among its benefits, technology contracting:

  1. Saves time through coordinated project management. 
  2. Cuts capital, construction and operating costs by eliminating duplication of infrastructure and systems, reducing wasted materials, minimizing change orders, saving energy, and reducing equipment maintenance.
  3.  Optimizes building systems integration for effective energy management and improved decision-making capabilities. 

In the context of smart LED solutions, technology contracting would enable a single service provider to design an advanced lighting system that incorporates automation, controls, integration, and analytics and data management on a devices’ energy consumption. Currently, very few buildings have lighting integrated with building automation or control systems. The combination of these building solutions can help improve energy and operational efficiency. 
Benefits of Advanced LED Solutions
Smart LED solutions with advanced controls and automation will greatly enhance building data availability and management. The data collected from building sensors or smart lighting devices will help optimize lighting output and building performance by adjusting control systems to manage scheduling and dimming capabilities, depending on occupancy and daylight levels. Analytics and data management can also contribute to the measurement and verification of energy and cost savings from a lighting investment.
Network integration will help lighting technology reach its full potential to optimize building performance. LED solutions will be integrated with building automation and enterprise management systems and thus lighting will become an integrated component of a comprehensive management structure covering all the energy consuming and producing assets in the facility.
LED systems are positioned to be a disruptive technology in the lighting industry as their prices drop and their functionality improves. LEDs are already in widespread use for outdoor needs, like street lighting and parking lots, and they will increasingly be considered for interior retrofits and new construction of commercial, industrial, and institutional buildings. Adoption of LED technology will contribute to optimizing building performance through systems integration, advanced controls, and analytics and data management. LEDs have great potential to improve energy efficiency, cut costs, and increase occupant comfort in the built environment. They are well on their way to realizing this potential. 

 September 2012

[i] Emmerich, D. & E. Bloom. 2011. “Energy Efficient Lighting for Commercial Markets.” Pike Research

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