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LED lighting poised to boom in 2015 and beyond

Date
02/02/2015

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According to a recent study by reports.com, the global light-emitting-diode-based lighting market, which totaled less than $5 billion as recently as 2013, will reach $25.7 billion in 2015 and $63 billion by 2020—a combined aggregate growth rate of 45% per year.1 Patrick J. Clouden, CEO and Co-founder of Commercial Energy Solutions, Inc. (CES), one of the nation’s foremost full-service energy consulting (http://www.consumerenergysolutions.com/energy-consulting.php) companies, advocates commercial LED lighting (http://www.consumerenergysolutions.com/programs.php) not only as a way for individual companies to reduce their operating costs—though it effectively and substantially does that—but as a boon for the U.S. economy as a whole.

High energy costs are a particular burden to small business (http://www.consumerenergysolutions.com/programs.php); a recent study by the National Federation of Independent Businesses reports that more than a third of small businesses report energy costs as among their top three business expenses.2 Energy is also a major cost factor for 24-hour, lighting-intensive concerns such as hospitals3 and parking garages4. Reducing that burden, for businesses of all types, could free up needed resources for growth and expansion, and could serve as a primary driver of economic growth in the United States, per Clouden.

The advantages of LED over conventional incandescent lighting are twofold. One perk pertains to bulb life; the operational life of current white LED lamps is 100,000 hours, or 11 years of continuous operation. This is in stark contrast to incandescent bulbs, whose average life is approximately 5000 hours. For office buildings and skyscrapers, the maintenance cost to replace burned-out bulbs—an enormous overhead in direct labor, not to mention the cost of the bulbs—can be virtually eliminated. The really definitive strength of LED lighting, however, lies in reduced power consumption. When designed properly, an LED circuit will convert 80% of the energy it consumes to light, as opposed to 20% for incandescent bulbs. This means that a 100-watt incandescent bulb, over the course of a year, will consume almost four times as much electricity as an equivalent LED light bulb.5

CES’ own experience bears this out. The company recently conducted a lighting audit on behalf of a client for a building in which most of the lighting was provided by 32-watt T-8 fluorescent tubes, one of the most common types of commercial lighting in the United States. It was supplemented by 400- and 175-watt incandescent bulbs, which are also very common. CES recommended a complete upgrade to LED, and to offset the initial conversion cost, CES helped arrange lease-purchase equipment financing on a 60-month term. The combined utility and maintenance saving exceeded the monthly financing payment by over $3,000 per month, which meant that over five years, for this one building alone, the company netted savings of more than $180,000.

One factor that has retarded the growth of LED lighting, notes Clouden, is the initial bulb replacement cost. For most of the time the technology has been in existence, LED bulbs have sold at a substantial multiple of the cost of an equivalent incandescent bulb, creating both a psychological and economic barrier to conversion. A recent market study, however, indicates that the emergence of cost-competitive LEDs is causing a paradigm shift in the industry. Sales of LEDs that outpace incandescent bulbs in North America are expected to soon completely eliminate incandescent bulbs.6

Further impetus to widespread US conversion is coming from a push in the industry to obtain certification from the US Environmental Protection Agency and US-based nonprofit DesignLights Consortium. Firms that receive certification from these organizations are expected to be eligible for subsidies from local utilities providers, just as is the case with solar panels today.7

“LED lighting is the future,” says Clouden. “For businesses already using it, it’s a competitive advantage, and for those who are not, it will soon become a competitive necessity. Not only that, it holds out the prospect of significantly reducing our country’s total energy consumption, which would help preserve natural resources, protect the environment, and stimulate the overall economy. We’re encouraging our clients, new and old, to take advantage of this technology now and reap the tremendous benefits it offers.”

Consumer Energy Solutions

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