In this issue: Networked Lighting Controls: Vendors, Pricing and Drivers

Transcription

1 Issue 91 November 21, 2013 In this issue: Networked Lighting Controls: Vendors, Pricing and Drivers Q&A with: Jesse Foote Navigant Research

2 Networked Lighting Controls: Vendors, Pricing and Drivers Q&A WITH: JESSE FOOTE, NAVIGANT RESEARCH Overview The lighting market is changing rapidly. Prices for light-emitting diode (LED) lighting are falling fast and LED adoption is on the rise. Meanwhile control technology is improving, and it too is becoming less expensive. Building owners are beginning to expect fine control over their lighting systems, just as they have for their HVAC. In its recent report, Intelligent Lighting Controls for Commercial Buildings, Navigant Research forecasts that revenue from networked lighting control equipment in commercial buildings will grow at a compound annual growth rate of 17.2 percent, reaching $5.3 billion globally by We spoke to Jesse Foote of Navigant Research about the current vendor landscape, pricing and drivers of future adoption. Environmental Leader: In your report, you outlined three major types of vendors in the lighting controls market: traditional lighting companies, established building controls companies, and pure-play startups. Can you name the major players in each of these categories? Jesse Foote: Some of the big players in those categories are quite well known. In lighting you have GE, Osram and Philips. Each of those is pursuing lighting controls out of necessity: as longer-life LEDs get adopted more, lamp sales will be decreasing, so expanding into lighting controls is a necessary move to make up for that revenue. They are also the ones selling the lights, so for customers, that s a convenience factor. 2

3 In terms of existing building control companies, the big ones are Schneider, Johnson Controls, Siemens and Honeywell, and here you have a similar phenomenon: they are already providing HVAC control to a large number of buildings, so it s a logical addition to include lighting. 3

4 The third category is start-ups focusing specifically on lighting controls. This is where you re getting some of the most interesting innovation. Daintree Networks focuses on open standards and being compatible with a whole range of lamps, luminaires and control products. Digital Lumens is pushing lighting controls into types of buildings, like warehouses and industrial facilities, that haven t had much before. The company sells LED luminaires in those spaces and all their products come built-in with sensors and controls, so companies that do a lighting switch to LEDs to save money also end up with controls, helping them save additional money. EL: Is there an issue with compatibility between various lights, fixtures and controls? For example, if a company buys lighting controls from GE, will they only ever be able to use GE lights? JF: A lot depends whether the individual vendor is using some of these open standards or developing their own proprietary controls. In terms of customers wanting to make sure they are buying a product from a company that will be around for the life of the building, the big established companies have an advantage there. In terms of cutting-edge new features, that s the edge that smaller companies focused on lighting controls can bring to the table and if they are using open standards, they can in part overcome that concern about being around for the future. I would say lighting companies have focused on control products for their own systems, but I would not expect any of them to close the door on selling those products for other companies lighting products. Compatibility also depends on what you re purchasing. Dimmer switches have a relatively new standard that defines compatibility between dimmers and LED lights. That s been a problem in the past, that you can t just put an LED light on your existing incandescent dimmers, so there have been different approaches. I think the NEMA [National Electrical Manufacturers Association] standard will really help there. So in that case you could use one company s dimmer and another company s lamp, as long as they re both meeting specifications and requirements. A lot of the time, even if the vendor uses an open standard on the back end, communications between individual nodes and low-level controllers will often still be proprietary. 4

5 EL: Can you name the players poised to do well in the future? JF: I really haven t picked specific winners, but I expect that all the ones I mentioned will do well. I would not be surprised to see new entrants. I think there s a lot of room for innovation. Something that hasn t hit the US too much yet is color tuning, which lets the customer change the color temperature of the product. That can allow you to shift a white light from 3000 to 4500 or 5000 kelvin, for example, or even change from red to blue. At the Lightfair conference this year, lots of companies were boasting about this. The products like Philips Hue that let you wirelessly change colors are mostly residential, so far. But beyond residential there are studies showing that office workers can benefit from different colored lights at different times of day, and restaurants can set different ambiances. I think there will be a lot of creative ways to use this technology. EL: Can companies effectively adopt lighting controls without use of LEDs? JF: LEDs dim much better than fluorescents, and certainly compared to CFLs (which mostly dim down to 50 percent, then cut out). LEDs can essentially dim all the way down to 1 percent, and fluorescents inherently don t like to be turned on and off frequently. In addition, LEDs are semiconductor products, so building lighting and dimming controls directly into lamp is much easier. That will happen more and more in the future, as a default. But yes, companies can institute lighting controls without LEDs they have been for years. Because there are so many more fluorescents installed currently, the vast majority of daylight harvesting based on photo sensors uses fluorescents. You can do the same networking and monitoring with fluorescents. Those installations will continue because the installed base of lighting will continue to be dominated by fluorescents for a number of years to come. 5

6 EL: What are typical LED prices today, and how far do you expect prices to fall? JF: The big recent pricing news, on the consumer side, is that you can get a 60 watt-equivalent LED screw-in replacement for an incandescent bulb at Home Depot for $10 without any rebates. That was seen as a critical milestone, coming down from a previous $30 or $40 for a single bulb. We have seen similar price drops for the commercial sector. The Department of Energy forecasts that from 2013 to 2020, manufacturer costs will decrease another 65 percent, so there is still plenty of room for that price to go down, and there seems to be a wide expectation in the industry that these prices will continue to fall for a few years to come. The big news in commercial lighting will be when an LED tube can cost-competitively replace a 4-foot linear fluorescent. That could happen in the next couple years. At the same time it s certainly possible that because of the switch to LEDs, those tubes will no longer be the dominant form of lighting. There s more creative, innovative shapes lights can come in. But because such a big proportion of commercial lighting is linear, you d need new fixtures so there s also a mindset that needs to change. EL: How about wireless controls how much do these cost? JF: Wireless equipment is built into many types of controls, so it s hard to get an average. An average just for wireless nodes in 2013 is between $11 and $12 that would be your cost for adding wireless ability to a control. If you re doing it as a renovation it can be cheaper to do wireless controls rather than running wires all over your building. And on new construction, the wireless equipment itself is still more expensive than wired, but once you factor in labor, wireless can be directly competitive. 6

7 EL: Your report highlights three major drivers for adoption of this technology: in Europe, the EU s 2020 energy targets; in China, energy efficiency targets under the 12 th five-year plan; and in the US, the 2010 version of the ASHRAE 90.1 standard. What s the latest on the adoption of this standard, and will it set a high bar for building designers and occupiers? JF: As the name implies, ASHRAE came out three years ago. It has been a benchmark in LEED certification, and businesses have gained plenty of experience designing to that code. In terms of lighting specifically, ASHRAE increased requirements for occupancy sensors and daylight sensors, so these costs do add up, but it s an investment that delivers a return quite quickly. One challenge of is that the lighting power densities are lower the standard keeps lowering the watts per square foot you re allowed in different space types. So it can be a challenge for a lighting designer to meet the owner s needs and also the power density requirements. But certainly with LED available now, that makes it easier to hit those densities. The federal government mandates that states require compliance with , and October 2013 was the deadline for states to adopt this requirement. But only five states so far have enacted the requirement, while another five have adopted new codes that haven t gone into effect yet. 1 It s rather disappointing to see that so few states have adopted the 2010 version of the code. My understanding is there wasn t a big stick to get them to do it. EL: Do you expect growth in intelligent lighting controls to be particularly strong in certain sectors or certain parts of the US? If so, what are the drivers? JF: I haven t done a specific breakdown of US regions, but certainly different building codes would affect adoption and different electricity rates would have an effect on payback periods. 1 Data from Online Code Environment & Advocacy Network, 7

8 The office building sector is ahead now and will continue to be ahead. Both the energy savings and benefit to occupant comfort come into play. One other promising area is corporations that have a big portfolio of buildings, maybe spread across the country just because, if a vendor can get a customer with thousands of stores across the country to install the product in all of their stores, it s a huge win. Walmart is a good example of a company that has done a lot with energy savings and lighting across their many stores, specifically through use of skylights and daylight harvesting. About Navigant Research Navigant Research is a market research and consulting firm that provides in-depth analysis of global clean technology markets. The company s research methodology combines supply-side industry analysis, end-user primary research and demand assessment, and deep examination of technology trends to provide a comprehensive view of these industry sectors. Author Profile: Jesse Foote Jesse Foote is a senior research analyst contributing to Navigant Research s Smart Buildings program, with a focus on energy efficient lighting technologies. He has extensive experience analyzing and implementing a range of green building innovations. Prior to joining Navigant Research, Foote was the director of employer partnerships for the Illinois Green Economy Network, where he worked to form mutually beneficial relationships between the 48 community colleges in Illinois and businesses, government and community groups in an effort to grow the state s green economy. Foote has also worked as the manager of green building services for Harvard University s Office for Sustainability. He has firsthand experience in the selection and implementation of numerous green building technologies and practices, and has navigated the financial, regulatory, and bureaucratic challenges that are often involved. Foote received a bachelor s degree in engineering and environmental studies from Dartmouth College. His report, Intelligent Lighting Controls for Commercial Buildings, is available at 8

9 Contact Information Tel. for Richard Martin: URL: LinkedIn: 9