One of the most popular questions we hear from customers and industry watchers is about LED adoption rate. The LED industry continues to move forward aggressively, with established LED chip manufacturers pushing innovation and production to meet demand. That demand is coming from many well-established sectors – televisions and other electronics, growing sectors like residential bulb replacements, and also from companies like ours that are delivering LEDs as part of a complete system for new applications. Which raises the question: Are industrial customers ready for LEDs?
When people ask if industrial facilities are actually deploying LEDs, I answer that industrial LED adoption is on pace to outpace LED adoption in other sectors. In fact, it is very likely that industrial customers will move faster and have more square footage under LEDs than other sectors within a few years. The migration has already begun with tens of millions of square feet of industrial space already illuminated by LEDs. Why?
Traditional lighting is an extreme pain point for industrial facilities. It is very expensive in both energy and maintenance costs, while often delivering very poor light levels and light quality. To make matters worse, unlike residential customers who only have lights on for a few hours per day at most, most industrial facilities have the lights on all the time. While residential lighting uses 40-100 Watts per traditional incandescent bulb, traditional industrial lighting uses anywhere from 220-1,000 Watts per fixture (multiplied by hundreds of fixtures). When maintenance and electricity are combined, industrial facilities are looking at lighting costs that approach $1 per square foot per year. For these customers, the benefits of LEDs (lower wattage, long life and suitability to granular, energy-savings controls) make them extremely compelling – especially with a payback period of two to four years. Intelligent LEDs – with integrated sensors and controls can drive this cost down to less than ¢.04 per square foot per year.
The combination of the severe pain from current lighting and the fact that when a large industrial customer commits to LEDs, they are making a wholesale shift and moving hundreds of thousands of square feet to LEDs – with a single decision – means that industrials are likely to move more rapidly to this technology than other sectors.
But what about the economy and customers’ willingness to invest in sustainability? The most savvy management teams have figured out that investments in sustainable technologies are one of the best investments they can make. In fact, in a 2011 report from the Sloan School of Management at MIT, “Sustainability Nears a Tipping Point”, there was widespread belief in this point of view.
In the case of lighting, which every facility needs, existing solutions are so costly to run and rife with performance issues that the door is wide open to LEDs that offer massive cost and functional benefits. As for the broader cleantech implications, we continue to see that our peers who offer other sustainability services to industrial customers are doing well if they are delivering tangible value and a reasonable payback period. Energy costs are not expected to decline in the foreseeable future, so sustainability investments – from lighting to variable frequency drives to demand-response programs — are one of the surest forms of insurance against them.