Category: Lighting Industry

DOE Publishes New Lighting Market Characterization

In November 2017, the U.S. Department of Energy (DoE) released its new 2015 U.S. Lighting Characterization report. The 135-page report, which follows similar reports issued in 2001 and 2010, estimates the total installed lighting stock in the United States by light source and building sector. Dense with tables and graphs, it provides data useful for business planning while clarifying trends.

Below is a recent contribution to tED Magazine. Reprinted with permission.

In November 2017, the U.S. Department of Energy (DoE) released its new 2015 U.S. Lighting Characterization report. The 135-page report, which follows similar reports issued in 2001 and 2010, estimates the total installed lighting stock in the United States by light source and building sector. Dense with tables and graphs, it provides data useful for business planning while clarifying trends.

In 2015, lighting consumed 17 percent of all energy used in the United States. Accounting for 37 percent of energy, the commercial sector was the biggest lighting energy user, followed by outdoor and residential. The residential sector, however, had the most lamps—an estimated 6.2 billion out of a total of 8.7 billion, or 71 percent. Most of the lighting stock added since 2010 was in this sector. At 2.1 billion lamps, the commercial sector ranked second (24 percent).

The report confirms and helps quantify several significant trends recognized in the lighting market during the time period:

LED enjoyed rapid growth.
LED penetration increased from nearly 70 million lamps, or 1 percent of the lighting stock, to about 700 million lamps, or 8 percent, in 2015. Adoption was greatest in the outdoor sector (23 percent), followed by the commercial (10 percent), residential (7 percent), and industrial (4 percent) sectors. This trend is currently accelerating.

Incandescent lamps declined. Obsolescent, highly regulated incandescent lamps declined from 45 percent of the total lighting stock in 2010 to 25 percent in 2015. The installed base of incandescent lamps declined 40 percent.

Halogen enjoyed big growth.
While overall, traditional technologies saw little growth in installations from 2010 to 2015, halogen got a big boost by offering a compliant alternative to incandescent general-service A-lamps being phased out. Halogen’s share of the installed lighting stock increased from 4 percent in 2010 to 12 percent in 2015, with installations increasing from 28 million to 693 million, an increase of 350 percent.

Linear fluorescent saw flat growth.
While compact fluorescent lamps increased from 19 to 26 percent of the lighting stock from 2010 to 2015, linear fluorescent stayed at about 2.3 billion lamps, with various winners and losers among the category’s subgroups. Four-foot T8 lamps, for example, gained 38 percent, while obsolete, highly regulated 4-ft. T12 lamps declined 30 percent.

HID saw flat growth. HID lamps also stayed at about 140 million lamps. Metal halide was the sole winner, increasing 11 percent, while high- and low-pressure sodium suffered small declines. The installed base of obsolete, highly regulated mercury vapor lamps, meanwhile, declined 68 percent.

Efficiency is increasing. The net effect of all this was steadily growing average lighting efficacy. National average lighting efficacy increased from 39 to 51 lumens/W between 2010 and 2015. From 21 to 28 lumens/W in the residential sector, 62 to 86 in commercial, 78 to 90 in industrial, and 73 to 80 in outdoor.

Lighting controls show modest adoption.
Adoption of lighting controls is about 18 percent in the commercial sector, including occupancy sensors (10 percent), energy management systems (5 percent), multi-strategy systems (1 percent), timer-switches (1 percent), daylight-responsive controls (1 percent), and dimmers (1 percent). In the residential sector, 11 percent of lamps, the majority controlled by dimmers.

Overall, the report indicates that between 2010 and 2015, lighting in the United States underwent a phase in an ongoing major technological shift to highly energy-efficient light sources, with accelerating emphasis on LED. To get the full report, available as both a PDF and XLS spreadsheet, click here.

Inventory, energy consumption, and lumen production in 2015 by building sector. Image courtesy of the U.S. Department of Energy.

Average lighting efficacy by building sector for 2001, 2010, and 2015. Image courtesy of the U.S. Department of Energy.

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Lighting—the Next iPhone?

At the Strategies in Light conference held February 28-March 2, 2017 in Anaheim, California, Dan Ryan, VP Product, IoT Solutions, Acuity Brands Lighting examined lighting disruption posed by LED technology and the Internet of Things (IoT). He said a good starting point to predicting what will happen next in the lighting industry is to look at changes in similar industries such as electronics and computing. Specifically, by examining bundling and unbundling, based on a quote attributed to American executive Jim Barksdale: “There are two ways to make money in business: You can unbundle, or you can bundle.”

Below is another article I contributed to the December 2017 issue of ELECTRICAL CONTRACTOR.

At the Strategies in Light conference held February 28-March 2, 2017 in Anaheim, California, Dan Ryan, VP Product, IoT Solutions, Acuity Brands Lighting examined lighting disruption posed by LED technology and the Internet of Things (IoT). He said a good starting point to predicting what will happen next in the lighting industry is to look at changes in similar industries such as electronics and computing. Specifically, by examining bundling and unbundling, based on a quote attributed to American executive Jim Barksdale: “There are two ways to make money in business: You can unbundle, or you can bundle.”

Bundling, Ryan explained, is when products are integrated and sold as a package instead of separately. He cited numerous examples in the computing and consumer electronics industries. In computing, for example, almost every big tech change saw a bundle or unbundle event. In the pre-Internet era, Microsoft dominated by bundling all applications into Windows. Then the Internet unbundled everything until Google, Facebook, Amazon, Apple and others began to rebundle everything again. Currently, elements of these devices and services are being unbundled as individual products such as Amazon’s Echo and Google Home voice-assistant devices. Ryan said another major unbundling event might soon occur with cryptocurrencies such as bitcoins and blockchains, the digital ledgers that manage these currencies.

“The basic aspect is that there are powerful economic forces in play that benefit both buyers and sellers,” Ryan said about bundling. “Buyers get access to more services for a lower cost than they would if they purchased independently, and sellers gain more profits by selling to a larger customer base. Right now, the lighting industry is going through a bundling phase, where IoT services as well as building management systems are bundling with lighting projects.”

He added lighting might be considered the new iPhone, a classic example of bundling in the consumer electronics industry. Today’s iPhone integrates functionality into a single pocket device that 15 years ago would have required numerous larger devices—video player, camera, video camera, telephone, CD player, TV, laptop. In lighting, Ryan said, lighting is in a unique position to serve as an aggregation point for the delivery of both light and IoT services.

“Much like that closet full of consumer electronics that’s now bundled into an iPhone, we’re seeing a bunch of systems that used to be sold, installed and maintained separately start to consolidate into a single platform—smart lighting,” Ryan said. “We’re seeing lighting companies bundle new digital services with lighting with offers like indoor positioning, asset tracking and occupancy analytics. The common pattern with solutions is leveraging the lighting network to collect data about the environment and then using that data to improve a business process.”

Ryan said that while bundling will likely remain a driving force in the lighting industry for the foreseeable future, unbundling is likely to occur again. The key is standardization enabling compatibility, which drives competition and development of a new services layer. An open question is whether the LED luminaire, which bundled the light source with other components, will unbundle to allow servicing of interchangeable components using standard connections.

The biggest impact of these events is not necessarily to product but often to their supply chains. As an example, Ryan pointed to the impact of Internet video streaming had on the cable TV industry. Consumers are no longer limited to getting content through a bundle offered by a sole provider but can subscribe to video content services from numerous Internet sources such as Netflix and Hulu. In lighting, Ryan believes true disruption is not occurring, as how lighting projects are specified and sold is not materially changing. While distributors may see maintenance, repair and operations (MRO) sales decline due to the longevity of installed LED sources, they may also benefit from the current bundling trend due to larger project sizes involving higher-end systems. Similarly, as long as projects are specified and sold the same way, the role of the contractor will remain the same, though these systems may present complexity challenges and a learning curve, at least in the short term.

“I don’t think contractors need to become experts in IoT services to still play the important role they play in the channel today, nor should we expect them to,” said Ryan. “Intelligent lighting systems need to be simple to install, commission and maintain. If deploying a lighting-based IoT network becomes as costly as maintaining an independent network, then why bundle at all?”

He said a wildcard in the market is low-voltage DC lighting control solutions like Power over Ethernet (PoE) systems, which are gaining momentum in the new construction market. Ryan pointed out this allows contractors to tap into a different labor pool for executing projects.

“The point here is that by moving into an entry point for IoT, the total available market opportunity for the entire industry is going to increase, which will benefit multiple players in the channel,” Ryan said.

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Acuity’s Scott Roos on What’s New in Downlighting

I recently had the pleasure of interviewing Scott Roos, VP Design, Downlight, Accent and Trac Products, Acuity Brands Lighting. The topic: trends in LED downlights. I’m happy to share his responses with you here.

I recently had the pleasure of interviewing Scott Roos, VP Design, Downlight, Accent and Trac Products, Acuity Brands Lighting. The topic: trends in LED downlights. I’m happy to share his responses with you here. The interview informed an article I wrote for the March 2018 issue of tED Magazine.

DiLouie: How would you characterize the downlight lighting market in terms of size, and current demand for downlights?

Roos: When characterizing the downlight market, it is helpful to segment it into Residential and Commercial applications. Residentially, downlights continue to be a preferred fixture for providing general and accent lighting throughout the home. A home that incorporates well placed recessed lighting simply looks more spectacular and drives up both the resale value and quality of living for the homeowner. And LED technology has enabled smaller scale, highly efficient fixtures which makes downlighting an even more desirable amenity.

Commercially, downlighting is seeing increased use throughout the variety of applications from hospitality and retail to corporate, municipal and healthcare interiors. Downlights have always been an important commercial lighting technique with their unique ability to provide general, accent and wall wash illumination from an inconspicuous recessed source.

The expanded capability of LED technology to pack higher lumen packages into increasingly smaller diameter fixtures while controlling aperture brightness has made them even more useful and versatile. Downlighting is clearly one of the larger luminaire categories with estimates in the $2+ billion range for all market segments.

DiLouie: In what key areas have LED downlights improved over the past three years, and what benefits do these improvements offer?

Roos: Improved LED technology and luminaire designs have enabled smaller aperture, higher lumen downlights with more beam spread options and better control of aperture brightness…all while pushing the efficacy envelope to as high as 130 delivered lumens per watt. The comparison to previous generation LED and legacy technology downlights is remarkable. Consider that 6” or 8” aperture compact fluorescent downlights delivered only 35-40 lumens per watt, with 4” CFL downlights nearer to 25 LPW. And achieving 4,000 or greater delivered mean lumens for higher ceilings required extremely bright, larger diameter 8”-12” aperture downlights. Today there are 4” LED downlights that can deliver 8,000 lumens at 130LPW while maintaining extremely low aperture brightness!

Another interesting way to look at the greater versatility that today’s LED downlights afford is recognizing that the historical 20-30+% efficacy tradeoff to achieve the more upscale look of downlights versus the more utilitarian look of 2X2 or 2X4 troffers no longer exists. Today’s higher performance LED downlights equal or exceed the efficacy and lumen output of both fluorescent and LED troffers.

Yet another area of improvement for LED downlighting over the past few years is the greater range of higher color rendering choices up to 97 CRI along with the ability to specify Warm Dimming, Tunable White and Tunable Spectrum to further enhance interior aesthetics and support improved health, well-being and productivity.

LED downlights that take advantage of the latest LED, thermal management, driver and optics technology are head and shoulders better than both earlier generation LED and legacy technology downlights and can more optimally solve for a broader range of applications.

DiLouie: What are the top 5 trends in LED downlight design?

Roos: The top 5 trends in downlighting are:

1) Smaller, quieter apertures: 3”, 2” and even 1” aperture sizes have moved from specialty to mainstream. Lower-brightness reflector options and bevel style trims and mudded-in trimless installation have all become more common place. These small aperture fixtures are also available in surface and pendant mount cylinders for use in the increasingly popular open ceiling formats. And this miniaturization is enabling new linear format downlights with the lumens spread across multiple low brightness cells, some with the capability of individualized optical control and aiming.

2) More granular optical control: It is now possible to produce a wider range of beam angles and choose from either smooth, feathered distributions for uniform illumination or tighter distributions with high center beam punch with minimal spill outside of the main beam to achieve high contrast non-uniform downlighting and accent lighting. LED recessed wall washers are available that provide unprecedented top to bottom and side to side uniformity from apertures as small as 2”.

3) Higher Lumen Outputs: 4” downlights exceeding 8,000 delivered lumens, 6” downlights to 15,000 lumens and 8” downlights up to 20,000 lumens, combined with extremely long LED service life, have transformed high ceiling downlighting in spaces like atriums, auditoriums and convention centers.

4) Warm Dimming, Tunable White & Tunable Spectrum. The ability to dynamically change the appearance of a space by replicating the warm dimming characteristic of incandescent lighting, changing the color temperature for different times of day or events or even adjusting the hue and saturation to optimally light interior finishes and art has added new dimensions to downlighting and recessed accent lighting with impressive impacts on aesthetics and the productivity and well-being of occupants.

5) Low profile housings and surface mount downlights: Plenum space, especially in multi-story buildings, is more valuable than ever and shrinking. Lower profile recessed housings are therefore finding increasing applications. 1” thin surface mount downlights are available as a practical, cost efficient downlight alternative in concrete and fire rated ceilings where recessing fixtures is not practical.

DiLouie: How would you characterize progress made in ensuring compatibility and integration with controls?

Roos: Regarding compatibility and integration with lighting controls, there have been quantum improvements over the past few years. The performance and reliability of economical phase dimmable LED downlights has improved in terms of reliability, minimum dim levels and flicker, although you still need to validate dimmer compatibility with the luminaire manufacturer. 0-10V is still the most prevalent commercial lighting protocol, and you can now choose from a variety of 0-10V drivers with linear dimming down to 10% or 1% or logarithmic dim to dark to suit the aesthetic and budget needs of any project. DMX drivers are also now more widely available for downlighting in specialized applications such as theatres and auditoriums where the general lighting is being controlled as part of the theatrical lighting system. And economical and simple to commission plug and play Ethernet cabled and wireless protocols are available to enable individual fixture control, grouping and zoning independent of their placement on the electrical circuits.

DiLouie: What are typical benefits of upgrading existing downlights with LED retrofit kits? What’s the market opportunity?

Roos: The benefits of upgrading legacy technology downlights with LED retrofit kits include extreme energy savings and lower maintenance costs with rapid ROI paybacks. And if done thoughtfully, an improved quality of light can be achieved that improves the image that the building projects for the owner and the productivity, enjoyment and wellbeing of space occupants. The downlight retrofit market opportunity is huge, as the installed base of legacy technology downlights is orders of magnitude larger than new construction projects, and conversion of the installed downlighting base to LED is still in the early stages.

DiLouie: What are the main attributes of an LED downlight that electrical distributors would be looking for? How do they confidently select a quality product?

Roos: First, work with reliable manufacturers that you know and trust have invested in the sound development and thorough testing of their products and will stand behind them in the event of a problem. Be sure to compare luminaire efficacies, as there is currently a surprisingly wide range of performance spanning 60 to 130 delivered lumens per watt. When possible, specify multi-volt fixtures so you don’t run into surprises with the wrong voltage on a job site. Make certain that the right color temperature and CRI is specified to match other fixture types being used on the project. And most important be sure to pick the most appropriate good, better or best quality downlight in terms of price, efficacy, distribution and below the ceiling appearance to suit the needs of each project. A back of house installation versus lighting a lobby or boardroom in corporate interior call for two different categories of fixtures. When in doubt, ask your local sales representative for design assistance and advice.

DiLouie: What listings are important for downlights and why are they important?

Roos: Of course, a safety listing from UL or another accredited lab is table stakes. Being Energy Star listed offers some assurance that the product meets minimum performance and design standards. Above and beyond this look for the manufacturer to offer a system compatibility certification to demonstrate that the downlight/driver/controls combination has been designed and tested to provide consistent color appearance and out-of-the-box compatibility with simple commissioning.

DiLouie: What are value-added features distributors should be selling, and for what applications or problems are they ideally suited?

Roos: There are a lot of performance and design differences between LED downlights, even within the portfolio of a single manufacturer. Installation features or restrictions, fixture height and housing size, ease of replacing the light engine to name a few. The appearance of the trim and reflector are also important considerations, including when appropriate, the use of extremely low brightness reflectors that create a “silent” ceiling effect and mudded-in trimless bevel apertures, both which can provide a higher level of aesthetics and drama by placing the emphasis on what is being illuminated while making the downlights virtually disappear from the field of view. Look for other special value added features such as an optional lumen depreciation indicator that can trigger maintenance when the light engine depreciates past 70% of its initial lumens.

Another important consideration is the completeness and consistent appearance/performance throughout a line. For example, having all aperture sizes and a wide range of lumen packages available in new construction, remodeling, retrofit or surface cylinder housings ensures that you can solve for any installation condition. The availability of downlight, wallwash & adjustables, different beam spreads and a wide range of CCTs, CRIs, warm dimming, tunable white and tunable spectrum light engines throughout the full range of housing types and sizes ensures that you can solve for any functional and aesthetic requirements.

And finally, an emerging consideration new to the lighting industry is giving the option to your customers to specify downlights, and other luminaires, with embedded data collection and communications capability. Even if they don’t need this capability today, at some point in time it is likely that they will want to utilize their lighting system as a gateway to the Internet of Things to collect data and enable cloud-based functionality and analytics such as asset management, security, space utilization, wayfinding or occupant/customer engagement. The nominal cost to add Bluetooth or Visual Light Communication(VLC) into a luminaire can future proof their investment in a new lighting system, much like having a smart phone in the early days provided a platform for the plethora of applications that rapidly emerged. It is an exciting time for downlighting and well worth the distributor’s inside and outside sales staff’s time to become familiar with the breadth/consistency and specific features available in different manufacturers’ products so they know the easiest lines to work with and the best opportunities to add value beyond just filling a hole in the ceiling with the least expensive product, both to improve their own profit margins and the quality of lighting on the discretionary projects they control.

DiLouie: What impact is the proliferation of LED products having on electrical distribution business practices in general?

Roos: The wide range of available downlights, most with LED integrated directly into the luminaire, the rapid pace of change and the variety of color temperatures, CRIs and dimming protocols has certainly made it difficult for distributors to keep downlights in their inventory. And the lack of standardization, features, designs and performance of different manufacturer’s products of course makes it challenging to know which manufacturers’ products to use on various projects.

DiLouie: If you could tell the entire electrical industry just one thing about LED downlights, what would it be?

Roos: Anyone can specify an LED downlight to dump light into a space. Not anyone can specify LED downlighting that truly optimizes the appearance and functionality of a space. With current technology, we can create nuanced and stunning aesthetic executions and positively impact productivity, health and wellbeing… all with low lifecycle costs in terms of both energy and maintenance. Having well-trained lighting specialists on your team that can select and thoughtfully apply the best LED downlighting for each application will separate you from your competition and earn you more business.

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Creative Destruction in Lighting

At the 2017 Strategies in Light conference, Robert F. Karlicek, Jr. spoke about creative destruction in the lighting industry brought on by LED technology and the Internet of things (IoT). After catching his fascinating presentation, I interviewed him for a story for ELECTRICAL CONTRACTOR. Click here for an excerpt and link where you can read the article.

At the 2017 Strategies in Light conference, Robert F. Karlicek, Jr., spoke about creative destruction in the lighting industry brought on by LED technology and the Internet of things (IoT). Karlicek is a professor and director for the Center for Lighting Enabled Systems and Applications at the Rensselaer Polytechnic Institute, Troy, N.Y.
 After catching his fascinating presentation, I interviewed him for a story for ELECTRICAL CONTRACTOR. Excerpt below:

In 1942, economist Joseph Schumpeter coined the term “creative destruction” to describe the impact of innovation. In the lighting industry, LED technology and integration of IoT services are disrupting traditional lighting and legacy business structures, supply chains and distribution channels.


For the majority of the market, the primary focus is energy efficiency and performance. The high efficiency and longevity of LED products makes them appealing for both new and existing construction. This is destructive to traditional lighting manufacturing and distribution. 


In the specification-grade segment, innovation focuses on adding value—new form factors, features, color tuning, dimming, data production, IoT integration and visual light communication. As color tuning and IoT concepts continue to enter the market, Karlicek believes this segment will grow.


Click here to read more.

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Randy Burkett Lighting Design Celebrates 30 Years of Professional Practice

Randy Burkett Lighting Design recently announced it is beginning its 30th year of professional practice.

Randy Burkett Lighting Design recently announced it is beginning its 30th year of professional practice. The company marked the occasion with the launch of a new branding initiative, including a major upgrade to its website.

Congratulations, Randy!

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ARCHITECTURAL LIGHTING Moves to Digital Format, Editor Steps Down

Big changes at my alma mater, ARCHITECTURAL LIGHTING. Editor Elizabeth Donoff recently announced that the magazine will move to a digital-only format starting in 2018. And today is Donoff’s last day with the magazine as editor in chief.

Big changes at my alma mater, ARCHITECTURAL LIGHTING. Editor Elizabeth Donoff recently announced that the magazine will move to a digital-only format starting in 2018. And today is Donoff’s last day with the magazine as editor in chief.

I served as AL’s editor and publisher from 1995 to 2001, following in the footsteps of Wanda Jankowski and Charles Linn, who started the magazine. Along with them and Christina Trauthwein, Emilie Sommerhoff, and Elizabeth Donoff, I was proud to support the lighting industry in this important role. I wish my colleague Donoff, who did an admirable job as editor, well in her future travels.

Publications like ARCHITECTURAL LIGHTING are more important than ever today as the lighting industry navigates an era of turbulent change. But the publishing industry is undergoing its own change. As Donoff explained:

The print-to-digital transformation is something that all media brands, no matter the subject matter or audience, have had to face over the past decade. I had hoped we would be able to maintain our full portfolio longer, but business conditions for both publishing and lighting point in a different direction.

Donoff also announced she was stepping down as editor in chief:

Additionally, Dec. 8 will be my last day as editor-in-chief, although I will help guide AL through its next chapter in an editor-at-large capacity.

I hope ARCHITECTURAL LIGHTING thrives in its new digital-only format. While my go-to magazine these days is LD+A due to its fantastic columnists, the industry needs more journalism not less these days, and ARCHITECTURAL LIGHTING is one of its leading voices.

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TLED Lamp Adoption Continues to Grow

The NEMA Linear Fluorescent Lamp Index showed respective market share of 57.3% for T8, 8.6% for T5 and 12.4% for T12 in the first quarter of 2017. Remarkably, TLED lamps, which accounted for 15.3% of shipments in the first quarter, increased to 21.7% in the second quarter.

The NEMA Linear Fluorescent Lamp Index showed respective market share of 57.3% for T8, 8.6% for T5 and 12.4% for T12 in the first quarter of 2017. The index rating for each of these declined by 10.5%, 9.3% and 8.1%, respectively, compared to the first quarter.

Remarkably, TLED lamps, which accounted for 15.3% of shipments in the first quarter, increased to 21.7% in the second quarter.

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LD+A Wins Awards

LD+A, the official publication of the Illuminating Engineering Society, recently earned four awards—-one for each submission-—in the 37th annual EXCEL Awards competition sponsored by Association Media & Publishing. Congratulations!

LD+A, the official publication of the Illuminating Engineering Society, recently earned four awards—-one for each submission-—in the 37th annual EXCEL Awards competition sponsored by Association Media & Publishing.

The magazine received the highly coveted Gold award in the “Single Topic Issue” category (magazines, 10,000 circulation and under) for the October 2016 Light + Health issue. Only 64 Gold awards-—out of 830 total submissions—-were given in categories ranging from magazines to books, websites, videos and marketing pieces.

LD+A also earned Silver in the “Design Excellence” category; Bronze in the “General Excellence” category (magazines, 10,000 circulation and under); and Bronze in the “Media Kit—Print” category.

Congratulations!

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The University of California and its Partners Plan to Buy 1 Million LED Lamps

The Million Lamp Challenge has officially been launched by the University of California system in consultation with the California State Department of General Services. The groups have issued their purchasing…

The Million Lamp Challenge has officially been launched by the University of California system in consultation with the California State Department of General Services.

The groups have issued their purchasing standards to encourage the purchase and installation of high-quality LED lamps in their buildings:

UC System Purchasing Standard
DGS Purchasing Standard

The purchasing standards follow the Voluntary California Quality LED Lamp Specification published by the California Energy Commission and used by California investor-owned utilities to determine which lamps are eligible to receive incentives.

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Lighting’s Creative Destruction

Below is my contribution to the July issue of tED Magazine on the topic of change in the lighting industry. Reprinted with permission. At this year’s Strategies in Light conference…

Below is my contribution to the July issue of tED Magazine on the topic of change in the lighting industry. Reprinted with permission.

At this year’s Strategies in Light conference in Anaheim, California, two notable speakers talked about how LED technology is disrupting the traditional lighting industry. tED caught up with them to ask how this disruption is impacting electrical distributors and what distributors should do to remain competitive in the LED and intelligent lighting era.

Creative destruction

Robert F. Karlicek, Jr., PhD, Professor and Director, Center for Lighting Enabled Systems and Applications, Rensselaer Polytechnic Institute, sees the industry going through a process called creative destruction. This term, coined by economist Joseph Schumpeter in 1942, describes the process of innovation destroying old economic structures and creating new ones.

“In the lighting industry, the creative aspects involve high-efficiency LEDs that have long lifetimes and can offer new lighting-based services,” said Karlicek. “The disruption is to all forms of old non-LED lighting and disruption of legacy business structures, supply chains and distribution channels.”

In the existing building market, LED retrofits offer high efficiency, longevity and other benefits. However, this longevity is eroding the replacement market that traditionally provided steady lamp sales. Karlicek also pointed out the low wattage of LED makes energy-saving lighting controls more difficult to justify.

In the new construction market, prevailing energy codes require both high lighting efficiency and extensive automatic controls. Here, the economics are more favorable to extended capabilities such as intelligent connected lighting, dimming, tunable-white lighting, Internet of Things (IoT) integration and others. However, these capabilities are redefining lighting, necessitating education. Meanwhile, widespread innovation and less standardization have resulted in very short product cycles, wide variation in performance and limited serviceability.

Karlicek said two emerging metatrends are pointing to further creative destruction in lighting’s future. These include circadian lighting and the IoT.

“LED lighting is uniquely suited for circadian and human performance management,” he said. LED lighting enables control of both intensity and color output (spectral power distribution), tools that may influence the human circadian system. “However, I believe there is still a lot more research needed to properly define optimal LED lighting wavelength distributions for optimal human outcomes.”

Karlicek also pointed to the IoT’s emergence as another major trend that will impact lighting. “Traditional sales channels will need to become savvy about lighting standards, wired and wireless networking protocols, and computer and network systems,” he said. “For the time being, however, properly serving this emerging field will be difficult because of the wide variety of proprietary systems and lack of interoperability.”

All of this is developing, necessitating monitoring the market and agility to invest in capabilities at the right time. “Ultimately, distributors will need to become—either alone or through partnerships—both an electrical and networking systems supplier,” Karlicek said. “Start investing in re-educating your workforce so they can be skilled at AC and DC power distribution systems, networking and advanced controls.”

Bundling

Dan Ryan, VP Product, IoT Solutions, Acuity Brands Lighting, sees the lighting industry undergoing a process called bundling. Bundling is defined as aggregation of individual services to create new value for buyers and sellers in a market. Buyers can access more services at a lower cost, while sellers can more profitably access a larger market.

He points to the computing and consumer electronics industries for examples of bundling and unbundling in action, drawing parallels to the lighting industry. Microsoft bundled services into Windows, the Internet unbundled them again across the web, technology giants like Google and Amazon rebundled them into their platforms, and now some unbundling is occurring as some services are being peeled off.

While industry analysts tend to focus on product, bundling also occurs in distribution. Consider video content distribution. Cable TV providers bundled and sold video content. Then video streaming from the Internet became feasible, resulting in an unbundling event. Today, consumers can access a wide variety of online content providers such as Netflix.

Ryan believes strong parallels for lighting can be found in the Apple iPhone, which bundled numerous services—phone, camera, etc. Similarly, the lighting industry is going through a bundling phase in which lighting projects are being bundled with IoT services and building management systems. “The world is starting to recognize that lighting is uniquely positioned to be an aggregation point for the delivery of IoT services,” he said. “This is due to its ubiquity in the as-built environment and the proliferation of networked lighting control systems.”

As a result, lighting manufacturers are starting to bundle new digital services with lighting such as indoor positioning, asset tracking and occupancy analytics. The overriding goal is to leverage installed lighting hardware and networking to collect data and use it to improve processes. The result will be larger and higher-end lighting projects. This bundling will continue until standardization and interoperability enables a new services layer, which will result in some unbundling.

For electrical distributors, Ryan sees opportunity in a role that for the foreseeable future will remain the same as it is now. “The powerful economic principle behind bundling is that both buyers and sellers benefit,” he said. “So in that sense, when you apply this to the lighting channel, electrical distributors will benefit. The sale of higher-end systems will lead to larger project sizes and help fight the commoditization and price erosion that we’re currently seeing in the traditional lighting market. For those distributors who strive to move up the value chain, there will be opportunities to develop deeper end-user relationships.”

The wildcard is the IoT’s impact on how lighting projects are specified and sold. Ryan points out that channel and access to market remain the most important drivers in activity in the lighting market, not technology. As the IoT enters more specifications, how projects are specified and sold may evolve, but Ryan sees opportunity for distributors who can deliver value.

“I think the real question for distribution is where the intersection is between IoT service sales and the traditional lighting sale,” he said. “At one level, distribution will sell higher-end systems and will see benefits there. There are also some lighting-channel-specific IoT services—such as preventative maintenance and lighting asset management—that will unlock new opportunities for selling to the traditional buyer. But I think it’s still very much an open question of how value-added IoT services will actually be sold and what role the traditional channel will play there. The majority of new services being developed are really orthogonal to what distributors do today. Regardless of how it all plays out, I expect traditional distribution to play a huge role.”

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