MARK RUTHERFORD, CEO of Ilum-a-Lite, looks into the future of lighting retrofits. The crest of the current wave is five to seven years away, he says, but what then?
Five years ago does not seem that long ago. In 2008, the global financial crisis was rampant, the Rudd Government was new, in New South Wales if you asked what an energy saving certificate was you would get a blank look and if you offered LED lighting as an energy saving lighting retrofit only the most bold would listen to you.
How things have changed over five years as we find ourselves entering, indeed engaged in, the era of digital lighting. So, what does this mean for five years from now?
To find the answer it is valuable to look at other ‘digital revolutions’; and there are a few – print newspapers, film cameras, telephones, vinyl records and tape cassettes, for example. The main characteristic of all of these and of lighting now and in the future is that digital products replace the existing technology and that the dominant players in the industry either shrink or disappear, replaced by adopters of the digital technology.
THE TIPPING POINT
Lighting is at the tipping point for this to happen. From deserved scepticism five years ago, LED technology has now reached the point where efficacy in good quality and high performance products is equal to or better than what it replaces at 50 to 80 percent less power. Price has been a stumbling block, but it is now possible to buy high performance, high reliability and fully compliant LED products from reputable suppliers at near equivalent price to conventional lighting, but of vastly better value in terms of power consumption, life, colour rendering, switching tolerance and controllability.
Don’t, however, write off the older technology gas discharge lighting. In 2012, according to the annual McKinsey Global Lighting Market Model, it still represented more than 75 percent of all lighting sold and will still be more than
50 percent five years from now.
By 2020, however, it is predicted that 90 percent of luminaires sold and 80 percent of lamps will be LED. The legacy market will continue for a number of years and advances in dimmability of T5 fluorescent, ease of maintenance and long life mean these technologies may have a new lease of life and survive their less efficient cousins.
THE FUTURE OF LIGHTING RETROFITS
What does this mean for lighting retrofits over the next five years? Lighting retrofits are driven primarily by economic outcomes. Customers want returns on investment (ROI) over the quickest possible time. They also want value, which is why LED lighting has been, at times, surrounded by scepticism and doubt.
Early technology did not always achieve its claimed performance and reliability so, on paper, had a satisfactory ROI, but, in fact, maintenance and warranty issues sometimes meant true value was not achieved. With reliability, performance and price from established and reputable providers now equal to or better than discharge lighting, it is plain that the majority of lighting retrofits in the future will be LED.
NAVIGATING THE MARKETPLACE
The proliferation of LED products and suppliers brings its own challenges to the market. Once upon a time, there were dominant market players. Customers could be confident that a branded product would be supported, warranties honoured and the provider would remain in business. This is no longer the case.
The digital revolution has introduced a plethora of manufacturers, importers and integrators, and it is no longer easy to know what is good value and what is good marketing. Buyers must remain cautious about accepting claims that seem too good to be true to achieve a value outcome and should reference check with other buyers.
Take the extra time to visit sites that the vendor has retrofitted to evaluate appearance and make your assessment of a similar retrofit. Buyers should also insist on a sighting test and approval certificates, any third-party registrations, such as state-based approval or registration for energy saving schemes, and ensure that products are marked with the Registered Compliance Mark (RCM), which is mandatory in Australia.
Another driver of lighting retrofits is financial incentives such as the NSW Energy Saving Scheme, the Victorian Energy Efficiency Target (VEET) and demand reduction incentives offered by Energex in Queensland.
The impact of these incentives is twofold: ROI is improved, making lighting retrofits more affordable, and even more vendors are attracted into the marketplace with a rebate business model. This is both good and bad for the customer and the cautions in the above paragraph apply.
GET READY FOR THE NEXT WAVE
In summary, the future of lighting retrofits represents a wave. For the next five years, we will surf this wave as organisations upgrade lighting to take advantage of efficiency, lowering cost and incentives. The crest of the wave is five to seven years away – but what then?
As with any wave, there is another set just behind it. This is the controls wave, which is only just gathering strength.
As the peak of the energy efficiency wave is reached, the next great opportunity is better control of lighting using smart controls. The above graph from the McKinsey 2012 report gives some indication of the likely growth in lighting controls.
Lighting controls today suffer from similar problems as LED lighting five years ago. There is not the market scepticism that surrounded LEDs, but financially, the ROIs are often outside the parameters that many organisations will accept, particularly when considering some of the latest and the very best smart systems. They are at an early stage and are expensive. The catalyst that will make these more attractive will be either increasing energy costs or reducing technology costs, and this will take some years to bite.
The future of energy saving lighting retrofits is something new and many things old. New technologies make a compelling argument to upgrade lighting as a sound investment for an owner, tenant or landlord. The old criterion of value for money remains the ongoing driver and reason to upgrade.