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northeast group, llc Global LED and Smart Street Lighting: Market Forecast (2016 – 2026) Volume III October 2016 | www.northeast-group.com
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northeast group, llc

Global LED and Smart Street Lighting: Market Forecast (2016 – 2026)

Volume III October 2016 | www.northeast-group.com

© 2016 Northeast Group, LLC

Global LED and Smart Street Lighting: Market Forecast (2016 – 2026)

There are currently 315 million total streetlights in the world. This number will grow to 359 million total streetlights by 2026. The public outdoor lighting market is currently undergoing a period of change where legacy streetlights are being replaced with new and more efficient LED, or solid-state lighting, technology. Taking this new technology a step further, these LED streetlights are also being networked together with communications to become “smart” streetlights. This study analyzes and forecasts the global market for both LED and smart street lighting through 2026.

LED streetlights will transform cities and municipalities across the globe over the next decade. LEDs offer longer lifetimes, lower energy consumption, and reduced maintenance expenses when compared with legacy streetlight technologies. In most developed countries, LEDs are already an economically beneficial alternative to existing streetlights over the lifetime of the streetlight when energy savings are considered, despite their higher upfront cost. But in the next few years, LED streetlights are expected to reach cost parity with legacy technologies (and in some cases already have), making their benefits to costs immediately positive. At this point, they will make economic sense as replacements in almost all countries. Also, many emerging market countries

are rapidly urbanizing and in need of improved urban infrastructure, creating further drivers for this market. From 2016 to 2026, global investment in LED street lighting is expected to be $57 billion.

But LEDs are not the sole element in modernized public outdoor lighting. Networked “smart” streetlights help cities further reduce costs with their dimming capabilities and reduced maintenance costs. As the costs for networked streetlights also rapidly decline, these smart streetlights will find a growing role in cities and municipalities across the

Lowest unit price found

Lowest price found for 2016 project

Previous 2016 global average estimate price

Current 2016 global average estimate price

Highest price found for 2016 project (could include

decorative)

Price per streetlight for 100 W LED

Rajasthan429,966

Himachal Pradesh50

Uttar Pradesh17,290

Delhi189,479

Bihar150

Assam3,535

Source: EESL

Maharashtra659

Telengana971

Andhra Pradesh465,631

Kerala7,705

Tripura34,200

LED streetlights in India as part of EESL rollout, as of September 2016

India total:1,149,936

Global streetlight networking market share(deployed and announced)

Source: Northeast Group

© 2016 Northeast Group, LLC

globe. Smart street lighting is already taking off in major markets such as the US, UK, and China. In many developed countries, smart streetlights are serving as part of larger “smart city” concepts, where communications networks can be used to link items such as electricity and water meters, traffic lights, and parking meters. Smart streetlights also greatly improve safety conditions in a city by reducing the “down time” of streetlights. As soon as lamps expire, officials are notified, so streets rarely go without lighting. In many emerging market metropolises–and US cities–that are managing rising street crime, this will be a particularly strong benefit.

Overall, the LED and smart streetlight market remains young, and some challenges must be overcome. Most importantly, costs must continue to fall for financing to be feasible in many countries – so far costs have continued to fall at a rapid rate. Even so, vendor-led financing (i.e. performance contracting) must continue to develop to enable projects in many geographies. In some emerging market countries, multilateral financing can help overcome these challenges, and in 2014 the World Bank announced a $1 billion fund exclusively for LED street lighting. Another challenge is a lack of standardization. Particularly for networked streetlights, undeveloped standards could limit vendors’ ability to meet rising demand across the globe. Finally, a general preference towards conservatism could lead some cities to stick with legacy technologies even in the face of clear savings from LED and smart streetlights.

Back in 2012, Northeast Group conducted a survey of over 100 US cities, towns, and municipalities that were on the vanguard of LED streetlight deployments. The response was overwhelmingly positive from these early adopters—residents complimented the better light, law enforcement officials praised safety improvement, and cities overall showed significant cost savings. Since then, the business case for LED and smart streetlights has only grown stronger. Improvements in technology have driven costs down while improving the quality of the lights. Northeast Group’s most recent 2016 assessment of over 1,000 LED projects in over 90 countries shows that these benefits are shared by cities and municipalities across the globe. Given these clear advantages, LED and smart streetlights are projected to reach 89% and 42% of the total streetlight market, respectively, by 2026. This will total a $69.5 billion market opportunity over the next decade.

Average 10-year savings per streetlight from LEDs by region

Source: Northeast Group

59%30%

6% High%pressure%sodium%

Mercury%vapor%

LED%

Mixed%

Incandescent%

Fluorescent%

Mul<=vapor%metallic%

Others%

Types of streetlights in Brazil (2016)

Source: Eletrobras

© 2016 Northeast Group, LLC

Key questions answered in this study:

• What is the market share of the leading smart streetlight vendors? • How large will the market for LED and smart streetlights be across 125 countries? • How will falling prices impact LED and smart streetlight deployments? • What is the streetlight ownership structure in the leading markets? • Who are the key vendors throughout the smart streetlight value chain? • What hurdles to smart street lighting have been overcome and which ones remain?

Global LED and Smart Street Lighting: Market Forecast (2016–2026) deliverables include: PDF copy of study, PowerPoint executive summary and dataset in excel of 125 individual countries.

Table of Contents

i. Executive Summary 1

i.i What’s new in 2016? 5

ii. Methodology 12

1. Introduction 15

1.1 What makes infrastructure “smart?” 15

1.2 Smart infrastructure applications 18

1.3 How do smart infrastructure applications build on each other? 24

2. Overview of LED and smart streetlight benefits 26

2.1 Background of LED streetlights and comparison with other lighting technologies 26

2.2 Cost savings potential of LEDs 32

2.3 Advanced “smart” street lighting features 36

3. Challenges for LED and smart streetlight systems 45

3.1 Financing challenges 45

3.2 Non-financial hurdles 49

4. Case studies 58

4.1 Characteristics of LED and smart streetlight projects 58

Brazil 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026Total4Streetlights4(units) X.X X.X X.X X.X X.X X.X X.X X.X X.X X.X X.XTotal4LED4Streetlights4(units) X.X X.X X.X X.X X.X X.X X.X X.X X.X X.X X.XTotal4LED4Streetlight4Value4($M) $X.X $X.X $X.X $X.X $X.X $X.X $X.X $X.X $X.X $X.X $X.X

Cobrahead/shoebox4units X.X X.X X.X X.X X.X X.X X.X X.X X.X X.X X.XCobrahead/shoebox4value4($M) $X.X $X.X $X.X $X.X $X.X $X.X $X.X $X.X $X.X $X.X $X.XDecorative4units X.X X.X X.X X.X X.X X.X X.X X.X X.X X.X X.XDecorative4value4($M) $X.X $X.X $X.X $X.X $X.X $X.X $X.X $X.X $X.X $X.X $X.XHigh4wattage4(>504W)4units X.X X.X X.X X.X X.X X.X X.X X.X X.X X.X X.XHigh4wattage4(>504W)4value4($M) $X.X $X.X $X.X $X.X $X.X $X.X $X.X $X.X $X.X $X.X $X.X

Smart/Networking4units4(nodes) X.X X.X X.X X.X X.X X.X X.X X.X X.X X.X X.XSmart/Networking4value4($M) $X.X $X.X $X.X $X.X $X.X $X.X $X.X $X.X $X.X $X.X $X.X

© 2016 Northeast Group, LLC

Table of Contents (cont.)

4.2 Chicago, US 61

4.3 Bhopal, India 62

4.4 Gloucestershire, UK 64

4.5 Melbourne, Australia 65

4.6 Phoenix, US 66

4.7 Madrid, Spain 68

4.8 Florida, US 69

4.8 San José, US 70

4.10 Chattanooga, US 72

4.11 São Paulo, Brazil 75

4.12 South Korea (nationwide) 76

4.13 Buenos Aires, Argentina 77

4.14 Copenhagen, Denmark 78

4.15 Bratislava, Slovakia 79

4.16 Almaty, Kazakhstan 81

4.17 Abu Dhabi, UAE 82

4.18 Durban, South Africa 83

4.10 Kolkata, India 85

4.20 Dongguan, China 87

4.21 Hanoi, Vietnam 89

5. Market forecast 91

5.1 Total number of streetlights 91

5.2 LED and smart streetlight pace 93

5.3 Cost of LED and smart streetlight deployments 94

5.4 LED streetlight market forecast 96

5.5 Smart streetlight market forecast 99

6. Leading markets 102

6.1 United States 103

6.2 China 103

6.3 Japan 104

6.4 Germany 104

© 2016 Northeast Group, LLC

Table of Contents (cont.)

6.5 Brazil 105

6.6 India 105

6.7 Mexico 106

6.8 France 106

6.9 United Kingdom 107

6.10 Turkey 107

6.11 South Korea 108

6.12 Italy 108

7. Vendors 109

7.1 Market trends 109

7.2 Leading LED and smart streetlight vendors 115

8. Appendix 143

8.1 List of projects assessed in this study 143 153

8.2 List of abbreviations 159

8.3 List of companies mentioned in this study 161

List of Figures, Boxes, and Tables

Global LED and smart street lighting: key takeaways 4 Global streetlight networking market share 5 Price per streetlight for 100 W LED 7 Combined cumulative LED and networked streetlight value by year 7 Cumulative total networked streetlights by region 8 Notable smart streetlight partnerships in the past year 9 LED streetlights in India as part of EESL rollout 10 Highlights from the leading markets 11 LED and smart streetlight forecast methodology 13 Table 1.1: Smart infrastructure market segments 16 Figure 1.1: Smart infrastructure overview 18 Table 1.2: Communications technologies 20 Figure 1.2: Smart grid value chain 21 Table 2.1: LED streetlight benefits 26 Figure 2.1: Streetlight directional control 27

© 2016 Northeast Group, LLC

List of Figures, Boxes, and Tables (cont.)

Figure 2.2: Response to LED streetlights in Northeast Group’s US survey 28 Table 2.2: Different types of streetlight luminaires 28 Figure 2.3: Types of streetlights in Brazil 31 Table 2.3: HPS to LED wattage cross-reference 32 Figure 2.4: Comparison of savings percentages in Sri Lanka and Ukraine 32 Table 2.4: Estimate of payback on LED streetlights in Sri Lanka 33 Figure 2.5: Payback on replacement LED streetlights in Sri Lanka 33 Table 2.5: Estimate of payback on LED streetlights in Ukraine 33 Figure 2.6: Payback on replacement LED streetlights in Ukraine 34 Table 2.6: Estimate of payback on LED streetlights in Germany 34 Figure 2.7: Payback on replacement LED streetlights in Germany 34 Figure 2.8: Average 10-year savings per streetlight from LEDs by region 35 Figure 2.9: Smart streetlight model with different communications systems 37 Figure 2.10: Global average savings from smart streetlights based on networking costs 39 Figure 2.11: 10-year breakeven point for networked streetlights based solely on dimming 40 Figure 2.12: Average electricity prices by region 41 Figure 2.13: Average payback on networked streetlights 42 Table 2.7: Estimate of payback on networked streetlights 42 Table 2.8: Summary of cost-benefit analysis examples 44 Table 3.1: Streetlight financing in Europe 46 Table 3.2: Streetlight ownership models 49 Figure 3.1: Countries with only state-owned utilities 50 Figure 3.2: Legal framework for assessing liability of streetlights 54 Table 3.3: Dimming criteria for the standard IESNA RP-8-05 55 Figure 3.3: Countries with NEMA sockets 56 Figure 4.1: Locations of reporting LED and smart streetlight projects 57 Table 4.1: Summary of case studies 58 Figure 4.2: Case study examples in this study 60 Table 5.1: Total number of streetlights 91 Table 5.2: Cumulative investment in LED and smart streetlights 92 Figure 5.1: Cumulative investment in LED and smart streetlights 92 Figure 5.2: Global LED and smart streetlight penetration rate 93 Figure 5.3: Common types of LED streetlight fixtures 94 Figure 5.4: Average cost per streetlight of smart LED projects 94

© 2016 Northeast Group, LLC

List of Figures, Boxes, and Tables (cont.)

Table 5.3: LED and smart streetlight market drivers and barriers 95 Figure 5.5: LED streetlight forecast by lamp type 97 Table 5.4: LED streetlight forecast data by type 97 Figure 5.6: LED streetlight forecast with installation separate 98 Table 5.5: LED streetlight forecast data by region 98 Figure 5.7: Regional LED streetlight forecast 99 Table 5.6: Smart streetlight forecast data 100 Figure 5.8: Smart streetlight forecast 100 Figure 5.9: Regional smart streetlight forecast 101 Table 5.7: Smart streetlight forecast data by region 101 Figure 6.1: Annual LED streetlight value in leading markets 102 Figure 6.2: Annual smart streetlight value in leading markets 102 Leading markets snapshots United States 103 China 103 Japan 104 Germany 104 Brazil 105 India 105 Mexico 106 France 106 United Kingdom 107 Turkey 107 South Korea 108 Italy 108 Figure 7.1: Global streetlight networking market share 110 Figure 7.2: Streetlight networking market share in the Americas 110 Figure 7.3: Streetlight networking market share in EMEA 111 Figure 7.4: Streetlight networking market share in Asia-Pac 111 Table 7.1: Vendors responding to RFI for street lighting in Chicago 112 Figure 7.5: Locations of smart streetlight vendors 113 Table 7.2: Streetlight vendor partnerships 114 Table 7.3: Notable smart streetlight partnerships in the past year 115 Figure 7.6: Relative manufacturing costs of LED chip components 115

© 2016 Northeast Group, LLC

List of Figures, Boxes, and Tables (cont.)

Figure 7.7: Smart lighting value chain 116 Table 7.4: LED chip vendors 122 Table 7.5: LED wafer vendors 122 Table 7.6: LED phosphor vendors 122 Table 7.7: LED driver vendors 123 Table 7.8: General LED lighting vendors 125 Table 7.9: Streetlight network and control vendors 131 Table 7.10: Streetlight communications vendors 138

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