Market Insight

Connected Street Lights: Coming Soon to a Smart City Near You

December 04, 2014

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With connected technology and the ‘Internet of Things’ becoming an integral part of everyday life, we are seeing rapid development of a whole host of technologies aimed at making cities ‘smarter’ and ultimately more efficient.

The market for connected street lighting is currently worth around $104 million. However, IHS predicts that world shipments of connected street lights will increase fourfold over the next five years, increasing the size of the market to almost $450 million in 2018.

The municipal street lighting system in a city is said to account for around 40 percent of a city’s total energy budget. By replacing traditional street lighting systems with intelligent, connected luminaires and energy efficient LED bulbs, the energy consumption from street lighting can be reduced by up to 80 percent. LED bulbs also have a greatly increased life expectancy over traditional non-LED technologies. Replacing a street light is an expensive and time-consuming task, so by increasing the life expectancy of the bulb, the municipality can save significantly on the maintenance costs of the system.

By adding connectivity to the luminaires, engineers are able to remotely monitor the status of the luminaires, enabling more efficient maintenance. The added connectivity has other advantages; the street lighting systems can be linked with other systems, such as the security or fire services, or the luminaires can be used as a platform for other technologies such as sensing or mobile communications systems. This added connectivity is the key feature in making any technology suitable to be used in a ‘smart city’.

But this technology has its drawbacks as well. Converting a city to entirely connected LED streetlights is a huge task and requires significant upfront costs. While the payback period of the system may be only a few years, city governments are notoriously bad at raising large amounts of money, which would otherwise be spent on things like improving healthcare or expanding the public transport system.

The market for connected street lighting is also unevenly distributed around the world. In 2013, 54 percent of all connected lighting shipments were to EMEA, whereas only 17 percent of shipments were to APAC.

The main benefits of installing the street light system is the reduced energy and maintenance costs, meaning that even with an extremely high initial cost of installation, the payback period of the technology could be as short as three or four years. Municipalities in EMEA face the largest cost for energy and maintenance in comparison to other regions, giving a shorter payback period; hence, their adoption of connected street lighting is much higher

As a technology, connected street lighting has many advantages, and customers are beginning to see the benefits. But in a market with an installed base of almost 150 million units and a penetration of less than 3 percent, connected street lighting still has a long way to go before it is considered the dominant technology.

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