New Light in Old Spaces

The market potential for putting modern LED lighting systems in existing buildings dwarfs new construction, but in many ways it’s a more challenging market to serve.

Doug Chandler Blog | Apr 05, 2019

Thanks to the humble light-emitting diode, the lighting market is among the brighter sectors for distributors in an electrical industry that’s growing steadily overall. Most of the attention goes to new buildings where architects and lighting designers are pushing the boundaries of what the latest LED lighting technology and intelligent controls can do. 

Meanwhile, look around you at all the buildings that make up your city and you’ll quickly realize that all those offices, shops, conference rooms and lobbies, factories, warehouses and parking garages where people spend their days beneath old fluorescent, incandescent and high-intensity discharge (HID) lighting could benefit from the same technologies that are going into new buildings. The trick is getting them in there. 

The scale of the opportunity is hard to estimate and there’s no real consensus. John Engel, CEO of WESCO Distribution, Pittsburgh, told analysts in the company’s quarterly earnings discussion in January, in response to questions about WESCO’s rationale for acquiring Sylvania Lighting Services, that estimates of the lighting retrofit market’s size are in the neighborhood of $300 billion. 

“It’s a tremendous growth engine, and there’s a lot of really interesting developments and dynamics occurring in that market,” Engel said. 

Using 2016 numbers, a report from the U.S. Department of Energy (DOE) prepared by Navigant found that 874 million of the lighting systems installed through that year in the United States were LED, which captured 12.6% of the market that year. 

The report, “Adoption of Light-Emitting Diodes in Common Lighting Applications,” showed that LEDs have seen much more success replacing outdoor lighting, at 29.7% overall, including parking garage and building exterior lighting, both past 30%. Indoors, the penetration rates are smaller at 12.3% overall, but growing quickly. LEDs have taken over 47.6% of small directional light installations, 19.8% of downlighting and 15.3% of directional lighting. 

The major lighting category where LEDs have penetrated least among the categories covered in the study is linear fixtures, but even in that application LEDs’ penetration grew from 1.3% in 2014 to 6% in 2016 and by all accounts has continued to grow since then.

Those figures for the lighting market as a whole suggest an even greater untapped opportunity for retrofits, given that LED penetration percentages in existing buildings are still somewhere in the single digits. 

Historically, lighting sales were tied closely to new construction. Fixtures and ballasts were installed during construction and after that sales were primarily for replacement lamps and the occasional tenant turnover or refresh. LED lighting has changed that picture fundamentally, making the entire installed base a potential market for new lighting systems. 

Getting a handle on the retrofit market means adjusting to some of its nuances. For example, lighting equipment specifications in retrofit projects tend to vary widely, far moreso than new construction due to the variety of incumbent light sources with existing buildings. “A new construction project being specified by a lighting designer or an engineering firm has so much less variation from proposal to proposal,” says Randy Johnson, who sold his lighting distributorship, US Lamp, Inc. to Werner Electric Supply Co. in Appleton, WI in January 2019, and is now Werner’s Lighting Solutions Manager, based in Green Bay. “The specifier will call out his preferred brand of high-bay, based on their designs, and say it needs to have this lumen output, and at least this many lumens-per-Watt, this color rendering index, et cetera. The tighter the spec the less variation there is. On the retrofit side, it’s a whole hodge-podge, because typically the end-user doesn’t hire someone to develop a solution and the product called out for is at the whim and expertise of the vendor quoting the customer, which can vary widely.”

Retrofits also tend to happen on a much faster time frame than construction projects, says John Dellorto, VP of sales for Focal Point, a lighting manufacturer based in Chicago. “Most tenant improvement jobs are fast-track. The landlord doesn’t want to lose rent for too many months. He wants to turn it around in eight to 12 weeks, so he’ll hire an architect or some kind of lighting consultant to do it and they’ll come to us,” he said. “It gets going pretty quickly. The runway on a new construction project is a much longer cycle; you will know 24 months before it’s bid or breaks ground.”

The rapid pace and broad variability of the retrofit market mean that distributors and reps need to be in the loop early on, to keep from “chasing the spec” to get their lines added as equivalent alternatives or worse, resorting to a fight on price. 

Cast of Thousands

For distributors, selling lighting systems for retrofit projects involves cultivating relationships with a more diverse set of buying influences than new construction. Construction projects tend to have a predictable flow of influences including the developer, engineers, architects, lighting designers and of course the lighting rep, whose presence is felt throughout. In a retrofit project the tenant may play a central role, or none at all. The property manager or facilities manager may be the key decision maker, or in the case of a large corporate tenant or a university campus they may have an energy manager tasked with reducing energy consumption across all facilities.

Forging strong, long-term relationships with municipalities, school campus, and industrial facilities managers and others may be the best path to growth in the retrofit lighting market. That can start from anywhere, from online queries to cold calls, but the best opening may be your existing customers who are buying other kinds of electrical equipment, says Johnson of Werner Electric Supply.

“In the retrofit market it’s really a matter of going in and making the customer aware of opportunities that are there that they might not realize. What we’ve done, both as US Lamp and Werner, is get a dialog going with whoever we’ve got the relationship with. If it’s product other than lighting that a given person is responsible for, we can have a fundamental discussion about who would be involved with lighting improvements. It might be the energy manager, might be the facility manager, might be the executive committee, but we’ll open a dialog and ask them, ‘Have you looked at any of this LED technology? We’ll come in and do a first-level observation of your facility for you, at no charge, as a value-added service as a current or potential customer to determine what opportunities are present in lighting and controls.”

Developing long-term relationships with the people involved in existing real estate can avoid having the conversation devolve to price. “Distributors are often not in contact with the end customer and, in the bidding process, will offer bare minimum to provide a low bid,” says Jim Williams, president of Chicago-area lighting rep agency KSA Lighting & Controls, Hanover Park, IL. “Too often we see distributors leading with the lowest cost product with no regards to service on the front end or post sales. In the long run they are having their credibility and reputation impacted negatively because of this.”

Jason Barbour, CEO of START Lighting, a commercial lighting manufacturer in Engelwood, CO, spent 20 years in electrical and lighting distribution before moving into manufacturing. He says distributors are under assault by online suppliers and customers who want to buy direct from manufacturers, but he sees distribution continuing to play a pivotal role in the retrofit lighting market. 

“I still think distribution has the ability to take control, because it owns the relationships,” he says. He points to some large national distributors who have built sales teams dedicated to the retrofit market. “Those folks pay for themselves relatively quickly. They say, ‘We want to grow our retrofit market.’ You go out and forge relationships and go from there.”

Energy and Returns

Energy savings has been one of the strongest selling points for LED lighting since it emerged on the scene. Lifetime energy savings attracted many customers and utility and government rebates helped to sweeten the deal. Distributors, reps and manufacturers serving the retrofit market say the energy savings are still persuasive for owners and building managers and tenants, but the sale also requires a firm grasp of the financial picture and the ability to convey the savings in terms that are compelling for a financial manager. 

“The driving force today in the retrofit market is still by far energy savings, first cost and simple ROI,” says Williams of KSA Lighting & Controls. “Bargain hunters may purchase 3rd tier products at a low cost that on paper provide an attractive ROI not realizing the lumen maintenance and life of the product are not what they expected. 

“The good news is that forward thinkers are investing in connected smart lighting and preparing their buildings to be future proofed and IOT compatible,” Williams adds. “These customers understand the value of the connected system with sensors on board each fixture that will provide the granular control and deep energy savings they desire. These energy savings will pay for the cost of the smart system.”

Energy service companies (ESCOs) have focused on selling the financial picture ahead of the specific technologies forever, and the emphasis has shifted a little, says Chris Gersch, president of Verde Systems, an ESCO in Chicago. “The emphasis now is no money out of pocket. The conversation used to lead with ROI and endless savings, but now it’s, ‘Are you cash flow positive?’”

Rebates drove some of the early action in the market and can accelerate the payback on a project, but many utilities have backed off recently or shifted to incentives in other areas. “Rebates were more important two years ago,” says Dellorto of Focal Point Lighting. “Utilities were offering rebates on LEDs but now they assume that’s what will be installed and feel they don’t have to incentivize the customer.”

Meanwhile the competitive landscape of the semiconductor industry that has taken over the lighting market and the influx of low-cost competitors that come with it have driven pricing down across the market, making financial paybacks from energy savings even faster. 

Taking Control

The evolution of LED lighting technologies appears to have leveled off lately compared to the breakneck pace of advances seen a few years ago. Some customers see little difference among the product offerings. As one distributor said, in their mind an LED is an LED. Distributors can find themselves feeding into that impression if they don’t stay up with the benefits that continue to emerge, such as the possibilities for productivity improvements from “human-centric” lighting or more generally the aesthetics and design options available with tunable color. 

What seems to get customers excited right now, though, comes more from the control side. The emergence of wireless lighting control has changed the game for retrofits, removing the headaches and cost and locked-in feeling of hard-wired proprietary systems while giving end users huge gains in flexible use of their lighting systems. 

“The last two years have changed the conversation,” says Gersch of Verde Solutions. “Not so much around LED, everyone knows about that by now. But customers are now far more aware of sensors, whether it’s motion sensors, daylight dimmers, and so on, compatibility with building automation systems and things like that.”

Williams of KSA Lighting & Controls thinks LED fixtures without controls will be uncommon in the near future. “Customers really get excited about the controls and features that a connected smart system offers like setting the AV mode with the push of a button in a classroom, fixtures with daylight harvesting that dim by zone, exterior fixtures that provide the lighting levels they desire for safety and also provide deep savings by dimming 70% or more when the space is not occupied.”

The flexibility to reconfigure lighting zones and control them separately from a mobile device provides compelling benefits for many customers such as large manufacturing operations where changes in production and demand may require dividing up the plant floor space differently over time, or open office settings where desks and seating areas may need to be redone on occasion. 

With the advances in wireless controls and the declining cost of LED lighting systems generally, sales people in the field are seeing opportunity everywhere they look. Given the scope of the opportunity it seems likely to continue for many years. But once modern lighting systems are installed in most existing buildings, the conversation is almost certain to change again. The life expectancy of modern LED lighting and the continuing advance of future-ready configurable systems will yield a very different competitive landscape once this fun is done.    

Tunable white lighting in the classroom: The new ROI is ROO→

Throughout the past few years, we at LEDs Magazine have seen more solid-state lighting (SSL) product development targeted at educational environments. School officials, especially in the public-school arena, must manage strict budgets and plan strategically to obtain the best return on investment (ROI) possible, so the potential financial implications are important factors — first, the cost of premium equipment and installation, but then balanced against the possible payback due to energy efficiency initiatives and less maintenance. One consideration beyond the established cost reductions of SSL in institutional buildings such as schools is the possible impact of tunable white lighting in the classroom. Naturally, dimmability and other controls features such as granularity of color temperature can be customized to various classroom tasks and increase visual acuity. But what’s becoming even more appealing to educational administrators is the ability to influence less “visible” factors in the classroom, such as mood, behavior, and concentration. Strategies in Light, co-located with The LED Show and Lightspace California, will draw more attention to so-called human-centric lighting applications as this, also known as lighting for health and wellbeing. One such presentation, “Lighting for pupils…Tunable white lighting in the classroom and the new ROI,” by Tricia Foster of Acuity Brands Lighting and Catherine Hollenshead of Estes, McClure & Associates (EMA), will feature a case study on a Texas school district’s first-hand experience using tunable white lighting in several classrooms. Here the speakers give a glimpse into the new classroom experience. They will offer up additional details during SIL on how ROI has evolved into “return on objective” (ROO) in such installations. — Carrie Meadows

Tunable white lighting is the future of classroom lighting because of the positive impacts on mood, behavior, and concentration. In a time when schools are seeking every possible advantage to improve the learning environment, they cannot lose sight of the impact lighting and controls can have on learning. Lighting and controls need to be considered tools that are as critical as smartboards, tablets for students, and all the other modern-day teaching tactics that are being deployed in classrooms across the country.

Acuity Brands and EMA will discuss the installation of the tunable white solution in the Carrollton Farmers Branch Independent School District (ISD) where the ROI went beyond energy — showing what it took to bring the energy manager, the teachers, the parents, principal, and even the students along for the ride. In addition, the results of a Pacific Northwest National Laboratories (PNNL) Gateway Study are now public and we will show the results of this study based on the installation at CFB ISD.

Tunable white lighting and its potential impact on the K–12 learning environment has been the subject of a number of research studies, but not a lot of practical, in-the-classroom experience exists,” Foster points out. “Catherine and I had the opportunity to work with the school administration, teachers, and students to gain insight and feedback on just how effective lighting can be on student behavior and performance.”

“As part of our presentation, we Twill walk through deploying a tunable white system into the classroom,” adds Hollenshead. “We will review the return on investment from energy savings over the previous fluorescent lighting system, but also dig into the multiple benefits to the teachers and impact on students as they experience lighting that can be adjusted to mood, activity, time of day, and other factors.”

Lighting industry ‘must teach schools the value of good lighting’→

Lighting professionals must join with educators to improve lighting in schools, Chris Boyce of Capita Symonds told LuxLive.

Better cooperation is needed to make use of government funding for primary and secondary education, Boyce said in a keynote speech.

Boyce urged lighting professionals to use their knowledge and skills to help architects and educators to make the right choices. He said: ‘We need the people who design the lighting in education to help us as architects to change the way light is given in education – that is my plea to you.’

He also called on schools to learn lessons from the way commercial offices and universities are lit.

Boyce warned of the dangers of installing low-energy lighting without understanding how it will be used. The drive by the government to standardise energy-efficiency and school designs could compromise the quality of school lighting due to a lack of evidence on the need for quality lighting, he  warned.

‘It’s my view that lighting will suffer,’ Boyce said, ‘and it’s the industry’s job to work with architects to persuade teachers that they need quality space and not just space.

‘Lighting contributes to educational outcomes. My request for the lighting industry is to challenge the normal education need by gathering the data to back up the need for it.’

Capitalize on the intersection of commercial lighting and IoT (MAGAZINE)

Published on: Sep 12, 2018

By Chuck Piccirillo
Osram Digital Systems

As the IoT establishes itself as the next adaptation in hardware and software applications, CHUCK PICCIRILLO outlines how enabling technology and lighting providers must shift to a new conceptual and development model to ensure their businesses will thrive in the connected spaces market.

The Internet of Things (IoT) and lighting have been living in separate worlds until very recently. Over the past decade, indoor lighting has evolved from traditional incandescent and fluorescent technology into solid-state lighting (SSL) and subsequently connected lighting management systems. Simultaneously, the IoT has established itself as the next technology revolution destined to create a plethora of smart applications that will change the way we work, play, and live. As the number of connected devices reaches an all-time high, these two worlds are coming together in a way that is mutually beneficial.

Lighting is ubiquitous — it’s in every space within a building. It is the perfect conduit for collecting information on what is happening in a building at any given time, because it is ideally located in the space and is connected to a power source. Sensors embedded in luminaires transform light points into data nodes on the lighting network, creating the enabling technology infrastructure for smart building applications and the IoT. As more emphasis is placed on connected spaces, an increasing number of use cases become possible.

This opportunity spawns several questions. What is driving the adoption of smart lighting and IoT? What will the ecosystem look like that moves this market forward? What factors should be considered when choosing a networked lighting control system, and what are the first steps to get started?Smart lighting and the IoT ecosystem

A complete end-to-end IoT solution requires a lot of capabilities, and no one entity can provide this on its own. In reality, IoT solutions will be based on the latest innovations and technologies as well as partnerships and alliances, where each organization contributes its own area of expertise to form a complete solution.

Partnerships are emerging between lighting companies and other technology-based companies — many of which were unlikely before this latest technology revolution. Although still in its infancy, many lighting companies are teaming up with traditional IT organizations, software service providers, and, in many cases, other lighting companies to tackle new and innovative applications.

For example, lighting companies need a cloud infrastructure to store data collected about the space and are forming partnerships with companies like Amazon, Microsoft, Google, etc., which can provide services that connect lighting networks to the cloud.

This begs the question: What do you do with the information that is coming from the lighting network? Software-as-a-service (SaaS) companies are taking information to produce the applications and analytics that are needed for particular smart IoT use cases. Since lighting is everywhere, each light point can provide very accurate data about a specific space within a building and this level of accuracy enhances the analytics capability that SaaS applications require. They can gain granular insights from lighting system data about what is happening in the space.

“Coopetition” in the market is increasing. Lighting manufacturers are seeking out other lighting manufacturers to go to market together with solutions that are mutually beneficial. In this new blended world, previous competitors are now seeing the value of combining products and expertise.

Drivers for adoption of smart lighting

As previously mentioned, lighting is ubiquitous and well-suited for collecting information about activities taking place in a building at any given time. With this as its backdrop, there are other major factors leading to the adoption of smart lighting systems.

Energy and operational savings. According to IBM, the day-to-day operation of a building represents more than 70% of the total cost of that building over its life­span — this includes things like electricity, heating and cooling, water, etc. The immediate impact of IoT in commercial buildings is to lower operational costs, particularly in the form of energy savings. And many building codes, especially in the United States, are being rewritten to address these new cost reduction requirements, another factor driving adoption.

Building efficiencies. By creating a digital version of a building and its internal operations including systems and occupant activities, you can visualize what happens in the building on a day-to-day basis and use those insights to make better decisions. These reports enable facility executives to improve efficiencies while they centrally manage systems in the building or group of buildings.

Occupant health and wellbeing. There has been a shift in recent years toward occupant health and wellbeing and the impact that factors like lighting and room temperature have on productivity and alertness levels. With this in mind, many companies are piloting applications that test how these factors impact their employees’ experiences while at work.

Considerations for IoT deployment

Selecting an infrastructure that will support IoT can be an overwhelming task. There are still many unknowns about what the exact requirements will be, and no one wants to make an investment mistake. However, there a few key considerations when choosing an intelligent lighting system infrastructure as a platform for IoT, which can help future-proof the system.

Be prepared to scale. Choose a software-based, scalable infrastructure that can grow in size and scope, protecting and extending the value of your investment. Software is easy and cost effective to upgrade, and you will not need to rip out and replace expensive hardware as you grow or adjust your space.

Stay flexible and agile. Choose an infrastructure that not only supports change but handles it quickly. Most office space is reconfigured regularly to accommodate employee movement and space adjustments. Chances are you will need to adjust lighting and other smart building applications. You’ll want to manage luminaires and control zones quickly with a few mouse clicks and without rewiring or moving fixtures. And individual addressability of each luminaire will enable you to capture the granular data needed for applications such as predictive maintenance.

Go wireless. Wireless technology has improved drastically over the past five years and it will continue to improve moving forward. In the not-so-distant future, virtually everything will communicate wirelessly including emerging IoT applications that will make your smart building even smarter, so be prepared. The initial technical challenges of deploying wireless have been overcome and now wireless is the connectivity of choice because it costs less to install, is more flexible in retrofit spaces than hard-wired systems, and can be deployed quickly.

Stick with non-proprietary technology. A standards-based, non-proprietary platform is key to enabling the variety and number of potential IoT applications that will surface, including those from startups. Access to a broad ecosystem fundamentally conflicts with a proprietary platform strategy. You don’t want your options to be limited as you roll out specific IoT applications. Your system should have the ability to connect to a range of devices from multiple manufacturers. Pick a solution that allows you to select the right hardware for the space, without being beholden to a specific manufacturer.

The platform needs to connect to the cloud for data storage and SaaS-based applications such as space utilization, asset tracking, conference room and desk bookings, and more. Open, cloud-connected platforms enable more developers to deliver more innovative apps quickly and cost-effectively.

Streamline the user experience. Choose a system that is easy-to-use for both the facility manager and occupants. Additional features and functionality should not translate to additional complexity for facility managers and their operations team. As smart systems evolve, facility managers will be putting more control of the environment into the hands of occupants to support their preferences in their workspaces. A simple user experience is crucial to making the facility team’s tasks manageable.

Put IoT potential to work

IoT brings smart lighting to the next level. Think of it as smart lighting on steroids. While smart lighting brings efficiencies and automation to the lighting system, the addition of IoT tells a broader story about the space, the occupants, and the building itself.

Like any new technology wave, there will be those who take a cautious, slow-roll approach, while early adopters want it deployed everywhere as soon as possible. As the industry grows and matures, more pilots are being deployed to ensure the products of all suppliers involved in an IoT system are compatible for seamless operation.

It depends on the use case, but some pilots can run in as few as two weeks, while a more typical pilot period lasts approximately six months, with many choosing a phased approach versus a full deployment. Once deployed, and depending upon the type of application, the return on investment may be immediate or not too far off in the future.

As the IoT and smart lighting worlds continue to merge, the ecosystem of lighting manufacturers and software providers will continue to expand, bringing unique applications to market that have yet to be imagined. The promise of a new intelligent world is a reality and it starts with smart lighting.

CHUCK PICCIRILLO is head of product – Lighting Networks & Services for Osram. A 19-year veteran of the Osram organization, Piccirillo has served in engineering roles, both managing projects and delivering manufacturing solutions, and later moved into product marketing and business development roles with Osram. He participated in a pre-engineering program with Saint Bonaventure University, received a BS in chemical engineering from Clarkson University, and completed an MBA program with a focus on high tech at the D'Amore-McKim School of Business at Northeastern University. Piccirillo is a member of the Illuminating Engineering Society of North America (IESNA) and is Lighting Certified.