! Global LED and Smart Street Lighting: Market Forecast ( )

Size: px

Start display at page:

Download "! Global LED and Smart Street Lighting: Market Forecast ( )"

Prosper Warner
5 years ago
Views:

northeast group, llc Global LED and Smart Street Lighting: Market Forecast (2017

1 northeast group, llc Global LED and Smart Street Lighting: Market Forecast ( ) Excerpt of Study for Telensa Volume IV November

2 Global LED and Smart Street Lighting: Market Forecast ( ) Public Outdoor Lighting Market Northeast Group, LLC th St NW, Suite 6 Washington, DC This research was published by Northeast Group, LLC, a smart infrastructure market intelligence firm based in Washington, DC. The following is a brief excerpt of the research licensed by Telensa Limited. The full research package includes a 158-page study, executive summary presentation and a dataset in Excel covering 125 individual countries with forecasts for each over the next decade. The unabridged research is available at:

3 Global LED and Smart Street Lighting northeast group, llc Executive summary Key findings: The 4 th edition of Northeast Group s study finds the global street lighting market evolving at a rapid pace, with new projects, an increasingly competitive vendor landscape, and new applications in development; These dynamics are creating a $64.2 billion market opportunity over the next decade. Global investment in public LED street lighting will be $53.6 billion with a further $10.6 billion invested in smart networked streetlights from 2017 to 2027: Across 125 countries, 264 million LED streetlights will be added over the next ten years, reaching a penetration rate of 89% by 2027; The largest market segment will be cobrahead LED streetlights, which will be worth $36.1 billion over the next ten years. Decorative LED streetlights will have a value of $14.1 billion and high wattage LED streetlights will have a value of $3.3 billion over the forecast period; and Cities and utilities will network 94.8 million streetlights over the next ten years, reaching a 29% penetration rate. The market leaders for smart street lighting are Telensa, Silver Spring Networks, Philips, and Echelon, but some new vendors have established themselves in Northeast Group s 2017 market share data; and In the near term, the largest markets will be North America (US), Europe (Germany, France, UK, and Italy), and East Asia (China, Japan, and South Korea), particularly for networked streetlights. There are currently 317 million total streetlights in the world. This number will grow to 363 million total streetlights by 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 Global LED and Smart Street Lighting Excerpt 1

4 northeast group, llc Global LED and Smart Street Lighting 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 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. LEDs are quickly becoming the dominant source of lighting in cities around the world and from 2017 to 2027 global investment in LED street lighting is expected to be $53.6 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 decline, these smart streetlights will find a growing role in cities and municipalities across the 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, parking meters, waste bins, and other infrastructure. Smart streetlights also greatly improve safety conditions in a city by reducing the down time of streetlights. In many emerging market metropolises and US cities that are managing rising street crime, this will be a particularly strong benefit. While there are still challenges to overcome, the rapid growth of LED and smart street lighting is providing clear examples and benefit cases for cities in diverse contexts to follow. Given these clear advantages, LED and smart streetlights are projected to reach 89% and 29% of the total streetlight market, respectively, by This will total a $64.2 billion market opportunity over the next decade. 2 Excerpt Global LED and Smart Street Lighting

5 Global LED and Smart Street Lighting northeast group, llc 21.8m LED and 2.8m smart streetlights deployed in 2017 Large projects continued across the world in 2017 Communications choices expanding with emergence of LPWAN options The LED and smart streetlight vendor landscape remains fragmented but is increasingly competitive LED streetlights will make economic sense everywhere by the end of the decade and reach 89% penetration Cost reductions will create net positive benefits from networked or smart streetlights Financing hurdles are being overcome Streetlight ownership issues can lead to misaligned incentives In addition to cost savings, LED and smart streetlights bring qualitative benefits Global LED and smart street lighting: key takeaways Northeast Group s model projects that globally 21.8 million LED streetlights were deployed in In addition, 2.8 million streetlights were networked to become smart. These figures confirm that this is no longer a nascent market but rather one that has arrived. In the US, huge projects continued in Florida and Georgia with Chicago just getting started and Washington, DC tendering. In Europe, Paris and Madrid are high profile projects, with numerous UK projects well developed. In Asia, Seoul and Jakarta are proceeding with Singapore set to begin along with many projects across China, India, and Oceania. The majority of the installed base of smart streetlights uses RF mesh, PLC, and UNB communications. This past year has seen the continued rise of new LPWAN communication options such as LoRa, NB-IoT, LTE-Cat-M1, and others. A number of players are fighting for position in the smart streetlight value chain, including chipmakers, component manufacturers, luminaire vendors, and networking companies. The leading smart streetlight vendor is Telensa with 19% market share, followed by Silver Spring Networks, but Northeast Group s 2017 market share data reveals some new players. LEDs are already economically feasible in most countries due to their longer lifetimes and lower energy costs. Once upfront costs reach parity with legacy lighting, nearly all new streetlights will be LED and several legacy ones will be converted, leading to 89% LED penetration by The per-endpoint costs of networking streetlights are falling rapidly. Currently, the costs outweigh the benefits in some countries, but with falling prices, cities that can dim lights at least 20-30% of the time will see positive benefits and by 2027, 29% of all streetlights will be networked. Financing has been the main hurdle to LED and smart streetlight adoption, but lower costs and performance contracting are removing this barrier. In cities where privately owned utilities own streetlights, there are often few incentives to lower costs through LED and smart streetlights. 60 of the 125 countries covered in this study currently have some degree of privately owned streetlights, which could limit advanced streetlight adoption. LEDs offer better directional control than legacy streetlights and their color has been preferred in most cities pilot projects. Adding networking allows cities to rapidly replace expired streetlights, improving safety conditions. Other public safety features are also available with smart streetlights. Global LED and Smart Street Lighting Excerpt 3

6 northeast group, llc Global LED and Smart Street Lighting What s new in 2017? Streetlights increasingly serving as the first smart city application Vendors that had previously focused on just smart metering or lighting controls are now branching out into broader smart cities and IoT offerings. Now several applications can layer on a single network, helping reduce costs while improving benefits through increased data and shared infrastructure (for more on how Northeast Group defines smart cities, please see the appendix). Smart grid especially smart metering is the first concrete example of IoT, but smart street lighting is the first application to take advantage of municipal infrastructure for efficiency gains on a large scale. Table 1.2: Smart city applications Deployment/development Bandwidth/communications needed Examples Smart grid/smart metering High penetration rates throughout the developed world; growing in emerging markets Moderate bandwidth; almost all projects are RF, PLC, or cellular Large-scale rollouts throughout the world Smart street lighting Currently less than 5% of all streetlights, expected to reach nearly 30% by end of 2027 Low bandwidth; most communications capable of serving basic and some advanced lighting control Notable projects throughout the world with over one million endpoints deployed/ announced in each of US, UK, and China Smart parking Negligible penetration rates; expected to expand in next 2-5 years Low bandwidth; most communications suitable Hamburg, San Francisco Additional sensors (environmental, gunshot, etc.) Piloted in some smart streetlight projects Low bandwidth; most communications suitable Atlanta, San Diego Video monitoring Piloted extensively, likely to see near-term growth High bandwidth needed for HD video monitoring, typically cellular; lower bandwidth ok for lower quality video or processing at the edge Requires endpoints to be within range of towers; more expensive than lower bandwidth options Smart waste management Still at pilot stage; expected to expand in next 2-5 years Low bandwidth; most communications suitable Barcelona, Washington Smart traffic management Still at pilot stage; communications costs need to come down before it can be used at large scale Higher bandwidth, typically cellular, used Numerous Public Wi-Fi Used at relatively small scale in several cities; expected to grow in near term High bandwidth (Wi-Fi or cellular) needed Several cities throughout the developed world Source: Northeast Group 4 Excerpt Global LED and Smart Street Lighting

7 Global LED and Smart Street Lighting northeast group, llc Most vendors and cities are in agreement that smart streetlights are the first step towards smart cities. Streetlights are widespread in cities and provide ideal coverage for networks and sensors. Additionally, the business case is relatively straightforward. LED luminaires alone do not make streetlights smart, but LEDs have a very favorable business case and are easily dimmable, enabling controllable streetlights, with added connectivity. This also has a favorable business case and smart streetlights are growing rapidly. As they do, they will often provide the communications network necessary for additional smart city infrastructure. There is still no consensus on what will be the next smart city applications (after street lighting) to be deployed at scale. The most likely will be smart parking, video monitoring, and public Wi-Fi. In the medium term, additional applications will include smart traffic management, smart waste management, and a variety of sensors, including environmental sensors and gunshot detectors. Very few of these applications have been applied at scale to-date, and there are hurdles that must be overcome before there will be growth in large-scale smart city projects. Perhaps the largest inhibitor is a lack of consensus within municipal governments, where departments (and budgets) are typically siloed, making it more difficult to complete projects where both costs and benefits will be spread throughout the city. Additionally, different smart city applications require different strengths of communications in terms of throughput, latency, and range. Cities right now may have to decide between cheaper communications options that cannot handle all the features they eventually want to deploy, more expensive communications that may be difficult to justify for smart city applications that have yet to be proven at scale, and hybrid systems, which can be more complex. Smart city uncertainty serves as both a driver and barrier of smart streetlight growth. Some cities see the numerous additional possibilities and are eager to install a cost-effective networked Global LED and Smart Street Lighting Excerpt 5

8 northeast group, llc Global LED and Smart Street Lighting streetlight system that can enable these other features down the line. Other cities, particularly in Europe, are more eager to move towards smart cities in a holistic manner, and are holding off on investing in smart streetlights until they have designed large smart city plans. But in all cases, smart streetlights connection to smart cities will ensure significant medium-term growth. Vendor landscape update As the smart streetlight market expands, the vendor landscape is constantly shifting, with new entrants but also notable partnerships and mergers/acquisitions. One major trend is that networked street lighting projects are increasingly going to vendors focused on the communications component rather than the lighting component. Three of the four largest vendors in terms of market share (Telensa, Silver Spring Networks, and Echelon) are not luminaire Figure 1.6: Global streetlight networking market share (deployed by end of 2017) 9,476,812 units Source: Northeast Group Deployments not announced Others (12+ vendors w/ less than 1% share) Multiple Chinese vendors in Chinese market 19% #1 #2 #3 #4 6 Excerpt Global LED and Smart Street Lighting

9 Global LED and Smart Street Lighting northeast group, llc manufacturers. The notable exception is Philips, which participates in projects both as an all-in-one solution provider and as a provider of just luminaires or controls. LED and smart streetlight market forecast The large number of LED and smart streetlight projects throughout the world clearly demonstrate that the market is quickly developing and is on track to see rapid growth over the next decade. This section provides separate market forecasts for both the global LED and smart streetlight markets through The forecasts are based on primary research into the costs and pace of streetlight deployments, existing market drivers and barriers that will dictate the start dates for installations, an analysis of how these drivers and barriers will likely develop Figure 5.1: Cumulative investment in LED and smart streetlights (including installation value) Total value ($M) $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $64.2bn in investment from ,000, ,000, ,000, ,000, ,000, ,000,000 50,000,000 Total streetlights $ LED streetlights value ($M) Smart streetlight systems value ($M) # Smart streetlights # LED streetlights Source: Northeast Group Global LED and Smart Street Lighting Excerpt 7

10 northeast group, llc Global LED and Smart Street Lighting throughout the decade, and Northeast Group s proprietary forecasting models. For the installed base of smart streetlights and market share data, Northeast Group has received data from 15 of the largest smart streetlight vendors, which collectively represent the vast majority of the current market. Vendors Northeast Group s research shows that hundreds of vendors have served at least one aspect of LED and smart streetlight projects. As this market develops, the vendor landscape is changing, with new technologies and vendors from new geographies putting pressure on existing players. This section looks at new trends within the vendor landscape and highlights the major players at each level of the LED and smart streetlight value chain. Telensa The British vendor Telensa is the global market leader for connected streetlights. With over 1.7 million smart streetlights deployed or announced, Telensa has 19% of global deployments. The majority of the company s projects are in its home market of the UK, but it is also active throughout Europe and has a growing presence in the US including a large portion of Georgia Power s deployment. It views the US as its largest growth market. Telensa also has several smaller projects in the Asia-Pacific region and is expecting to see growth in Australia, New Zealand, and the Middle East. Telensa s system includes UNB communications between streetlights and base stations, each of which connects up to 5,000 streetlights, and relay data via cellular communications to a control center that can manage hundreds of thousands of streetlights. Telensa also provides software and services for its offerings. 8 Excerpt Global LED and Smart Street Lighting

11 Global LED and Smart Street Lighting northeast group, llc In addition to smart street lighting, Telensa provides sensors for a variety of smart city applications, including smart parking and metering and monitoring of weather, traffic, and pollution. The company has doubled its number of personnel in the past year and is expecting further growth in these markets. In total, Telensa UNB is deployed in over 9 million sensors across 30 countries ranging from the UK and US to Russia, China, and Brazil. Global LED and Smart Street Lighting Excerpt 9

northeast group, llc South Asia Smart Grid: Market Forecast ( ) (excluding India) May

northeast group, llc South Asia Smart Grid: Market Forecast (2016 2026) (excluding India) May 2016 www.northeast-group.com South Asia Smart Grid: Market Forecast (2016-2026) The South Asian region is poised