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MONDO ARC

Smart Lighting Berlin

Issue 86 August / September 2015


Technology expert Dr Geoff Archenhold was recently a speaker at the Smart Lighting conference in Berlin. Luckily for you he hung around to give you the low down on the platform for connected lighting combining the interests of stakeholders from the lighting, the semiconductor and ICT industry.

I recently had the pleasure of attending the Smart Lighting Conference in Berlin at the end of May and I had massively mixed emotions about lighting by the end of it. You may well be wondering why, especially as the conference was designed to discuss the future of lighting and the new technologies associated with it. On the one hand, as a self-confessed technologist, I was excited about the features, functions and opportunities that will be coming soon. However, I felt great sadness as I foresaw the death of so many established lighting companies over the next five years whilst the business model of the lighting industry is changing forever within such a short timescale, there is no escape for many of them.

What is Smart Lighting?

In order to start off I should perhaps cover the many definitions of Smart Lighting such as:

“Smart lighting is a lighting technology designed for energy efficiency. This may include high efficiency fixtures and automated controls that make adjustments based on conditions such as occupancy or daylight availability,” from Wikipedia 

Rensselaer Polytechnic Institute defines Efficient lighting systems that:

(a) ‘see’ where the light is going and what it is doing,

(b) communicate using light to send information and enable lighting information processing, and

(c) have novel control systems that ‘think’ about what the light needs to be doing to meet the expectations and requirements of people.

The overall vision for smart lighting is clear but how we (as an industry) deliver the vision is what concerns me and several of the speakers and audience members touched on this during the two days as I will now try and explain. 

Light fixtures to be given away for free!

There were several large players most notably GE discussing their vision of smart lighting and smart cities but the big news was the surprise comments that the cost of LED fixtures are so heavily commoditised that within a couple of years they will essentially be given away! 

This prediction has a massive impact on the lighting fixture community and they will undoubtedly come under pressure to remain profitable as LED fixture pricing erodes further and in turn we will inevitably see big failures across the industry. I predict many traditional lighting players which have large overheads (or indeed pension liabilities!) that cannot respond to the new market dynamics and cannot downsize will simply disappear. The new world will be made up of lighting companies that can either become system integrators and provide complete solutions from fixtures, drivers and controls to cloud services or they downsize and supply only what they are good at to other systems integrators and try and maintain margins if they can. The real difficulty with trying to focus on specialisation is that:

Well-financed companies can provide a complete lighting system free of charge and then lease the installation back to the end user. In other words the building owner outsources the whole building management (not just lighting).

A variant of the above is to charge a cost for using the lighting system or ‘pay per lumen’ concept currently promoted by Philips Lighting and others.

Traditional fixture-only companies will be locked out as they do not have the financial backing to offer free lighting fixtures and will also suffer profit margin erosion as the cost of fixtures plummet.

Independent controls companies will either have to merge or acquire fixture companies to offer complete solutions or be acquired themselves as the cost of control systems will be the next segment of lighting that will be eroded quickly especially with the Internet of Things concept.

LED fixtures will not catastrophically fail so the need to replace LED fixtures in the future will continue to drop and compound the issue for fixture manufacturers as the total addressable market will begin to reduce in size.

Smaller companies will be able to compete due to technology innovation but they will either be acquired by the large companies or stay small focusing on niche applications.

The price erosion is lethal and today one can purchase LED panels from quality companies at less than £50 whereas only two years ago they would have cost well over £150 and if you decided that you wanted to go for unbranded products then the costs drop to below £25 for a 600mm x 600mm panel these days. This is why you can see the lighting industry leaders such as Philips, Osram and others changing their strategies rapidly to cope with the new world that is coming! What happens to all the companies in between is anyone’s guess but how can you compete with LED fixtures in two years’ time that are perhaps only £10 per fixture, where is the profit in that?

This is why there is such a rush to deliver Smart Lighting as a concept as the only sure way to generate future revenues for lighting companies will be to develop a service model that end users will pay for. 

How will Smart Lighting be used?

The key lighting companies such as Philips and GE highlighted the need to focus smart lighting on specific areas including:

Street lighting (over 290 million streetlights are installed globally - less than 1% of all the streetlights are connected

Public and Commercial Buildings (they represent 60% of global lighting-based electricity use but just 20% of office buildings today have some form of lighting controls)

City-wide solutions

Energy and Sustainability

Communications

Weather warnings

Maintenance and Operations

Physical Infrastructure

The key point of many of the presentations were that lighting companies are going to have to morph into data analytics companies very soon – how many do you think will make the transition?

The GE presentation showed a glimpse of how companies in other sectors are making the transition and highlighted how sophisticated their engine division operates whereby all parameters of the engines are monitored and logged which creates mountains of data (often referred to as big data) but then this has to be analysed, stored and reported in a very secure way.  The GE engine division actually creates a significant revenue from added data analytic and servicing which is where GE lighting seems to be heading.

In terms of data analytics then there were similar visions at street level from GE, Cisco and Osram that could yield fantastic opportunities for both city management and end users. Cisco concurred with this vision in its presentation although they went a step further to include other sensors within street lighting such as noise detectors and so forth to provide further data and information.

The real question will be can such sophisticated systems be deployed cost effectively in the near term or is it a step to far from reality?

Issues with smart lighting today

Several of the presenters discussed why Smart Lighting is disliked by many, mainly because users are often not happy with the results; installers find the systems complex to install and commission; owners get a limited financial return, but also experience many problems due to complexity and reliability; and there is no one standard operating system that can share cross-domain information so have to use conventional BEMS or BMS systems as core.

I have actually heard that over 70% of today’s advanced lighting control systems are turned off after three months from installation because the systems have stopped operating correctly and are irritating users, it’s too complex to change the system when the building use changes, any changes are expensive to make as the system requires a commissioning engineer to attend amongst many other aspects.

Biodynamic Lighting 

Nils Erkamp who is involved within the EU funded SSLerate project highlighted that smart lighting needs to be also human centric lighting and showed there was definitely a value added proposition for the industry to focus on and reference some work by consultancy AT Kearney. Key beneficiaries of human centric lighting will be industrial, education, healthcare and elderly and this could save over €12.8bn by 2020 from improved productivity, less errors and less sick days as shown.

The issue of privacy and security

Osram highlighted that one of the greatest challenges facing new technology is that of privacy and security. This is an area where lighting companies need to learn from the IT leaders that have gone before them such as Microsoft, Google, Apple, Facebook and so forth by having robust user data licencing.

The key aspect for me will be security of the lighting control system as I have been working with several universities for nearly three years to develop iMune, a secure lighting and building management control system that utilises open-standard Ethernet technologies to provide a scalable and secure system which is easy to configure and change whilst taking only a few hours to commission from start to finish. 

What I am concerned about is that network security is completely alien to most lighting companies and they do not have the skillsets to deliver on security therefore I advise everyone to work with lighting security specialists to roll out future lighting applications (unless you want them to be compromised).

Conclusions

There was so much to listen to at this event and so many different viewpoints on how to deliver smart lighting in the future. I am excited that no matter how people may resist I think smart lighting is going to be delivered by 2020 whether we like it or not! 

The main aspects are these systems need to be cost effective, secure and simple to deploy and use otherwise the industry will be chastised for not delivering on its promises.

As I said at the start, not many of our friends and colleagues will be left in the industry from 2020 onwards and the survivors can rightly claim to be smart enough!

www.smartlighting.org

Geoff Archenhold is an active investor in LED driver and fixture manufacturers and a lighting energy consultant. 

The views expressed in this article are those of the author and do not necessarily represent the views of mondo*arc.

You can contact him on:

g.archenhold@mondiale.co.uk

 

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