Should Councils upgrade to LED street lighting now?

There are around 2.3 million street lights in Australia, consuming close to 0.5% of all electricity generated. Between electricity and use-of-system (SLUOS)[1] charges local Councils and roads authorities are spending upwards of $400 million per year on street lights. For instance, a small regional council might spend $300,000 per year on street lighting for local roads, whereas a metropolitan council in a capital city might spend $2.5 million or more per year.

In many parts of the world LED technology is now the norm for new street lighting and when upgrades are carried out to existing street lights. In Australia, just 10% of street lights have been converted to LED, so there is an enormous opportunity for local governments to make significant savings that will lower their carbon footprint, reduce costs, and provide better public lighting services to ratepayers.

LED technology has been improving for several years, with current products capable of reducing energy demand by 50-60%. There are now numerous initiatives and examples of LED street lighting across Australia. The total greenhouse gas emissions savings if all street lights were converted to LED today would be more than half a million tonnes of carbon emissions per year.

Working with several councils in 2016 and 2017 we have seen that the payback for local road lighting upgrades is around 4 to 5 years. This is partly driven by recent volatility in electricity markets, which is causing higher electricity prices for the next several years for many councils. The case for investing in LED street lighting is therefore very strong.

For many local councils – the 90% who have yet to upgrade to LED – a missing piece is often understanding the business case and the benefits of switching to LED. We strongly urge all local councils to spend time to do this, so that when the opportunity to switch arises, the case has been made and funds are available to pay for the upgrade.

Evaluating the business case can involve an assessment of a number of factors:

1) Eligibility of lamps

The current street lighting inventory can be compared with LED options so that all eligible replacements can be identified. For example, networks may only have replacement options for non-decorative fittings on local roads, and main road lights may not yet be eligible. Councils can work with their network provider to get clarity on what can be done now, and what the expected timeframe for LED-eligibility of all lighting will be.

2) Energy savings

For eligible lamps, the potential savings will involve calculating the change in energy demand for new LED lights compared with the existing technology. It is best to refer to the Australian Energy Regulator’s lighting load table so that energy demand for each type of light is correct. For example, an 80W mercury vapour lamp actually consumes around 96W of power as it has a ballast that also consumes power. The energy savings can be converted to dollars by applying the energy and network rates for street lighting. Remember that a proportion of street lighting energy is consumed during peak times, and not all during off-peak. In our experience energy savings of between 50% and 60% are typical.

3) SLUOS savings

Every year Street Light Use Of System (SLUOS) prices are released, showing the cost per year for the full range of luminaires and mounting structures within a network area. Similar to calculating energy savings, an analysis needs to be conducted of SLUOS charges for all eligible lighting that can be switched to LED. Councils should regularly receive data from their network provider which will confirm the SLUOS rates. These are then compared with the SLUOS pricing for LED equivalents. Councils should engage with their network provider to confirm the estimated benefits. In our experience to date, we have seen savings in SLUOS charges of around 55%.

4) Available incentives

In some states, there are incentives to help councils switch to LED lighting. For example, the NSW Energy Savings Scheme has a public lighting component, which allows efficiency upgrades to access Energy Saving Certificates (ESCs) and claim several years of savings effectively as an upfront discount to the cost of an LED upgrade. This can reduce the upgrade costs by more than 5%. It is also recommended that any potential grant incentives be identified and applied for where applicable. Energy-specific, climate/carbon or community/regional grants could all apply.

5) Timing for the upgrade

Typically the costs of bulk replacements are borne by the network provider and councils simply see billing for energy and SLUOS. However, an upgrade to LED involves a step change in technology, and whole luminaires and not just lamps are replaced. If possible, it makes sense to time an upgrade to coincide with a regular bulk replacement cycle, with the potential that labour costs for the upgrade can be reduced since this is part of the normal process.

6) Other ways to reduce costs

When undertaking a bulk replacement, it is likely that there is a ‘residual value’ remaining in some street lights – that is, capital costs incurred by the network that have not been fully recouped. This could make up around 10% of the LED upgrade cost, more in some cases. However, in our experience, a lot of this cost may be associated with just a small fraction of the assets. Where this is a significant factor councils should work with the network to see if these upgrades can be deferred to a later upgrade cycle and then weigh up the pros and cons of lost savings compared with the reduction in capital cost.

Armed with this analysis councils will be in a position to fully understand both the costs and savings of an LED upgrade to their street lighting. However, upgrading eligible street lights to LED technology should just be the beginning of a council’s efforts to reduce the carbon footprint of this service. There is more that can be achieved in future.

  • Development processes and controls should be examined and modified to ensure that all new land releases and road developments use LED as standard.
  • Off-grid street lights that are powered by solar technology and batteries can significantly reduce installation costs with no network connection requirement.
  • The Street Lighting And Smart Controls Programme (SLSC) is aiming to achieve more savings in street lighting by driving the integration of smart controls with street lights. While just 0.1% of street lighting in Australia has smart controls enabled (through trials), this will change in future and may see energy savings rise to well over 70%.
  • In addition to distributing light more efficiently than conventional street lighting technologies, LED lighting efficiency will continue to improve in other areas. Whereas some LED technologies produce around 100-120 lumens per watt (lm/W) today, in time this will improve. A 300 lm/W future LED will require far less power to provide the same light as LEDs today.

Saving 50-60% with an LED upgrade today makes a big contribution to reducing local government’s carbon footprint. But future advances in LED, smart controls and renewable energy can drive even greater savings in the long term. Active management of street lighting, engagement with council associations and industry bodies, and periodic re-assessment of opportunities to further reduce energy costs will see these savings realised.

For more information, contact or Patrick or Barbara.

[1] Street Light Use of System