Illustrating the problem within the LED industry:
The Current Model
The Standard Process for Upgrading to LED
Imagine a scenario where a facilities manager, let’s call him Phil, upgraded 1,000 halogen lightbulbs to LED luminaires in 2013.
At this time the average LED efficiency is 70 lumens per watt, so Phil spends £4,320 on his electricity and saves £9,180 a year compared to his old halogen lights.
In addition Phil's LED's come with a standard warranty somewhere between 5 to 10 years, so he no longer needs a maintenance contract. Nor replace his broken halogen lights; saving an average industry cost of £5 per light = or £5,000 a year.
Improvements in Technology
Our facilities manager Phil has a twin brother, David, who also upgraded his facility to LED's 4 years later in 2017. Due to the technological advancement of LED's (forecast by Haitz's Law) the efficiency of David's lights are 100 lumens per watt.
In 2017 Phil's LED's are running at 96% of their original efficiency, and his energy provider charges more per kWh. The result is that Phil pays £4,652 a year while his brother David pays £3,198 for the exact same thing.
If they had not upgraded at all the electricity cost would be £20,801 for halogen lighting.
Obsolescence and Depreciation
You might be asking what the issue is? Phil should just upgrade his lighting again. However, the problem arises due to the design of industrial LED's. The boards that LED's are placed on are not standardised in the same way that light-bulbs are. If there is no standardised component, Phil's lights cannot be replaced or upgraded. In addition most manufacturers glue the boards directly to the heatsink.
This means Phil is effectively blocked from upgrading his luminaires until they reach their end-of-life; in 2028. And David in 2032. Leaving them both with 15 years of overspending on their electric bills.
Continuous Circular Service Value (CCSV)
Manufacturers have taken advantage of the longevity of LED lights. In the past where you would simply replace a lightbulb, by the time a customer looks to replace an LED it could be anywhere from 5 to 20 years later.
This highlights the problem existing between the long lifespan of LED's and their ever increasing energy efficiency.
We developed the 'Lighting as a Managed Service' (LaaMS) model, to allow the optimisation of both the energy and material efficiency for our customers lighting solutions.
After all, why pay to maintain your light's when all you want is the provision of light itself?
That's the name for something exorbitantly exciting to those in the lighting industry. And it should be exciting to you too; let us explain why.
If you've never heard of Roland Haitz, let us introduce you. Haitz' Law (much like his contemporary Moore) predicts that every decade, the cost per lumen falls by a factor of 10, and the amount of light generated per LED package increases by a factor of 20.
Here's that sentence again, but translated into a much nicer graph;
That graph essentially predicts the rise of efficiency of LED's over time, while the price of those LED's decrease.
IF ENERGY EFFICIENCY IS INCREASING, WHY ISN'T THAT REFLECTED IN MY BILLS?
In some ways the LED industry has been a victim of it's own success. The rapid improvement in LED technology should mean that businesses experience a meaningful drop in their energy bills each year. But that's only if the LED 'bulbs' were to be replaced periodically.
The best LED's currently on the market are expected to last 15+ years in regular usage. So once a business has upgraded their lighting they are stuck at that efficiency cap. That's 15 years of businesses missing out on the saving projected by Haitz's Law.
WONT A SERVICE JUST TIE ME INTO ANOTHER EXPENSIVE MAINTENANCE CONTRACT?
A lighting service model protects customers from any loss in assert value because the basis of the service is not about simply selling luminaires but about guaranteeing future performance.
So, such a service enables customers to benefit from led technology – and from future developments – without the hassle of owning and maintaining the lighting solution themselves.
Energy Consumption of Traditional LED Overhaul v.s. EGG Service Model
Material Consumption of Traditional LED Overhaul v.s. EGG Service Model
"Raising the question; how do you continue to receive the highest energy efficiency, providing the lowest bills, without the maintenance costs?"
Lighting the Economic Path towards a more Sustainable Future.
It's a matter of economics, not romanticising renewables for their own sake.
As resources become more scarce and global competition rises, businesses need to decouple their economic growth from reliance on raw materials.
This is the warning call rallying the proponents of the 'Circular Economy', an economic model which lays out the path towards greater reuse, repair, and refurbishment of our products.
From a business perspective, a move to a more circular economy supports Scotland's Economic Strategy. By developing a local supply chain that recovers valuable material in end-of-life products before they are sent to landfill.
The Global Level
It is difficult to estimate the size of the circular
economy in the UK. But data suggests it could be approximately £40 billion in the UK at present.
And models of the EU economy estimate that the circular economy could increase GDP up to 8% by 2050.
The Local Level
'Making Things Last: A Circular Economy Strategy for Scotland', a report published by the Scottish Government, identified key areas that a more circular approaches will benefit:
The environment: cutting waste and carbon emissions and reducing reliance on scarce resources;
The economy: improving productivity, opening up new markets and improving resilience; and
Communities: lower cost options to access the goods we need with opportunities for social enterprise.
The Company Level
Alongside material waste, energy efficiency is directly related to a businesses costs and carbon emissions.
In the case of lighting, both of these aspects are wide open for optimisation. It is estimated that as much as 28% of UK retailers energy bills go towards lighting costs, and as much as 43% in warehouses.
We're not going to dwell on the point of increased energy efficiency of LED's, as any UK facility manager will already be well aware of the benefits. Suffice to say, LED's are anywhere up to 80% more efficient than traditional artificial light sources, and in some scenarios, can last almost a decade longer without maintenance.
It's this second point we want to draw your attention to. As with everything in this world, your lighting efficiency deteriorates over time. So while you might not have noticed your energy costs climbing above inflation, you could find that your bills are much higher than they ought to be. Even if you have upgraded to LED's in the past.
So the question is; how do you continue to receive the highest energy efficiency, providing the lowest bills, without the maintenance costs? >>
Reflections on planned obsolescence, and why the model needs to change.
Bernard London published his essay, “Ending the Depression Through Planned Obsolescence” During the great depression of 1932. In that essay 'planned obsolescence' found its champion; it invoked economic optimism based on advances in manufacturing and agriculture. Planned obsolescence was associated with choice, jobs, innovation, value engineering and a thriving economy.
Unfortunately, planned obsolescence has now come to signify vast landfills, impractical products and the pollution of our environment. In economic terms, it is associated with big businesses making profit at the cost of the environment and hoodwinking consumers into buying things they don’t need. This is a far cry from what the original proponents envisaged.
Obsolescence has a place. A bit like cholesterol, there is a good type and a bad type. Bad obsolescence introduces cosmetic changes that improve neither utility nor performance. This is called “pseudo-functional obsolescence”. Good obsolescence involves “value engineering” with the purpose being to use as little material as possible, while providing an acceptable lifespan, this is well suited to hi-tech goods and fosters continuous innovation.
In my view, the main failure of planned obsolescence is the lack of planning around what happens to a product when it is deemed obsolete? It still exists as a product, so what happens next? We can reuse it or recycle it, is the stock response. However, often this is very impractical and takes more time effort, cost and energy than making a new one.
‘Reuse’ and ‘recycle’ are useful end-of-life concepts, however execution often fails in technology products e.g. phones, cars, PCs, as it is an afterthought. The situation is greatly improved if ‘Reuse’ and ‘recycle’ are considered at the idea stage and designed-in. Reuse at the design stage means “modular and upgradable” and ‘recycle’ is minimising reprocessing and remanufacturing effort.
As consumers, we can support this design effort with purchasing power. Buying a product is like a vote for the product. Without sufficient votes it will fail. The challenge lies around getting the right product info into the public domain so that we can make informed ‘votes’. We can’t leave it in the hands of marketing execs, who often appeal to our faculty for making irrational decisions.
Director at EGG lighting
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