Bridgelux, the LED startup that has traditionally put its technology into other customers’ lighting systems, has just launched a new business that could put it into competition with those same customers in the growing market of LED streetlights.
Bridgelux announced Thursday that it’s partnering with Chevron Energy Solutions, the energy services arm of the giant oil company, to build and install LED modules that can be retrofitted into a large portion of the streetlights in the United States today.
So far, the partners are testing a handful of the new LED modules in the Northern California cities of Dublin and Livermore. But their target market is the tens of millions of U.S. streetlights that haven’t yet been converted to LEDs, according to Brad Bullington, Bridgelux’s vice president of corporate strategy and development.
For that market, the partners are hoping to bring a solution that’s 30 percent to 50 percent cheaper than today’s retrofit and replacement options, Bullington said in a Wednesday interview. And, with Chevron Energy Solutions’ help, the company plans to finance the projects to allow municipal customers to pay no money upfront, he added.
This isn’t the first time Bridgelux’s LEDs have found their way into streetlights. Last month, when the Livermore-based startup announced its most recent investment of $25 million from Chinese investor Kaistar Lighting, it also announced a new streetlighting project in Tulsa, Okla., putting its LEDs into streetlight luminaires built by partner Amerlux.
Nor is it the first attempt by the LED industry to target streetlights. In fact, outdoor lighting systems have been a natural early target for LEDs, given that their chief advantages -- long life, durability and energy efficiency -- tend to outweigh their chief disadvantage of higher cost in these situations.
Big LED and lighting system company Cree is installing streetlights for cities, for example, helped along by its acquisition of Ruud Lighting and its outdoor LED subsidiary BetaLED for $525 million in August 2011. Lighting giant Philips’s Lumileds division has a streetlight business and is deploying them in North America and in China.
Bridgelux, which has raised about $225 million in venture capital investment to date, lacks the market channels of these giants. But its partnership with Chevron Energy Solutions could change that equation by taking a different approach to the market, Bullington said.
First of all, rather than being installed in luminaires -- the industry term for the lighting system that includes housing, wiring, components and light source -- Bridgelux’s new modules are designed to be installed in the familiar “cobra head” streetlight fixtures which make up about 65 percent of the country’s 35 million or so streetlights, he said.
That should drive down the cost, relative to replacing the entire fixture, he said, delivering the hoped-for 30 percent to 50 percent price reduction compared to today’s LED street light replacement projects. While the Bridgelux retrofit modules are still only being tested out, the company expects some of its ongoing pilot projects to lead to citywide deployment announcements in the next few months, he said.
Then there’s the financing aspect of the project. Chevron Energy Solutions holds significant market share as an energy service provider for city governments across the country, and plans to offer the new streetlight retrofits under a service contract, Bullington said. That means cities pay no money upfront, but rather give CES the right to pay itself back for the project cost through energy savings, the reduced maintenance and replacement costs that come with LEDs and other such revenue streams, he said.
Energy services contracts can get complicated, and that has limited the reach of the market to mainly government and institutional clients. But municipal governments are a natural target for ESCO projects, and most spend from 10 percent to 40 percent of their power bills on streetlights, making them the third-highest single power drain for local governments, according to the Clinton Global Climate Initiative. LEDs also offer other advantages, like the fact that they can be networked and controlled for more efficient use.
Despite a lot of activity over the past few years to convert streetlights to LEDs, Bullington said the vast majority of streetlights around the world have yet to be changed over. That could represent a market in the several hundreds of millions of dollars range, he estimated. It's far from the biggest plum in the estimated $100 billion global lighting market, but it's worth capturing all the same.
The big question is, will Bridgelux's new foray into building modules, rather than the LEDs that go into other companies lighting systems, be competitive against the giants in the field?