According to the European Union Climate Change Service, the summer of 2023 was the hottest on record, coinciding with extreme weather events that have increased in severity over the past 30 years.
Responsible for an estimated 39 percent of global energy-related carbon emissions, buildings present a significant opportunity for reductions. Specifically, 28 percent of these emissions result from operations, including lighting, HVAC, and power. This exceeds even transportation, which accounts for about 24 percent.
To mitigate climate change, nearly 200 countries and the European Union adopted the 2016 Paris Agreement, which called for limiting global warming to an increase of 1.5 degrees Celsius above pre-industrial levels. To accomplish this, carbon emissions needed to be roughly halved by 2023 and reach net zero by 2050.
In November 2022, commercial real estate services firm Jones Lang LaSalle (JLL) released “Retrofitting Buildings to be Future-Fit.” To achieve the Paris Agreement’s goals, the report stated, the Global North will need to triple the rate of retrofits from barely 1 percent to at least 3 percent per year. Further, these retrofits should not be piecemeal and focused on low-hanging fruit but holistic and deep.
In the United States, various policies and market dynamics appear to be setting the stage for redefining what constitutes “low-hanging fruit.” For lighting, this represents a major opportunity for building owners and managers to invest in optimizing energy efficiency while deriving a great deal of other value made possible by the LED revolution and its novel capabilities.
In 2021, the Biden Administration set a goal to reduce carbon emissions by one-half by 2030 using a 2005 baseline. In 2022, the Inflation Reduction Act, the largest piece of climate legislation in the nation’s history, became law. Among other policies, it included spending on renewable energy, building retrofits and efficiency, electrification of transportation and buildings, manufacturing, and land use and resilience.
A number of cities have gone even further by requiring measuring and reporting carbon emissions and, in some cases, imposing carbon caps. Probably the most well-known example is New York, which passed Local Law 97 that takes effect in 2024. This law limits carbon emissions for buildings more than 25,000 square feet. Buildings that exceed the caps must offset emissions or pay penalties. Requirements grow stricter over time to achieve net zero by 2050.
A significant part of America’s decarbonization strategy is to transition to electric vehicles (EVs), which produce zero tailpipe emissions. This may result in a significant number of buildings investing in EV charging stations and also increasing national demand for electric power, potentially stressing the power grid and producing rising energy costs in the future.
By optimizing energy efficiency, early adopters of net-zero buildings can mitigate the risk of rising energy costs while potentially realizing other values. For example, JLL’s “Retrofitting Buildings to be Future-Fit” states that commercial properties can benefit from greater competitiveness in attracting and retaining tenants at higher rents. As this impacts net operating income rather than operating costs, it demonstrates one area of value where decarbonization measures can go beyond direct return on investment.
In JLL’s 2022 “Future of Work Survey,” three out of four respondents said their organizations would be willing to pay more to lease a building with leading sustainability credentials. One out of five said they already have.
Conversely, inaction may impose on inefficient properties a “brown discount,” or value depreciation, as demand for net-zero properties increases. And as the International Monetary Fund recently stated, inaction may also inhibit macroeconomic growth.
Decarbonization involves maximizing operational efficiencies, electrifying heat, and sourcing off-site local renewable energy and building onsite renewables, with offsetting as a last resort. To maximize success, building owners should take a holistic, long-term approach that supports occupant needs, health, and wellbeing.
JLL’s report identifies a number of building asset upgrades, including solar photovoltaic roof panels, green spaces, smart glass for daylighting, cycle storage, heat pumps, electric vehicle charging, and water harvesting. Looking at lighting, the report specifically calls out LED luminaires, detailed deployment of sensors, and digital (networked lighting) controls that generate data that in turn can be leveraged for energy management, reporting, and to optimize occupant comfort.
Due to its advantages, LED has been widely adopted in both new and existing construction, and there is evidence that the light source has achieved varying degrees of saturation in the installed lighting stock, particularly in regions with high energy costs. This has had a major impact. Lighting once consumed 40 percent of the average commercial building’s energy budget; today, it is closer to 10 percent. Overall, the Department of Energy (DOE) estimates that LED lighting has reduced overall electricity demand in the country by about 5 percent.
Even still, a great deal of value remains. Today’s LED lighting systems are highly precise, controllable, and flexible, providing capabilities and fresh benefits that 20 years ago would have been highly costly, complex, or unachievable. The next step is to revisit the installed stock and realize this potential.
The LED installed base is currently a mishmash of solutions. These range from new fixtures to retrofit kits to basic-grade retrofits using replacement lamps like TLEDs. Many of these installations either operate first-generation technology or otherwise fail to capture the full range of capabilities and benefits LED offers. Additionally, despite being a staple in new construction, advanced lighting controls are not widely installed in existing buildings.
Upgrading first-generation LED systems to second-generation LED systems with advanced controls would save large amounts of energy. This includes customized lighting designs, new luminaires with high-quality optics, networked lighting controls, luminaire-level lighting controls, tunable lighting, and integration with other building systems such as HVAC and plug loads.
Looking at networked lighting controls alone, the DesignLights Consortium (DLC) estimates that widespread adoption could reduce average lighting energy consumption by nearly one-half. In 2023, the DLC published a study that underscored the energy savings potential of networked controls and recommended revising energy efficiency incentive models to capture the full benefits of controlled lighting, including pairing with HVAC systems in large buildings. Currently, only a third of lighting rebates incentivize networked lighting controls, but as LED achieves saturation, rebate programs are expected to evaluate more strongly incentivizing strategies associated with deeper building retrofits.
Overall, as the decarbonization trend develops, this may result in one or more of the following occurring: increased demand for electrical infrastructure for EV charging, rising energy costs due to electrification’s strain on the power grid, and new policies incentivizing carbon reduction emissions. Meanwhile, LED saturation may spur rebate programs to promote next-generation lighting more heavily. The connection of these points may alter the economics of lighting retrofit as the value of deep energy savings grows, resulting in new “low-hanging fruit.”
For lighting quality, this is a major opportunity. Revisiting the installed LED stock offers substantial opportunity to optimize the value of a part of the building that was once a costly utility and has evolved to become a building asset enhancing occupant comfort and satisfaction, providing additional value beyond direct ROI. Among others, these measures include new luminaires that optimize LED’s strengths, color and light level tuning, and measuring and monitoring that can generate data useful for building operational efficiency, comfort, and maintenance.
Lighting and lighting controls have long been a keystone for improving commercial building energy efficiency. The growing urgency for decarbonization is resulting in policies, costs, and value that are prevailing toward increasing the value of energy savings and building operating data. The resulting economics may trend toward not only saving energy but maximizing energy savings, placing more aggressive energy-saving options on the table such as retrofitting first-generation LED systems, networked lighting controls, and integrated building control.
Building owners and facility managers are encouraged to keep abreast of this emerging meta trend, evaluate their opportunities for holistic and deep retrofits based on their true value, and partner with experts who have expertise provisioning building systems that can deliver a full range of potential benefits and value.
Craig DiLouie, LC, CLCP serves as education director for the Lighting Controls Association (www.LightingControlsAssociation.org), a council of NEMA dedicated to educating the public about lighting controls.
