Digital Lumens

Next Generation Lighting: Intelligent LEDs

To fully appreciate Digital Lumens’ products, it is helpful to see them in action. As forklift operators at Maines Paper and Food Services, Inc. in Conklin, NY, fly down storehouse aisles and weave around corners, lights burst on in front of them and fall back to a “nightlight” level a few minutes after the forklifts leave the area. While these responsive lights are entertaining to watch, they are not a gimmick. The new lights have allowed Maines to light the facility more brightly using 87% less electricity compared to the prior system, saving 1.7 million kWh per year in direct lighting energy.^1,2

Digital Lumens sells what it calls intelligent lighting systems, which use smart lights with highly-efficient light emitting diodes (LEDs), networked together and centrally controlled to light industrial facilities using less electricity than traditional highbay alternatives. Brian Chemel and Colin Piepgras were senior engineers at Color Kinetics when the company successfully integrated color LEDs and intelligent controls for the first time. In 2007, when Color Kinetics was acquired by Philips, they decided to use their expertise in LEDs to start their own company, founding Digital Lumens with support from full service energy-efficiency provider Groom Energy in 2008.³

Commercial and Industrial Lighting: A Large Energy Consumer

Lighting is surprisingly big business. In 2010, lighting accounted for approximately 15% of all electricity used in the United States.⁴ Digital Lumens focuses on lighting in industrial facilities – manufacturing facilities and warehouses – which the company’s management sees as large but underserved markets for efficient lighting. During the most recent years for which data are available (2002 and 2003 respectively), manufacturing facility lighting accounted for an estimated 1.7% of total electricity sales in the United States and warehouse and storage lighting an additional 1.1%.⁵ Assuming these percentages have remained roughly constant, together these two markets consumed about 105 million MWh of electricity in 2010,⁶ approximately equivalent to the electricity consumed annually by ten million U.S. homes, and at a cost of $10.8 billion.⁷

LED lighting, also called solid-state lighting, generates light efficiently by inducing electrons to move from one side of a semiconductor to the other. LEDs have found widespread use in digital clock displays, high resolution TVs and portable device screens, but as of 2010 accounted for only around 5% of the global lighting market.⁸

Given the continued advances in LED lighting technology, its high efficiency and the lights’ long lifetimes, LEDs are poised to have a disruptive impact on the lighting market, replacing the traditional incandescent lights and High Intensity Discharge (HID) lighting (a type of incandescent) often used in large facilities like warehouses and manufacturing plants, while also competing with fluorescent lighting. Broadly speaking, LEDs are five to ten times as efficient as traditional incandescent lights and have similar efficiencies to fluorescents, with the relative efficiencies of the technologies depending on specifics of the application.⁹

According to the company, further energy savings – as much as 1/3 of the total lighting energy savings in colder facilities – stem from the fact that LED lights give off little heat.¹⁰ The company demonstrates this characteristic in a video that contrasts the comfort of “Pete,” a chocolate candy rabbit, under an LED, to Pete melting into soup after 13 minutes under a traditional bulb. Minimizing the heat produced by lighting allows companies to spend less on energy for cooling the surrounding areas, which is particularly beneficial in cold storage facilities and refrigerated warehouses. In new buildings equipped with LED lighting, there are additional savings from installing smaller (i.e., less expensive) cooling and refrigeration equipment.

Digital Lumens builds “intelligent light engines,” which combine super-efficient LEDs with occupancy sensors and controls to provide “smart” lighting. The company’s LightRules software platform lights areas only when workers are in them and uses data gathered from the fixtures to supply detailed charts on lighting energy use and occupancy patterns through a web-based platform. LEDs are well suited for this type of nuanced control; they turn on and off instantly without degradation and can be dimmed to precise levels. LightRules allows building managers to control the details: setting light levels for the “on” and “off” settings and controlling how long lights stay on after a sensor is triggered.¹¹ Over time, iteration leads to better results. “Initially companies want to set it and forget it,” said Allison Parker, Director of Marketing for Digital Lumens, speaking about the common desire to use default settings. “Eventually, managers realize they can do better at 80% lighting, or turning it down one minute after someone leaves rather than two.” The fine-tuning becomes easier over time as workers get comfortable with the idea of flexibility in lighting. The result is that Digital Lumens can deliver the same or better lighting with 2,190 run-hours per year, than traditional lighting provides, turned on all 8,760 hours of the year.¹²

Long-Term Winner: The Economics of LEDs

Although Digital Lumens’ LED solutions have high upfront costs – around three times as much as either fluorescent or incandescent systems – they more than pay for themselves rapidly by reducing costs by up to 80-90%, and eliminating maintenance expenses.¹³ As a result, a typical system has a payback of approximately two years. In cold-storage facilities, the comparison to traditional HIDs is a no-brainer. The company estimates that, over 10 years in a 60,000 ft² sub-zero facility, an HID system will require more maintenance and 19 times as much electricity, and ultimately cost more than four times as much.^14,15

While fluorescent lighting is a strong competitor, it also requires more maintenance than LEDs and continually turning florescent lights on and off degrades them over time, making intelligent fluorescent lighting impossible. As a result, assuming again a 60,000 ft² sub-zero facility, the company calculates that fluorescent solutions still use more than eight times as much electricity as the Digital Lumens system. As an alternative to incandescents, fluorescents do pay back their initial investment faster than LEDs, but ultimately the total cost of ownership is still around twice as much compared to the LEDs over ten years.¹⁶ Furthermore, LEDs lack the small amounts of mercury present in fluorescent lights, which pose a health risk, especially in facilities storing food products.

Digital Lumens’ Future: A Focus on Steady Expansion

For a company in the business of next generation intelligent lighting, Digital Lumens talks more like a dowdy manufacturer than a tech company. “We are focused on execution, execution, execution,” said Ms. Parker. “Because we are a tech company, people are always asking where we are moving next, but we are staying focused on our core business – intelligent lighting systems.”

Digital Lumens brought its first product to market in March 2010. Since then, it has worked with around 100 customers (some with multiple sites) located in the United States, Europe, Canada, and Mexico. The company raised initial funding from Flybridge Capital, Black Coral Capital and Stata Ventures in 2009, and in 2011 “danced with the girl that brung us,” in Ms. Parker’s words, raising more capital from the same firms and adding Silicon Valley Bank. To date the firm has raised around $25 million.

Going forward, one challenge for the company is motivating facility managers to see lighting as a potential area for savings. “Lighting is sometimes seen as an expense line item, rather than something that can be changed,” said Ms. Parker. The company has a cost calculator on its website to try to combat this kind of thinking.

It is impossible to predict the specifics of how the industry will progress, but a company white paper seems convincing in saying, “It is ‘game over’ for traditional ‘brass and glass’ lighting in warehouses and large industrial facilities.”¹⁷ A time will likely come when most lighting is LED. In the meantime, by combining efficient LED lighting with intelligent control, Digital Lumens has created a product that could become a top choice within the commercial and industrial sectors. The product competes on price and performance alone, but its efficient lighting also brings about broader benefits; saving electricity translates to fewer emissions and reduces the need to build new power plants, moving us towards a more advanced energy system.

Oct 2011

Endnotes