Cree has developed a habit of cutting prices to levels that competitors must scramble to match. Street lights are the latest application to get this treatment.
Cree's earnings call happens next week. The company will present results for its fourth fiscal quarter and year. Perhaps not coincidentally, the company announced a blockbuster product today: a low-end variant on its XSP street light series, the XSPR LED Residential Street Light, selling for as little as $99. Before today, a more typical price for such a product would have been $300 to $400.
The XSPR comes in 4000K and 5700K color temperatures and offers a CRI above 70. This light is intended as a replacement for high-pressure sodium fixtures. Two versions of the XSPR draw 25 and 42 Watts, with efficacy of 109 and 98 lumens/Watt respectively, and put out light equivalent to 75- and 100-Watt HPS. The fixture is dimmable, comes with a 10-year warranty, and is UL and IP66 certified. Here are a sales sheet and a spec sheet.
Cree claims a payback period of less than a year vs. HPS based on 12 hours per day of operation and 11¢ per kWh for electricity (the national average). A one-year ROI on an infrastructure project is pretty much unheard of, and it will get the attention of many city officials and facilities managers who have perhaps been watching and waiting for LED lighting to mature a bit more.
I don't know if Cree's ROI calculation folds in the labor cost to install the lights. To estimate installation costs, I spoke with the head of the locally owned electric light department in my small New England town. I wanted to get a sense of what it costs on the ground to swap out legacy cobra heads for LED replacements. Answer: about 50 bucks. The department rents out a truck with a crew of two for $160 per hour. On average they can replace three fixtures per hour -- two per hour on busy streets, four on quiet ones. So a labor cost of $50 per fixture is a reasonable rule of thumb, at least in a quiet town in New England.
More typical ROIs
A small college in Pennsylvania recently completed an LED replacement project across the campus; the project got a green light when calculations by the vendor and the facilities people showed "an ROI of 6 years or less."
The city of Los Angeles, which has a street light upgrade program that we discussed in June, spent $57 million on four years of phase 1, replacing 141,089 lights. With that immense purchasing power, the city still paid an average of $404 per light replaced, presumably including the labor. The plan is to pay off the loan the city took out, using the cost savings from lower energy use, over seven years.
Here's an outlier: The US Army replaced all 247 street lights at its garrison in Vicenza, Italy, at a cost of $843,000. That's $3,413 per light. The ROI on this project is 28 years -- though the new fixtures are only expected to last for 10.
With typical numbers like these, a one- or even two-year ROI is obviously very attractive. Cree should sell a bunch of XSPRs. And when other vendors start offering competitively priced street lights, we'll see the real dawning of the LED era in cities and towns across the US and the world.
— Keith Dawson , Editor-in-Chief, All LED Lighting