Georgia Power’s largest LED street light projects
Atlanta: 34,704 lights
DeKalb County: 28,177 lights
Savannah: 17,420 lights
Augusta/Richmond County: 14,022 lights
Columbus: 12,509 lights
Macon/Bibb County: 6,260 lights
Source: Georgia Power
Across the nation, cities are installing energy-saving, low-maintenance LED street lights that should cut their electric bills by half or more.
The savings are so much that the lights are expected to pay for themselves in a few years, industry experts say, freeing up money that can go to cash-strapped programs or to fund other services.
But most Georgia cities won’t be seeing those savings. In some cases, municipalities that have converted to the more efficient lights have even seen their bills go up.
The reason: Georgia Power, which gets about $80 million a year from leasing street lights to cities, got state regulators’ approval to charge governments higher monthly fees for the newer models. The new fees consume all of the savings from one of the biggest technological advances in lighting in generations.
The city of Decatur is a typical case. In March, it signed a five-year contract with Georgia Power to replace 1,379 high-pressure sodium or mercury vapor street lights with new LED lights. Once done, Decatur’s annual street light bill will be about $213,000 — $1,000 higher.
Meanwhile, Georgia Power is “going to save 70 percent on the energy costs and 100 percent of the maintenance costs,” said Don Lepard, president of Global Green Lighting, a Chattanooga manufacturer of “smart” LED street lights.
The savings are “eventually going to pay for the lights, and Georgia Power gets to keep the savings,” he said. That’s not unreasonable, he added, since Georgia Power is paying to upgrade the lights.
But a better deal for cities, Lepard said, would have been for them to buy the lights so they could reap the savings. Or, he said, Georgia Power — a monopoly business regulated by the state — could have agreed to share the savings with cities after the lights are paid off.
But that’s not likely to happen, Lepard predicted. Electric utilities are “not interested in reducing their energy sales” or making it easy for cities to cut their power bills, he said. They “lose on both sides.”
‘Revolutionary” lights
But if there was ever a time to re-think how cities use and pay for their street lights, this would be it.
LED lights — short for light-emitting diodes — are a major game-changer not only because of their efficiency, but because they take street lights into the digital world.
“This is completely revolutionary. Lights are not just lights anymore,” said Mark Verheyden, senior vice president at Atlanta-based Acuity Brands, the nation’s largest LED light manufacturer.
Properly equipped, LED street lights can change colors or dim in the wee hours of the morning to save energy. They can send alerts when they’re about to fail. Police can brighten lights from their patrol cars to check out an iffy situation.
Lepard, who moved his factory from China to Chattanooga in 2013 to win an $18 million contract to convert that city’s 27,000 street lights, is now testing LED street lights that could provide wi-fi service to surrounding neighborhoods — and pay franchise fees to cities that sign up.
“The lights could be generating revenue for the city,” he said.
Georgia Power leases about 400,000 street lights to government customers across the state. It has conversions underway or planned in about 100 cities and counties, including more than 113,000 street lights in Atlanta, DeKalb County, Decatur, Savannah, Augusta, Columbus and Macon.
By 2020, the utility estimated, conversions could cut its government customers’ total street light power usage in half. The utility hasn’t said how much it’s spending or expects to save.
But Los Angeles, which owns its lights, gives some idea of scale. That city budgeted $57 million to retrofit its 215,000 lights with LED units, and expects to cut its $16 million annual power bill by 40 percent, Forbes magazine reported.
Atlanta was one of the state’s biggest and earliest movers to LED lights. It leases 36,633 lights from Georgia Power, but also owns more than 14,000 lights along the city’s streets and highways.
In 2014, Atlanta borrowed $1 million from the Georgia Transportation Infrastructure Bank, a state program, to pay for converting many of the highway lights. Georgia Power is now in the process of changing out 34,704 of Atlanta’s leased lights.
David Junger, Decatur’s assistant city manager, said his city is making the switch — even though it won’t financially benefit — to reduce its impact on the environment.
“Decatur’s the kind of place that cares about the environment, and we want to do the right thing,” he said. “Even though we’re not getting the direct financial benefit, we are reducing our overall consumption.”
The more durable, high-tech lights also should reduce street light outages, he said, and Decatur might be able cut its light bill eventually by adding advanced meters to control each light’s electricity usage.
‘Voluntary’ program
Georgia Power makes no apologies for not sharing expected savings with its government customers. Like L.A., the cities that are reaping those savings are the ones that own their street lights or municipal utilities, it said.
Under the new tariff, said Georgia Power spokesman Jacob Hawkins, customers’ electricity bills go down, but the tariff “offsets” their savings.
He said the program was never touted as a way for cities to save money. Instead, the utility marketed it as a voluntary program in which cities can benefit from the LED lights' more natural-looking color while Georgia Power handles the costs of buying, installing and maintaining the lights.
“We’ve created a successful program which allows Georgia cities and counties to receive better lighting for roads and streets, with the latest technology, at comparable pricing to older technology,” Hawkins said. “That is the purpose of the program and how we have always marketed it.” The company is “getting very positive feedback,” he said.
State regulators also defend the decision to allow Georgia Power to capture long-term savings.
Georgia Power “is not making any money right away” from the new lights, perhaps not for “two or three years,” said Georgia Public Service Commission spokesman Bill Edge.
He said the new tariffs were set up to make sure Georgia Power got paid for so-called “stranded costs” — such as old fixtures and still-good light bulbs — as well as capital investments in the new lights.
In late 2014, the PSC approved a new tariff for LED lights that made sure Georgia Power’s revenue doesn’t drop due to the conversions.
But industry experts say there usually aren’t a lot of stranded costs, and the savings pay for the new lights fairly quickly.
In most cases, existing street light fixtures are decades old and most of their value has been depreciated. The remaining cost is light bulbs, which have to be replaced about every two or three years, said Mike Hornung, a lighting market analyst with IHS Technology, a business information firm.
The new LED street lights cost more — “a few hundred dollars,” said Hornung. But they use less electricity, have no light bulbs to burn out, and don’t have to be replaced for “the next 25 or 30 years or longer,” he said.
Those savings, however, are less compelling for utility companies faced with the prospect of lower electricity sales, plus higher capital spending to install new lights, said Lepard, with the Chattanooga LED manufacturer.
“Utilities want to save energy, but they only want to save energy during peak demand hours,” such as summer afternoons when air conditioners are running full blast, said Lepard.
“If you’re saving 50 or 60 percent of the energy in the nighttime, that comes straight out of the utility’s bottom line,” he said.
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