Written by Paul Vesel, Director of Intelligent Infrastructure
Streetlighting is a leading expenditure in a municipality's electric utility budget, often accounting for approximately 60% of the budget. With limited budgets and resources, local governments are turning towards upgrading streetlight technology as a solution due to its low cost of operations, significant energy savings capabilities, and its positive environmental impact.
To retrofit the streetlight network with improved technology like LEDs (Light Emitting Diode), municipalities can either get the streetlights serviced by their utility as they see fit or go through the process of purchasing the streetlights from the utility also known as streetlight municipalization. If they take ownership of their streetlights, the municipality can decide how many streetlights they upgrade, what type of streetlights they choose, and whom they choose to contract with for the project. This process can look different in each state depending on what incentives or grant programs are in place for this endeavor.
What is Streetlight Municipalization?
Streetlight municipalization is the process in which a municipality purchases the streetlights from the utility. The process of municipalization began in the early 2000s. Across Colorado, many utilities have started to upgrade streetlights to decrease their operation and maintenance costs, but, new tariffs approved by the PUC (Public Utilities Commission) present a unique opportunity for local governments to take ownership of their streetlights and radically reduce their costs.
Streetlight buybacks have become much more widespread due to the various opportunities it presents for cities and towns. In fact, over 75 municipalities in the state of Massachusetts have bought back their streetlights. So why are municipalities doing this? The main reason is to save money. Cities and towns in Colorado have an opportunity to save up to 80% in costs through this process. Buying back the streetlights allows the municipality to cut its lighting budget, which in turn saves more money for other municipal projects – but there is much more to the story. Let's take a deeper look at the benefits of municipally owned streetlights.
Benefits of Streetlight Municipalization
1. Save Big on Costs
Streetlights are a necessary part of any municipality, but the cost of maintaining and operating streetlights can be expensive. So, how do municipally owned LED streetlights result in such significant cost savings?
When the municipality or local government elects to purchase streetlights from the utility, they not only get the benefit of saving energy, but they also capture all the saving associated with the maintenance. Typically, when a municipality services the streetlights through the utility, they will get a one-for-one replacement with little to no lighting designs. Yes, the municipality will see energy savings, however, they will not necessarily see the savings associated with maintenance, which represents two-thirds of the utility invoice. The utility may offer to upgrade the streetlights for free, but the municipality will likely be paying the same if not more in maintenance fees. Also, tariffs approved by the Public Utilities Commission may be available that offer additional savings for municipally owned streetlights. For example, our analysis with the City of Boulder helped them move forward with streetlight acquisition and LED conversion that will save approximately $1.1 million annually in maintenance and operating costs and reduce their energy expenses by 85%.
2. Get Credit for Greenhouse Gas Emission Reductions
In addition to the financial benefits, there are also environmental benefits to municipalizing streetlights. By taking ownership of the streetlights and converting them to LEDs, municipalities can help reduce greenhouse gas emissions and make progress towards their climate goals. Streetlights account for a significant amount of energy use in cities, so making this switch can have a big impact as a result. For example, the Village of Newark in New York saves approximately 589,281 kWh each year by converting its streetlights to LED. That is the equivalent of taking 90 gasoline-powered passenger cars off the road for a year.
3. Gain Control Over Color Temperature, Design, and Luminaire Selection
By owning the streetlights, municipalities have the freedom to pick the fixtures that are best for them. This includes choosing the correct color temperature, lighting design, and luminaire selection. Proper lighting design maximizes energy savings, improves citizen comfort and optimizes light levels including extending light lifespan and reducing glare, backlight, and light pollution.
Municipalities can also conduct pilot projects to test out different color temperatures and manufacturers of fixtures and receive feedback from the community about what fixtures would be the most suitable for their needs. Gaining valuable citizen feedback is priceless in the streetlight acquisition and the LED conversion process as it helps municipalities make the most informed decision for their community.
4. Improve Maintenance Response Times
When municipalities own the streetlights rather than the utilities, they can choose how the streetlights are maintained. The city or town can choose a local, trusted, and experienced electrical contractor to handle all their standard and emergency repairs. This ensures that any streetlight issues are addressed promptly by a trusted source. Oftentimes, maintenance response times are drastically reduced, and municipalities can feel confident knowing they have a reliable contractor to respond to any streetlight issues that may arise.
5. Open Door to Smart City Applications & Revenue Opportunities
Municipalities can take full advantage of the various smart city applications that are available when they purchase the streetlights. They are in full control of their streetlight assets, and they can lay the foundation for a connected, efficient, and powerful smart city network. In addition to intelligent lighting controls that offer an extra 20% energy savings, cities and towns can deploy smart city technologies like cameras, public WiFi, air quality sensors, traffic light sensors, and other IoT (Internet of Things) devices. Once streetlight ownership is achieved, cities and towns can even lease out the streetlight poles to cellular operations to create a new revenue to the area. Read more about Aspen's Small Cell Facilities plan here.
These smart city applications can help municipalities make quicker, well-informed decisions based on real-time data that can all be managed on one centralized platform.
In addition to these benefits, there are some important considerations to take into account which include the municipality’s geographical location and what incentive and rebate programs are offered in the area. We hope this blog was helpful in explaining more about what streetlight municipalization is and how it can benefit your community.
Have any Questions? We Can Help!
RealTerm Energy (RTE) has successfully completed over 350 LED streetlight conversion projects across North America. We have worked with 70 municipalities to acquire the streetlights and upgrade to LED technology. These are the results of the municipalities that purchased and upgraded their streetlight assets with RTE:
- An average reduction of costs by 61%
- An average cost savings of $114 per light per year
- An average annual maintenance cost of $22 per light per year
- Approximately 110 million kilowatt hours per year in savings
- $20 to $25 million in savings
Feel free to reach out to me to learn more about streetlight municipalization, LED conversion projects, financing options, smart city application management, and more.
About the Author: Paul Vesel
Paul is an energy and telecommunications expert with over 25 years of experience leading municipal infrastructure and energy efficiency projects. Paul has led 60 streetlight municipalization projects in 5 states. Prior to joining RealTerm Energy, Paul was CEO of Poderco, a Central American renewable energy company, and CEO of Omniwatt, a solar development company. Before launching Omniwatt, Paul was the Managing Director of Swisscom Eurospot’s Spanish subsidiary. Book a meeting with Paul.