A Market Transformation Opportunity Assessment for LED Traffic Signals

By: Margaret Suozzo

April 1998

Executive Summary

Light emitting diode (LED) light sources for traffic signals offer significant energy savings over the incandescent lamps traditionally used in this application. LED signals also last much longer than incandescent signals and fail less frequently, offering additional savings in reduced relamping, routine and emergency maintenance, and liability costs. Energy savings alone are estimated to be 3 billion kWh per year nationwide — a cost savings of $225 million per year — with maintenance and liability benefits on the same order of magnitude.

The market for traffic signals is clearly moving in the direction of LEDs. As of April 1996, 25,000 signal heads in the United States had been retrofitted with LEDs. Just a year an a half later, by the end of 1997, an estimated 150,000 LED traffic signals had been installed. This year, manufacturers expect that installations will double. The vast majority of these retrofits, however, have been for red LED traffic signals. Green and yellow retrofit kit sales are much lower and an integrated three-color LED traffic signal is in the early development stages.

A number of obstacles stand in the way of more rapid market penetration:

• Uncertainties about performance. Lack of information, lack of time to research information (i.e., high information or search costs), mistrust of potentially biased data (e.g., where the key source of technical and performance information is manufacturers), and the absence of a national specification all contribute to concerns about the technology's performance.

• Organizational practices and customs. State and local policy development, procurement, and capital and operating budgeting processes, as well as limited capital availability in many government agencies, limit investment in LED traffic signals.

• High product costs. High product costs (particularly for green LED retrofit kits) that result from inherently more costly technology, limited competition among source material manufacturers, and brightness standards (thought by many to be more stringent than necessary) hinder the LED traffic signals market.

Despite these barriers, a handful of communities and states throughout the country have retrofitted at least some of their red traffic signals with LEDs (and some have experimented with two- and three-color retrofits). As a result of their experience, many of these states and local governments are choosing to move to full-scale LED retrofits. In the absence of a national specification, several of these jurisdictions have developed their own specifications. Utilities and other third parties have helped to spur the market by offering rebates and financing for LED signals and by educating decision-makers.

LED traffic signals appear to be a good candidate for what could be a relatively easy market transformation effort. Accelerating market acceptance of red LED traffic signals is likely to require a relatively modest effort focused on activities such as developing and disseminating case studies, deploying targeted demonstration projects, making financing more easily available, and to a lesser extent working with national and regional organizations on specification development (for those states and localities reluctant to proceed without a national specification).

For red and green signals to be more attractive to jurisdictions, the cost of green LEDs will have to come down and/or the additional maintenance and other benefits from the two-color change-outs will have to be highlighted. Again, case studies and demonstrations can provide information on the actual benefits realized from retrofits, and financial incentives to spur the market as well as longer term financing can help address capital constraints faced by many states and localities. In addition, more critical than with red signals alone is influencing the development of a national specification by working with the Institute for Traffic Engineers (ITE) and supporting or supplementing current research on signal brightness requirements, as current levels are believed to contribute to the high cost of green and yellow signals.

Making three-color signals a market reality can be facilitated by working with manufacturers to develop fully integrated three-color LED traffic signals, and with state and local governments to demonstrate the signals' effectiveness. In addition to energy and maintenance savings (not much greater than two-color retrofits because of the low duty factor of yellow signals), some economies of scale are anticipated from system integration as are additional benefits, e.g., lighter weight, ease of use with newer traffic system controls, and reduced occupational hazard.

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