Dramatically falling costs and improvements in efficiency are driving increased sales of light emitting diode (LED) lamps for street lighting. Costs have fallen as much as 50% over the past two years and are expected to continue falling. By 2015, LEDs will become the second-leading type of lamp for street lights in terms of sales, behind only high pressure sodium lamps, according to a new report from Pike Research, a part of Navigant’s Energy Practice. By 2020, the study concludes, LED lamps for street lights will generate more than $2 billion in annual revenue.

“Broader investments in smart city infrastructure by municipal governments will boost smart street lighting projects, as the two go hand in hand,” says research analyst Jesse Foote. “Smart street lighting systems can provide a backbone for other smart city applications, and conversely, a city investing in networking capabilities for smart city applications should also be looking to include better management of street lighting.”

Nearly all smart street lighting projects are still in a pilot phase at the moment, according to the report. The adoption of LED street lights and networked control systems is seriously hindered by the ownership models and tariff structures in place across the United States and in some European and Asian locations as well. If utility companies own street lighting systems and charge a fixed tariff per light to municipalities, then towns have little financial incentive to pay for upgrading their lights. However, the potential for significant energy savings, reduced emissions and improved quality of service, combined with falling LED prices, means that more and more cities will find this an attractive proposition over time.

The report, Smart Street Lighting, analyzes the global market opportunity for lamp upgrades and networked lighting controls across five categories of public outdoor lighting: highways, roads, parking lots, city parks, and sports stadiums. The report provides a comprehensive assessment of the demand drivers, obstacles, policy factors, and technology issues associated with the growing market for street lighting controls. Key industry players are profiled in depth and worldwide revenue and capacity forecasts, segmented by lamp type and region, extend through 2020.