"Energy efficiency is not just about saving energy": Harry Verhaar, Philips Lighting

Ilario D'Amato
Reading time: 6 minutes
12 March 2015

After the publication of the 2015 Energy Productivity and Economic Prosperity Index, authored by The Lisbon CouncilEcofys and Quintel Intelligence and commissioned by Philips, we interviewed Harry Verhaar, Head of Global Public & Government Affairs, Philips Lighting, about the specific role of energy efficiency and the future of the lighting sector.

  • The 2015 Energy Productivity and Economic Prosperity Index report, which Philips commissioned, highlights that 98% of all energy produced globally is wasted through inefficiency. How energy efficient is the lighting sector?

Take the classic example of the incandescent light bulb. Only 5% of the electricity it consumes turns into light. But taking the whole energy chain into account, from energy generation to the actual service, the average productivity of an incandescent light bulb is only 1%.

The energy productivity view confirms that phasing out incandescent light bulbs is the right thing to do. They have done a lot of good – for example leading to economic development during the day, and giving lots of time to study during the night. But if you look at LEDs, they are 90% more efficient – almost 50% of the electricity consumed is turned into light.

  • How do you feel general consumers perceive energy efficiency and LEDs?

The benefits of energy efficiency aren’t always understood because many people aren’t so aware of their energy bills, so don’t know how much they waste or how much can be gained. It is important to increase awareness.

The second barrier to LED adoption quite often is initial investment. In public street lighting there is renovation investment and private-public finance models – this is happening more and more. LED street lights are the way to go. But many people may not be aware cities can directly use their energy and money savings to finance the whole transition. In December, we announced we would be upgrading 225,000 street lights in Madrid: the project is fully financed by a commercial bank, so the city is not spending one euro more, and within a few years they will have 45% lower lighting electricity bills thus reducing the demand on their public budget.

In a way this is also a more secure investment than the fluctuating stock market. Madrid’s public finances may be challenging at the moment, and the solution to actually reducing their energy expenses is improving energy efficiency. And there is interest in doing this. Cities can get out of the spiral of investing the full initial cost upfront for the new technology.

  •  Europe has put energy efficiency at the centre of its Energy Union. What is its specific role in the wider low carbon economy?

Energy efficiency is not just about saving energy, it’s about tackling economic, environmental and social issues at the same time. You can see from Intergovernmental Panel on Climate Change and International Energy Agency analysis that to tackle economic, energy and climate challenges, efficiency is a preponderant part of the sustainable path. If we don’t do this right, the success of the other energy mix components in particular renewable energy and carbon capture and storages will be at risk as their tasks will be to huge to cope with.

Energy efficiency has a crucial role to play. A vast part of the low carbon transition we need to make has to come from it. That means the rate of energy efficiency has to double. It is actually the most important driver for energy productivity. Europe recognizes it, calling energy efficiency ‘the first fuel’. And it is even more important than most people now can imagine; Europe can slash energy consumption by 35% by adopting existing energy efficiency technologies - just by doubling energy efficiency from 1.3% to between 2.5 and 3% - and house bills can be slashed by a third. Globally this creates 6 million jobs, of which 1.2 million are in Europe. This means reducing unemployment by about 10% from the current level. We don’t see any other approach that can be more productive.

  • It seems policymakers are increasingly recognizing the opportunities of clean technologies like LEDs. How do you think citizens feel about LED street lights?

More and more cities see that when they switch to LED lighting they can reduce their energy bill between 40% and 70% - sometimes even 80%. At the same time, the sense of safety and liveability in the city improves, and the crime rates potentially go down. We are in the midst of implementing the full connected LED lighting transition in Buenos Aires, with 91,000 LED streetlights, all connected through ICT solutions. There are now 50,000 implemented, and citizens are indicating they feel safer because of the light quality. We also have examples of interconnected LEDs in offices, where people become more productive without working more hours.

You can now also manage lights with an app on your iPhone that also shows how you can save 80-90% of energy with interconnected lighting. These technologies not only save the planet, they also create a more lively and productive environment for all thus improving our sense of well-being.

  • What are ‘connected’ and ‘adaptive’ lighting?

Beyond simple lights that you can just switch on and off, there is ‘adaptive’ lighting that can be programmed to dim or respond to people around it. ‘Connected lighting’ is an intelligent solution that can best explained through street lighting – where all the LED points in the city have an IP address, so can be monitored and managed from a central point. The lights can then respond manually, or with a program that responds to traffic. But city managers can also intervene if there is an electricity surge or energy shortage somewhere else.

Philips is working on making technology more efficient and simplifying the user interface, with more and more connected lighting. We already see, through the partnership we have with Ericsson, that light points around the city can also bring additional Wi-Fi capacity and broadband capacity – a service that is exponentially growing – so you don’t have to put a lot of additional antennas in the city.

  • How do you see the future of the lighting sector 10 years from now?

I see the sector moving to connected solutions for street lighting, offices, home and everywhere. This actually doubles the energy and monetary savings – and brings associate benefits like productivity, safety, liveability and comfort. It also means we’re increasingly looking beyond just selling hardware to seeing light as a quality service.

When in December 2007 we called to phase out incandescent light bulbs, at the time they were the two thirds of all sales volume. Last quarter, LEDs were 40% in value of it. This really is a LED revolution.

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by Ilario D'Amato

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