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Financial Challenges

Financial Challenges

Financial Challenges for Municipal Authorities

The lack of available funding to cover the initial costs of converting to LED technology has been a significant barrier to starting sizable projects. However, in many regions the range of options for obtaining the necessary finance has increased. There has been a greater focus from central governments on the need to implement projects that both reduce greenhouse gas emissions and lead to urban regeneration, which has led to new sources of government funding. In addition, structures involving private finance, including potentially from energy companies or LED equipment manufacturers, have further developed.

There are a large range of potential financial and commercial models that can be used to implement LED lighting. The most appropriate option depends on factors including: The financial constraints of the procurer, particularly in terms of financing upfront costs.

  • The desired risk allocation
  • The size of the intended installation
  • The availability of third party finance in the local market
  • The internal capabilities and resources of the procurer
  • The required timetable for installation
  • Local regulatory factors
  • Track record of deliverability of product in territory
  • How well developed PPP and leasing arrangements are in the country.

Street Lighting is a Significant Cost for Municipalities

  • Up to 40% of Municipal Electricity Bill
  • Up to 30% of Municipal Electricity Consumption

Street Light Ownership

Municipal Owned Street Light
  • Usually metered by the utility
  • Municipality pays for electricity (aside from possible franchise agreement issues)
  • Municipality is responsible for all maintenance and repairs
  • Municipality is free to install LED or any other technology – but barriers such as first cost often prevent energy efficient adoption.