Lighting Brazilian Cities : Business Models for Energy Efficient Public Street Lighting

Abstract

Cities are among the world´s largest
 consumersof electric energy, accountable for two-thirdsof
 total electricity consumption and for over 70 percent of
 global greenhouse gases emissions. Publicstreet lighting
 systems contribute significantly toa city´s energy
 consumption. In Brazil, the cost of energy for public
 lighting already represents thesecond most expensive item of
 most municipalities’ budgets, surpassed only by payroll
 expenditures.Furthermore, new regulations require all
 themunicipalities to own the city’s public lightingassets,
 making public lighting one of the few sectors in which local
 authorities have direct control over energy-consuming assets
 (contrastedwith other high energy-consuming sectors such as
 transport). As a result, the local authorities willhave
 every incentive to invest in and implementlighting projects
 by themselves.In Brazil, the current public street lighting
 inventory primarily consists of mercury and HPS lamps, which
 over time will tend to be replaced by more efficient
 technologies such as Light-Emitting Diodes (LEDs). This new
 technology is already in operation in some major cities in
 other countries. The availability and increasing spread of
 LED technology offers a unique opportunity for Brazilian
 cities to reduce their energy consumption. This is
 especially important and beneficial to cities, considering
 the sharp increase in energy prices in recent years.In spite
 of the substantial benefits associated with the conversion
 of the installed public lighting network in Brazilian
 cities, major economic financial and institutional obstacles
 still need to be overcome.In order to reap the benefits of
 conversion to LED,it is necessary to design and implement
 business models that can enable the necessary
 investments.These business models must take into account the
 diversity of Brazil’s municipalities.
 Furthermore,consideration must be given to designing
 financial solutions that can raise private sector capital
 while mitigating municipal credit and project performance risks.