Mike Christoph of the Madison Department of Public Works and Transportation works on the LED installation at the Lake Street parking ramp. The lights are achieving energy savings of at least 50% over the traditional lights. Credit: Energy Tech Solutions

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Rob and Cynthia Everhart attend a major lighting products show every year, and they've seen LED lights soar in popularity.

Last month in Las Vegas, energy efficient LEDs, also known as light-emitting diodes, accounted for 85% of what was displayed at the annual Lightfair confab, Rob Everhart said.

LEDs have long been considered the next big thing when it comes to energy-saving lights, but the upfront cost has been far too high. That's changing as the technology improves and production costs fall.

"I've been an energy consultant for 26 years now, and there's never been a technology that has changed the market the way this will change the market," said Rob Everhart.

Their Monona company, Energy Tech Solutions, is seeing strong demand in states such as California where electricity is expensive.

"We do a lot of work in Alaska and Hawaii, where the rebates are strong and the utility rates are higher," he said.

The business of LED lighting is growing rapidly. The North American market for suppliers of LED lamps is estimated to be about $55 million, and projected to grow by about 32% a year between 2012 and 2016, said Konkana Khaund, building technologies research manager at the consulting firm Frost & Sullivan.

The Everharts aren't alone among upper Midwest firms trying to illuminate their bottom line with an increased focus on LED. Consider:

In Sturtevant, the former Ruud Lighting expects to add 469 jobs over five years as it ramps up production in an expanded factory now under construction. Work on the $24.5 million project began last fall after Ruud was purchased by Cree Inc., a publicly traded LED-focused lighting technology provider.

The company is shifting production to Racine from North Carolina as it incorporates the Wisconsin firm's outdoor lighting products with its own line of LEDs.

In Manitowoc, Orion Energy Systems Inc., which develops energy-efficient lighting technology and wireless controls, is increasing its focus on LEDs.

Orion founder Neal Verfuerth said the company's first LED product provides lighting for refrigeration applications. In the freezer market, Orion has retrofitted more than 3 million square feet of space with LEDs and sees more of its customers moving to LED technology, Verfuerth said.

"We're seeing paybacks of less than three years, and utilities are offering pretty substantial rebates to go over to this new platform," he said during an investor conference call last week.

Other companies including Everbrite in Greenfield and in Gurnee, Ill., are seeing strong interest as well. Everbrite-engineered LEDs helped improve the lighting and reduce energy use at the Milwaukee Public Museum.

Customer interest continues to grow, vendors say.

"Our niche institutional markets are traditionally slow to jump into new technologies," said David Michals, executive vice president of sales at Kenall Manufacturing, a lighting company. "However, as LED has rapidly evolved our customers have accepted this technology faster than anything we've ever seen. There is no longer any hesitation to specify or purchase LED luminaires in our markets."

Focus on commercial uses

Analysts and lighting industry experts say the return on investment is still years away for making LEDs the right choice for most people for residential applications. But more and more there is a return on investment for commercial uses, particularly for applications such as decorative outdoor lighting.

In Orlando, city officials were concerned when managers of the SunTrust Tower stopped turning on lights that let their skyscraper brighten the skyline.

"City officials became involved in the project because the building was not turning on its lights at night," said Randy Teague, owner of Retrofit Systems Inc., the installer on the Energy Tech Solutions project. "The problem was the overall cost of running the exterior lights."

Energy Tech Solutions' LED replacement casts more light while consuming 90,000 fewer watts, a decrease of 90%. That translates into annual savings of $62,000 on energy bills, with a payback of 2.1 years, said Rob Everhart.

Energy Tech has some Midwest projects in its portfolio, including Olbrich Botanical Gardens in Madison and a Dunkin' Donuts in Chicago.

To Rob Everhart, the pace of change is striking, with prices falling and technological innovations surging.

"On one of our product lines the efficiency went up by 30%" compared with its efficiency 10 months ago, he said. "And then the price came down at the same time. That combination puts us in a much more cost-effective realm of energy efficiency."

Businesses considering a switch to LED need to consider the upfront cost and the energy savings but also need to get assurances about product quality, says energy engineer Mark Vincent, of the research nonprofit Energy Center of Wisconsin. He said the technology is improving but businesses still need to do their homework.

"My impression is that LEDs are getting a huge marketing push right now and in some cases but not all the marketing is ahead of the technology," he said. "They're pushing all the benefits and glossing over the drawbacks."

Drawbacks include inconsistent quality in some cases as well as the reliability challenges, particularly the low-cost products that continue to arrive from China and Korea.

Domestic production

Energy Tech found the same thing in its first few years in business, prompting its move toward domestic production of its LEDs, Cynthia Everhart said.

"There weren't a lot of options for U.S.-made products at the time," she said. "We picked the best ponies and ran with them, and in a lot of cases the companies either disappeared or weren't there for fulfillment."

Everhart said her firm's niche is to target "very high-level engineers who have a long history of working with LEDs. And we take what they built and expose them to our network of distributors, customers and government agencies and others to get their product to market for them."

The company last year opened a manufacturing plant in Moville, Iowa, and is able to deliver higher-quality products while saving on shipping costs, the Everharts said. Today 21 employees are producing more than a dozen different products.

"Everybody is looking for U.S.-made products," said Cynthia Everhart. Energy Tech was recognized last year by the Wisconsin Procurement Initiative for its work to develop lighting for U.S. government agencies undertaking energy upgrades.

Though the technology isn't ripe for residential use, commercial building owners that do their homework will find it "makes a lot of sense for specific applications," said Vincent, the Energy Center analyst. "They're great for exteriors such as parking lots, building mounted security lights, landscape lighting and inside especially parking garages."

Exterior lighting and parking lot applications are particularly significant in generating savings for northern climates, said Vincent, noting that the reduced energy output can produce savings, but controls that dim the lights can cut energy use even further, by a range of 40% to 80%.

In recent years, many Milwaukee area parking ramps have converted to LED lighting.

At the Milwaukee Public Museum, Dnesco Electric is pleased with last year's installation of Everbrite LEDs that reduced energy consumption by 30% and generate more light than their predecessor lamps.

"By installing LEDs, the loading dock is brighter and more evenly lit, which really improves the unpacking and packing of priceless traveling exhibits," said Rick Gutowski, museum lead maintenance engineer.