Lighting Science Group (LSCG.OB) announced news today about a new product: a street light that used LED lighting and which competes favorably on cost with the high pressure sodium lights that are normally used on roads today. According to the company, the high pressure sodium lights normally require replacement of the lamps between 4 and 6 times over the useful life of the fixture. The new LED lights offered by LSCG cost less to operate since they use much less power to provide the same light. Further, the LED lights do not require new lamps during their useful life, so they become less expensive than the high pressure sodium fixtures once the first new lamp is place in those lights.
This is big news for LSCG. The market for street lighting is enormous. According to the Clinton Foundation there were 37.9 million street lights installed in the USA in 2009 and about 220 million globally. Switching these to LED would save enormous amounts of energy every day (or night) and would also cut the long term costs to the governments everywhere. In the past, switching to LED lights has been a long term benefit for municipalities, but the up-front cost has dissuaded many from making the switch. With the cost of the lights coming down to the new level, however, we should see an accelerating switch over to LED in the next year or two.
Lighting Science is already selling these new lights to Puerto Rico which is installing the first 4000 of the lights in the coming months. My best estimate is that these lights will only be the first of many, many more. These street lights give Lighting Science a product that can explode onto the market in a big way.
In the last year, LSCG has been a very poor performing stock. It has lost over half of its value as the initial promise of the technology has wilted. Today's news, however, is significant enough in my opinion that the stock merits another look. It is very far from a sure thing, but it does have the potential for a big payoff.
DISCLOSURE: I am long LSCG.
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