Illuminating the Future: Cost-Benefit Analysis of the Installation of LED Street Lights in Townships

Abstract

Municipalities face decisions about maintaining and upgrading their streetlighting. Do they continue to replace bulbs in their existing lighting systems, or move to energy-efficient systems piecemeal or all at once? This research paper argues that the financial and environmental benefits of a complete shift to efficient Light Emitting Diode (LED) fixtures make the investment worthwhile. Analysis of data from Tredyffrin Township in southeastern Pennsylvania, that is currently making the switch to LED lighting systems, supports the conclusion that committing to one-time full replacement can maximize energy savings and that the issuance of green bonds, over standard municipal bonds, for financing is both viable and advantageous as it can lead to additional savings and budget surplus. Despite a higher initial investment, the extended lifespan of LED lights, compared with Mercury Vapor (MV) lamps, drastically lowers maintenance and replacement costs, leading to considerable long-term savings. By using green bonds, a financing instrument made available for environmentally beneficial projects, a municipality's financing costs can be kept low and large projects can be undertaken, for the fullest financial and environmental benefit.