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Lighting

LED technology for urban public lighting

Photo by Shutterstock

LED technology for urban public lighting

Compare IOA
Country
Brazil
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Infrastructure
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Utilities
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
> 25% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
> USD 1 billion
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
> USD 10 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Affordable and Clean Energy (SDG 7) Industry, Innovation and Infrastructure (SDG 9)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Sustainable Cities and Communities (SDG 11) Responsible Consumption and Production (SDG 12) Reduced Inequalities (SDG 10) Gender Equality (SDG 5) Decent Work and Economic Growth (SDG 8) No Poverty (SDG 1)

Business Model Description

Invest in the replacement of energy-intensive public street lighting (mercury and high-pressure sodium lamps) with more efficient LED technology, recouping capital from savings costs - model can be a direct investment through a concession or in a blended transaction

Expected Impact

Lower municipalities' energy bill and improve the quality and durability of public lighting

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

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Disclaimer

UNDP, the Private Finance for the SDGs, and their affiliates (collectively “UNDP”) do not seek or solicit investment for programmes, projects, or opportunities described on this site (collectively “Programmes”) or any other Programmes, and nothing on this page should constitute a solicitation for investment. The actors listed on this site are not partners of UNDP, and their inclusion should not be construed as an endorsement or recommendation by UNDP for any relationship or investment.

The descriptions on this page are provided for informational purposes only. Only companies and enterprises that appear under the case study tab have been validated and vetted through UNDP programmes such as the Growth Stage Impact Ventures (GSIV), Business Call to Action (BCtA), or through other UN agencies. Even then, under no circumstances should their appearance on this website be construed as an endorsement for any relationship or investment. UNDP assumes no liability for investment losses directly or indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains directly or indirectly resulting from trading profits, investment management, or advisory fees obtained by following investment recommendations made, implied, or inferred by its research.

Investment involves risk, and all investments should be made with the supervision of a professional investment manager or advisor. The materials on the website are not an offer to sell or a solicitation of an offer to buy any investment, security, or commodity, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.

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Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Brazil
Region
  • Brazil: Mato Grosso
  • Brazil: Mato Grosso do Sul
  • Brazil: Goiás
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Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Infrastructure

Development need
Brazil is held back by chronic underinvestment in infrastructure spending only 2.5% of GDP (2) This leads to critical structural inefficiencies: deficient existing transmission lines are responsible for a 20% energy loss (5); lack of investment in wastewater treatment is responsible for epidemics in over 1/3 of Brazilian households (6)

Policy priority
Infrastructure development is a top priority for the new administration, who has pledged to invest nearly US$ 50 billion in infrastructure in 2019 alone (vs. e.g., US$ 7 billion in 2018) (3) (4)

Gender inequalities and marginalization issues
Poor access to core infrastructure services forces women to allocate a large fraction of their available time to family chores (7)

Investment opportunities introduction
New administration's infrastructure development pledge means closer collaboration with private investors (e.g., continuity of PPI program and concessions timeline from past to current administration)

Key bottlenecks introduction
Licensing, funding for land acquisitions, capital requirements

Sub Sector

Utilities

Gender inequalities and marginalization issues
Fostering gender equality may depend significantly on the externalities that infrastructure creates in terms of women’s time allocation and bargaining power (7)

Industry

Electric Utilities and Power Generators

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Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

LED technology for urban public lighting

Business Model

Invest in the replacement of energy-intensive public street lighting (mercury and high-pressure sodium lamps) with more efficient LED technology, recouping capital from savings costs - model can be a direct investment through a concession or in a blended transaction

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Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Market Size (USD)
Describes the value in USD of a potential addressable market of the IOA.

> USD 1 billion

The public lighting market in Brazil consists in over 18 million lighting posts (10)

The cost of converting the entire grid is approximately US$ 8.6 billion. A focus on the most poorly-lit part of the country, aggregating over 90 million people and 4.5K municipalities, would yield a US$ 2.5 billion market (10)

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

> 25%

A pre-feasibility study for use of LEDs in Rio de Janeiro estimated an IRR of 27% to an investment of around US$100 million over a five-year period to cover the costs of LED equipment and installation (10) The payback period was estimated at 6.5 years (10)

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Medium Term (5–10 years)

While the technology is available and rapidly deployable, public lighting assets belong to municipalities since 2014 (as opposed to electricity utilities) and there are up to 5,570 municipalities in the country (10).

This means that business models suited to each municipality's characteristics need to be devised, making large-scale projects time-consuming

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

> USD 10 million

Market Risks & Scale Obstacles

Capital - Requires Subsidy

High dependence on public investment, particularly among municipalities, who until the country's recent economic collapse were largely funding their spending through borrowing

Capital - CapEx Intensive

LEDs are considerably more capital intensive than existing counterparts, and upfront capital deployment requirements is large (10)

Market - Highly Regulated

There are major funding restrictions on Brazilian municipalities arising from Brazil’s Fiscal Responsibility Law, which imposes on municipalities an indebtedness ceiling of 16% of Net Current Revenue (NCR) (10)
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Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

Public street lighting accounts for more than 4% of the country’s total energy consumption - this imposes a high budgetary strain on municipal entities, where public lighting is the highest city-level expense after payroll (10)

Blackouts and power outages have increased in frequency (15) across a country with one of the highest urbanization rates amongst large global economies

Gender & Marginalisation

Poor access to core infrastructure services forces women to allocate a large fraction of their available time to family chores (7)

Expected Development Outcome

Lower municipalities' energy bill from reduced public lighting expenses Improved quality of public lighting for citizens through higher-intensity, durable LED-lamps

Improve energy efficiency from LED technology (16). Up to 20% of Brazil's target to increase energy efficiency in the electricity sector by 10% by 2030 can be reached by introducing LED-public lighting (10)

Increase public safety by providing reliable, long-lasting public lighting infrastructure

Gender & Marginalisation

Improved access to infrastructure services may free women’s time in such a way that they could devote more time to building their own human capital (7)

Primary SDGs addressed

Affordable and Clean Energy (SDG 7)
7 - Affordable and Clean Energy

7.1.1 Proportion of population with access to electricity

7.3.1 Energy intensity measured in terms of primary energy and GDP

7.b.1 Installed renewable energy-generating capacity in developing countries (in watts per capita)

Current Value

100 % (2018) (18) 4.11 Megajoules per Constant 2011 Purchasing Power Parity GDP (2017) (19) Installed renewable electricity-generating capacity 650.004 watts per capita (2018) (19)

Target Value

100% Target 7.3: By 2030, double the global rate of improvement in energy efficiency (19) By 2030, expand infrastructure and upgrade technology for supplying modern and sustainable energy services for all in developing countries (19)

Industry, Innovation and Infrastructure (SDG 9)
9 - Industry, Innovation and Infrastructure

Secondary SDGs addressed

11 - Sustainable Cities and Communities
12 - Responsible Consumption and Production
10 - Reduced Inequalities
5 - Gender Equality
8 - Decent Work and Economic Growth
1 - No Poverty

Directly impacted stakeholders

People

Taxpayers

Public sector

Municipal governments, over 5,570 municipalities can benefit from this new technology, and electricity savings can be up to 40-70% of municipal governments' electricity bill (10)

Indirectly impacted stakeholders

Planet

The environment, as LED technology is longer-lasting and uses less energy

Outcome Risks

If undertaken as a public lighting project in collaboration with a development finance institution, the project could set a new precedent in which future investments would depend on DFI involvement

Improper disposal of replaced bulbs

Impact Risks

Unexpected impact risk: negative environmental externality due to the improper disposal of lightbulbs and the precedence created in financing through collaboration with DFIs

Execution risk: due to the multiplicity of municipalities that need to be engaged

Impact Classification

B—Benefit Stakeholders

What

The outcome is likely to be positive, important and largely intended because LED-lamps could lower municipalities' energy bill and improve the quality and durability of public lighting

Risk

While the technology is proven and readily available, external factors such as the multiplicity of municipalities that need to be engaged may disrupt the ability of the IOA

Impact Thesis

Lower municipalities' energy bill and improve the quality and durability of public lighting

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Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

(Daylight savings policy): The new administration's removal of the daylight savings comes with a commitment to improve efficiency of public infrastructure such as public lighting through the use of new technology (14)

Financial Environment

Financial incentives: BNDES has included high-power LED luminaires in the credit lines of the bank’s Special Industrial Financing Agency (Finame) (12)

Fiscal incentives: Municipalities and the Federal District collect "Contribution to Public Lighting Costs“ (COSIP) customers' itemized bills. This provides extra funding to pay for public street lighting improvements (10)

Other incentives: he World Bank's FinBRAZEEC will partner with CEF, a state-owned financial institution bank in Brazil, as the project’s financial intermediary. Commercial lenders will benefit from a partial credit guarantee offered by CEF (13)

Regulatory Environment

(ANEEL): Lighting regulation is undertaken by ANEEL, the national electric energy agency, with pricing additionally determined by municipal, state and federal taxes and the Public Lighting Contribution rate (17)

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Marketplace Participants

Discover examples of public and private stakeholders active in this investment opportunity that were identified through secondary research and consultations.

Private Sector

SX Lighting

Government

Larger municipalities with good credit standing

Multilaterals

The World Bank

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Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map

Brazil: Mato Grosso

The mid-West of Brazil has the lowest concentration of light points in-country as well as the least familiarity with LED technology in public lighting in Brazil (78.7%) (measured by the number of municipalities, city mayors and public agents that are aware of the technology) (1)

Brazil: Mato Grosso do Sul

The mid-West of Brazil has the lowest concentration of light points in-country as well as the least familiarity with LED technology in public lighting in Brazil (78.7%) (measured by the number of municipalities, city mayors and public agents that are aware of the technology) (1)

Brazil: Goiás

The mid-West of Brazil has the lowest concentration of light points in-country as well as the least familiarity with LED technology in public lighting in Brazil (78.7%) (measured by the number of municipalities, city mayors and public agents that are aware of the technology) (1)
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References

See what sources were used to establish the investment opportunity’s data and find resources that could be consulted to explore more.
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