Pentagon Goes Green With Cree LEDs

The Pentagon — known for such money-saving ventures as the mythical $600 hammer and wildly over-budget weapons development projects — is taking a crack at saving electricity with energy-efficient lighting.

Cree Inc. (NDSQ: CREE) said Tuesday that it has a deal to install 4,200 of its light-emitting diode (LED) recessed luminaires in Wedge 5 of the Pentagon. The LEDs are expected to use 22 percent less power than the fluorescent lights they will replace, enough to pay back their extra cost in four years, the company said.

LEDs are power-sippers compared to incandescent and fluorescent lights, and they’re already in wide use for traffic lights, billboards and other outdoor applications. But their higher costs remain an obstacle in bringing them to indoor lighting.

Still, the U.S. Department of Energy says that LED lighting use saved the country about 8.7 trillion watt hours in 2007 (out of a 2001 estimate of 765 trillion watt hours used for lighting across the United States), and that bringing LEDs to wider use in indoor lighting and 11 other untapped markets could save the country 27 gigawatts of power (see DOE Says LEDs Can Shine in 12 Markets).

Cree is among the lighting companies eager to buy up promising startups that can serve customers looking for those kinds of potential energy savings. The company has spent $303 million on acquisitions in the last two years, including buying LED Lighting Fixtures for about $77 million in cash and stock in February (see Cree to Buy Firm Founded by Its Former Execs).

Philips Lighting is also spending big on fledgling lighting companies — $5.4 billion in acquisitions from 2005 to 2007 — and has launched a line of LED indoor lights.

Startups in the LED field include Luminus Devices in Billerica, Mass., which raised $72 million in venture capital in March (see Luminus Closes $72M to Light Up New Applications), and Sunnyvale, Calif.-based BridgeLux, which raised $40 million in April.

The Pentagon’s move to LEDs would appear to fit in with President-elect Barack Obama’s promise to make the federal government more energy-efficient.

Obama’s campaign called for retrofitting existing federal buildings to make them 25 percent more energy-efficient in the next five years, as well as a promise to make sure all new federal buildings were 40 percent more energy-efficient in the same time frame. The long-term goal is to decrease the government’s energy usage by 15 percent by 2015.