Proposed Method for Analyzing Infrastructure Investment Decisions Involving Rapidly Evolving Technology: Case Study of LED Streetlights

Infrastructure projects have typically involved long-term investments in mature technologies characterized by stable performance and cost. However, with the ever-increasing rate of technological innovation, an increasing number of potential infrastructure investments involve a decision to replace a mature technology with a rapidly evolving technology. Therefore, the primary objective of this research was to develop a method to strategically determine the optimal year to replace an existing infrastructure item with a more cost-effective but rapidly evolving technology, where both the cost and performance of the technology are improving. The utility of this method is illustrated by evaluating the replacement of existing high-pressure sodium streetlights on 64 U.S. Air Force installations with light-emitting diode (LED) streetlights. A model is thus provided to predict the optimal year for replacement as a function of electricity rate. Potential life-cycle cost savings of the proposed approach ranged from 0.2 to 11.7% per installation, with an average of 5.4 percent.