(The author is a Reuters market analyst. The views expressed
are his own.)
By Gerard Wynn
LONDON Jan 9 The LED lighting industry is set
to dominate the global market more than a century after its
discovery, benefitting from a widespread ban of conventional
incandescent bulbs and as the market share of competing green
Light emitting diodes (LEDs) have a vital edge in that they
have superior energy efficiency and longer lifespans compared
with rivals, while a global glut in LED chips means they are
becoming more competitive.
A forecast explosion in LED sales by more than 40 percent
annually will see the technology eclipse high-efficiency rivals
such as compact fluorescent lamps (CFLs).
Meanwhile, the main LED market challenge of high upfront
costs is eroding.
And, while concerns remain of a potential manufacturing
bubble stemming from a boom-bust cycle of over-capacity - which
has been seen in other clean energy technologies sectors such as
wind and solar - freedom from subsidy programmes may see demand
rise more smoothly than with fickle government support.
LEDs will surge in the U.S. lighting market, to a 36 percent
share in 2020 and 74 percent in 2030, a U.S. Department of
Energy report forecast last year, implying $30 billion in annual
energy savings by 2030. (See Chart 1)
The study, "Energy Savings Potential of Solid-State Lighting
in General Illumination Applications", forecast rapid gains
after 2014 as prices continue to fall.
McKinsey is even more aggressive for the global 55 billion
euro ($71.86 billion) general lighting market (which excludes
automotive and specialist backlighting), forecasting a 45
percent LED market share in 2016 from 9 percent in 2011. (See
LEDs would usurp traditional efficient light bulbs such as
CFLs, the consultants said in their "Perspectives on the global
lighting market" study in August.
Chart 1: (page 4) goo.gl/TuovV
Chart 2: (page 21) goo.gl/OsmAK
Chart 3: (page 11) goo.gl/OsmAK
Developed countries are banning incandescent light bulbs on
the basis that they are inefficient and contribute to global
warming and energy insecurity, while governments chase building
efficiency programmes. (See Chart 3)
The International Energy Agency reported that 26 of its 28
member countries had policies in place to phase out incandescent
bulbs as of 2011, except in New Zealand and Turkey.
The European Union (19 EU countries are IEA members) last
year phased out all non-directional, clear incandescent light
bulbs usually used in household illumination.
The United States banned 100-watt incandescent light bulbs
from October last year, followed by 75-watt bulbs this month and
with 60-watt bulbs to follow.
Among emerging economies, China said it would ban 100-watt
incandescents from October last year, with other varieties
following through 2016.
Incandescent light bulbs produce light when an electric
current runs through a wire inside the bulb's glass globe,
causing the wire to heat up and glow. Halogen lamps are similar
but add a gas which extends the product lifespan and allows them
to operate at higher temperatures.
LEDs generate light when electricity flows through an
electronic component called a diode.
CFLs and fluorescent tubes emit light when electricity
excites a mix of gases inside the bulb, creating invisible
ultraviolet light that is absorbed by the bulb's fluorescent
coating and transformed into visible light.
LEDs are an old technology but will now become the dominant
technology in the wake of the incandescent ban.
Britain's H.J. Round is credited with being the first person
to publish the light emitting diode effect, in 1907.
Modern LEDs are superior to CFLs in terms of total
environmental impact including the energy and natural resources
needed to manufacture, transport, operate and dispose of light
bulbs, concluded a report published in September by the U.S.
Department of Energy's Pacific Northwest National Laboratory
(PNNL) and UK-based N14 Energy Limited.
It compared the most typical and widely available light bulb
in each technology class: LEDs, CFLs and incandescents.
With regards to operating efficiency, LEDs and CFLs were
neck and neck: the bulbs each created about the same amount of
light (800-900 lumens) but the incandescent bulb consumed 60
watts of electricity, followed by the CFL's 15 watts and LED's
But LEDs beat CFLs on overall environmental performance,
including the energy and resources needed to make them.
LEDs cost more but have a longer life span: the PNNL report
assumed its standard LED bulbs to last 25,000 hours for 2012
models, compared with 8,500 for CFLs and 1,000 for
McKinsey forecasts a less than two-year payback by 2016 in
the residential market and around three years in offices, from
around 10 years now.
Environmental buyers are already converted, such as
investors Climate Change Capital whose Tim Mockett reported on
Wednesday a rapid 18-24-month payback on a recent LED lighting
retrofit, replacing conventional fluorescent strip lighting.
A bigger test of demand will be adoption in large-scale
public procurement programmes including street lighting projects
which are gathering steam.
($1 = 0.7654 euros)
(Reporting by Gerard Wynn; Editing by Alison Birrane)