Smithers Apex Report: Are we at the Tipping Point for Widespread Adoption of LEDs?
The promise of affordable LEDs for customers is inching ever closer. LEDs offer a number of advantages compared to traditional lighting methods, and although these advantages have been long known, widespread adoption faces the long-standing obstacle of purchase price. Now that this price is rapidly lessening, the benefits of LEDs are becoming more widely recognised. From security to health, there a number of applications which the use of LEDs could greatly improve.
LEDs radiate less heat and convert more energy into light, creating more lumens for each Watt of electrical power. They also offer better colour through spectrum control, and have a positive effect on the health and wellbeing of humans and animals. The digital nature of LEDs and OLEDs means that lighting is finally joining the digital world. Lights will be integrated with sensors and wireless controls, becoming part of building management and security systems in the growing "internet of things". However, what are the implications of LEDs for the various parties involved? Smithers Apex produces a number of LED industry reports on this market, and in this bulletin explores whether or not the lighting industry is at the tipping point for the adoption of LEDs.
The customer
Prices for LEDs are coming down rapidly and performance is improving steadily, both in light quality and efficiency. The use of LEDs is becoming much cheaper for customers prepared to pay a little extra upfront for the lamps themselves. The widespread adoption of LEDs could lead to annual savings of over $200 billion globally in reduced electricity bills. These savings are so great that it is easy to think that the time has come to get rid of incandescents.
There may also be many more substantial advantages besides economic ones. For example, street lights benefit from better colour and more uniform distribution of light across the roadway with LEDs, which in turn makes streets far safer, as was the case with the Los Angeles Bureau of Street Lighting LED conversion project. 140,000 streetlights were installed on residential streets, resulting in energy savings of 63.3% and maintenance cost savings of $2.5 million per year. In residential areas, it is easier to control the spill-over of light from LED streetlights into house windows.
If people are planning renovations, either at home or at work, it is very likely that installing LED systems is already the best option. However, since prices are coming down so quickly, there is a strong temptation for customers to delay purchasing LEDs in case this price happens to decrease further. For some customers, waiting one or two years may be the best idea.
Decision makers
For those involved in decisions regarding power production and environmental effects, there exists a similar dilemma. If a utility or region has an urgent need for new electricity generation, it is far less expensive to subsidize the purchase of LED lighting than to install environmentally-friendly power sources such as solar panels. However, the efficiency of LED lights is also increasing rapidly and has much further room for improvement. Therefore, if there is sufficient available power, postponing aggressive promotion of LEDs for a year or two may be better in the long-term.
There are still some environmental concerns for LED lighting, as they could lead to a much greater demand for artificial light. Some analysts have suggested that if energy costs remain the same, global lighting demand could increase by over ten-fold, and energy consumed could increase by more than a factor of 2. While it is clear that increases in efficiency are essential to meeting global needs, the growth in lighting use must be controlled if energy consumption is to be reduced. Decision makers must balance these needs.
The lighting industry
For the lighting industry, selling LED products already provides around 30% of the revenues of major companies and those that do not invest in the new technology risk being left behind in such a dynamic industry.
However, LEDs last for a very long time and so the market for replacement lamps will soon shrink. Accelerating the rate of adoption of LEDs will mean that the market saturates even sooner. Again, we find that staging the promotion of LED lamps is difficult.
What is clear is that the industry will have to find another way of making profits, by adding value to lighting and expanding further down the supply chain into systems and services. As with the computer and telephone industries, lighting companies will need to think of new and innovative strategies to survive.
In the meantime it is important for lighting manufacturers to continue to focus on improvements in efficacy in order to reduce:
• The cost of electricity to the user
• The cost of the LED source
• The cost of thermal management
• The cost of drive electronics
• Air pollution
• The effects of global warming
In summary, LED technology has the potential to make good lighting available for all; however the industry must focus on the use of light and business survival, as well as the manufacture of LEDs.
Want to know more about the future of LEDs and lighting? Take a look at our popular study, Ten Year Forecast of Disruptive Technologies in Lighting and Displays to 2021.
For more information on the report, please contact Cherrie Pickard, +44 (0)1372 802186, cpickard@smithers.com or Heather Adams, +1 207 781 9632 hadams@smithers.com.
