Solid State Lighting: Keeping the Lights On By Turning Off Old Bulbs
Contents
Introduction
The costs of lighting
Market forces
Facts and Figures
Market movers
Leaders & fast followers
Investors
VC / PE / Funds
Enlightening the Illumination Industry
How revolutionary technology is lighting the path forward
How can we keep the lights on without emptying out our wallets? By shifting the market from conventional to innovative. Lights are used in every facet of human life, from lighting roads to growing food indoors. According to the US Energy Information Administration, the residential and commercial sectors combined use roughly 211 billion kilowatt-hours (kWh) of electricity for lighting in 2021, with an average price in the United States of $0.1372 per kWh, totalling $27.4 billion. The growing demand for illumination is only going to amplify this amount, with citizens footing the bill.
Beyond the growing financial cost of light, illumination accounts for nearly 5% of global energy-related carbon dioxide emissions, or 1.5 billion tonnes of CO2. And choosing an LED over its competitors can achieve energy savings of up to 70%. If lightbulbs alone can make this big of an impact, what effect could small changes in our daily lives have?
A solution to the ever-present threat of climate change and astronomical electricity bills has been coming to fruition over the past two decades: Solid State Lighting (SSL). SSL includes lighting applications that employ LEDs and OLEDs (organic light-emitting diodes) consisting of semiconductors that convert electricity into light. This method of light production saves significant amounts of energy with clear paths for additional energy savings in the future.
The Department of Energy’s (DOE’s) Solid State Lighting Program continuously develops comprehensive R&D strategies to both support advancements in lighting technology and maximize energy savings. Energy savings and productivity enabled by lighting are inextricably linked.
“By 2035, develop lighting systems that have power conversion efficiency greater than 60% ... while also providing optimum light intensity and directionality for the space and application to reduce energy and optimize health and productivity.”
Market Trends: Facts, Figures, Forces
Market Facts and figures
In 2021, the Global Smart Lighting Market was valued at $15.5 billion and estimated to hit $68.5 billion by 2028 at a compound annual growth rate (CAGR) of 20.4%.
According to a DOE report, 347 competitively selected R&D projects have been funded to date, resulting in 357 products.
The program's impact includes preventing 79 million metric tonnes of CO2 from being emitted and $20 billion in energy cost savings each year.
LEDs match or exceed the performance of fluorescent lighting, providing the same or higher-quality light and lasting two times longer.
market forces
Energy efficiency ubiquity has spread to the lighting market as government initiatives to reduce energy consumption ramp up. The attractiveness of SSL, including long life, energy savings, better quality light output, durability, as well as intrinsic safety, are driving the economic and environmental forces behind its rapid adoption.
Investment Opportunities
Unlocking the next wave of SSL technology will require further breakthroughs in fundamental, early stage R&D across the SSL value chain. In order to dignify decarbonization efforts, there needs to be recognition of barriers to deployment of this technology.
Lighting Platform Technology
Platform technology that enables energy savings and supports occupant health and productivity.
The vast majority of LED manufacturing is centered in Asia, whereas LED luminaire manufacturing is distributed worldwide.
A key objective of the DOE initiative is to advance the US manufacturing role in the global lighting market to benefit the US economy.
New technology advancements, increased automation, and additive manufacturing are promising vectors for innovation with the potential to add domestic manufacturing jobs.
Capitalizing on OLED materials during manufacturing improves the performance of low-profile, diffuse lighting concepts.
Lighting Science
Lighting Application Efficiency (LAE) Framework: Develop a general framework and computational model to characterize LAE, which balances light source efficiency, optical delivery efficiency, spectral efficiency, and intensity efficacy for specific lighting applications.
Develop high-efficiency LED packages, modules, and lighting products that demonstrate advanced performance, features, and energy savings through improved lighting application efficiency.
Lighting Integration and Validation
Connected Lighting: Lighting systems with the capability of sensing occupancy and light levels, communicating with building and grid systems, and responding via intensity and spectral changes already exist.
Investment in LED lights connected with smart building sensors and controls and data-gathering systems is needed.
Grid Flexibility: LED lighting is inherently dimmable, and intelligent lighting systems can be configured with control systems to respond to transactive control signals to instantaneously reduce grid load.
Market Segments
Residential Sector
The residential sector operates for less than two hours per day, which means lighting energy costs remain low. As a result, consumers place a high priority on low initial cost when purchasing lighting products. This mentality needs to transition to a more long-term mindset, as LEDs are more cost effective because they last 3 to 30 times longer than competitors.
Commercial and Industrial Sectors
Lighting applications in these sectors are characterized by long operating hours (often greater than 10 hours per day) and higher lumen output requirements compared with the residential sector. Technologies with high efficacy and long lifetimes are more popular in these sectors, despite higher initial costs.
Indoor
Whether talking about homes or businesses, buildings offer big opportunities for emission-reduction activities, which consume up to 1/3 of global energy demand and 40% of global GHG emissions. The illumination segment represents 40% of buildings’ energy footprint and can benefit from the adoption of SSL technology.
Outdoor
Street lighting happens to be a prevalent outdoor lighting advancement opportunity. The Climate Group, for example, has been working with a number of cities and utilities to upgrade city infrastructure to include modern, energy efficient lighting. Converting the remaining street lights in the US to LEDs would cost around $8 billion, but would save $1.2 billion annually in energy costs and billions more in maintenance savings over 15 years.
Impact
Climate and Environmental Health
A global transition to LED lighting is low-hanging fruit for climate change mitigation, as it supports efforts to limit global warming to the United Nations 1.5°Celsius target and eliminate 232 tonnes of mercury pollution from the environment. In addition, the LED transition would save 3.5 gigatons of CO2 emissions from power plants between 2025 and 2050.
The concept of the circular economy is becoming ever present in today's world. Utilizing LEDs that do not contain hazardous mercury makes them safer to dispose of at their end of life. Accelerating the adoption of LED products is estimated to reduce global energy consumption by 3% and encourages the circular economy principles because LEDs last two to three times longer than alternatives.
LEDs are a cost-effective replacement for fluorescents consumers in most countries can find for the same or slightly more expensive prices. Even when LEDs are more expensive, they pay for themselves in a few short months from saved electricity costs due to their efficiency benefits.
Market Movers: Current and Future Heavy Hitters
Market Leaders
Nichia (Japan) LEDs for automotive headlights and DRL (daytime running lights) and also interior lighting have already achieved high reliability.
Samsung’s (South Korea) smart lighting components allow luminaire makers to produce lighting in an easy and efficient way.
Cree, Inc. (US) manufactures lighting-class LEDs and other lighting products. Cree LED chips are an innovative technology that help deliver low prices and high-performance LED lighting.
GE lighting (US) is a leader in LED lighting solutions and offers a range of LED light bulbs for consumers, along with their Cync smart technology to control energy use.
Lumileds (Netherlands) manufactures and distributes LEDs, light bulbs, and other related products for automotive, illumination, and specialty applications.
Future Heavy Hitters
Luminit (US) works on both OLEDs and LEDs, and is currently developing a light extraction system for OLEDs.
OLEDWorks (US) has a high-performance OLED panel and luminaire and serves the automotive and commercial sectors.
Light Shaping Diffuser
A render used for design by Luminit, which is also currently developing a light extraction system
Courtesy: Luminit
Venture Capital/PE and Other Fund Investors
N*GEN Partners backs companies seeking to innovate industries in creative ways and promote environmentally sustainable products and services. Soraa, one of its portfolio companies, develops LEDs using pure gallium nitride substrates for healthy light.
Pegasus Tech Ventures is a global VC fund that invests in early stage and seed ventures, with 224 investments to date, including companies such as Airbnb and SpaceX.
VNT Management is a European VC management company solely focused on clean technologies. VNT has three VC funds totaling €157M (~$192 million).
Oak Investment Partners is a multi-stage VC firm that invests in several industries including technology and clean energy. The company has invested $9 billion in over 525 companies worldwide.
Clean Energy Venture Group provides seed capital and management expertise to early stage clean energy companies that have the potential to mitigate climate change.
Final Thoughts
Convincing individuals and corporations to put more down now and reap the benefits in the future poses a serious threat, as changing the innate human impulse to want to save money in the short run at the expense of future return is difficult. The higher cost of installation and maintenance will hamper the growth of the global smart lighting market. There may also be a rebound effect causing users to increase their daily lighting usage because the operating cost is cheaper. At the same time, however, there are a wide array of potential developments, investments, and regulations in the lighting market that could lower both the high initial cost and the rebound effect.