TAPPING THE LED REVOLUTION

There is a revolution in the lighting market, and the catalyst is light-emitting diode technology better known as LED. LED is a semiconductor device that produces light. Essentially, it is a solar cell working in reverse. Instead of converting light into electricity, it converts electricity into light. Unlike conventional light sources: incandescent, halogen, fluorescent, compact, high-intensity, discharge, LED emits light in a narrow range of wavelengths such as red, green, or blue. For general illumination, various approaches (such as colour mixing) are applied to obtain white light. LEDs boast several advantages over conventional lighting: Quality white-light source, instant dimmable light, no heat emission, no mercury, small size, high efficacy. Already LEDs are now applied in many different ways, including illumination, portable devices, displays and signage, traffic signals, automobiles, and medical devices.

LED is poised to dominate the market in the years ahead. By 2020 the LED share of the global lighting market is estimated to reach 80 percent. Germany is positioned first in Europe’s energy-efficient lighting industry ahead of the UK, Italy and France. The LED lighting market is expecting a huge increase over the years to come, with Germany being one of the global growth hot spots. Estimated turnover for the German light-emitting diodes (LED) lamps market is growing by 27 percent p.a. until 2018. The main market drivers are the customers’ push for energy efficiency and for saving energy costs, the continuous drifting down of prices, and governmental regulation phasing out older, less efficient lighting technologies. High energy prices are forcing architects, public investors and consumers to consider energy saving solutions. Driven by an early adopter tendency and thus steady growth, Germany remains the lead LED lighting market in Europe. Advances in LED technology and the factors mentioned will be significant in creating demand in the coming years. Lighting technologies keep improving due to ongoing R&D and economies of scale, which lower production prices and increase lamp efficiency, thereby enhancing attractiveness to consumers.

Manufacturers  are having to revise their market strategies since the LED revolution calls for nothing less than a dismantling and recreation of current business models. We are already seeing vertical integration along the value chain. Some are expanding their market positions through acquisitions. Others are creating cooperative relationships through licensing agreements. Still others buy components and assemble, specialising in key market segments, a trend that is likely to continue in coming years.

Companies in unrelated industries are entering the lighting market. They are predominantly from the semiconductor industry or television manufacturers. This is not an easy industry to enter, however, as the entry barriers are high; chip and epi production and packaging are capital intensive, there are significant intellectual property issues, and numerous players are already entrenched. Also, the modules and drivers business is fragmented (products are still not standardized), and the luminaire business has thousands of players. The main hope for newcomers is to differentiate by understanding regional issues and building strong  customer relationships. The LED revolution also represents a big opportunity for components manufacturers and service providers to expand their activities, identifying unique selling propositions and then occupying relevant positions along the value chain.

The key to success in the LED lighting market is to focus on that which makes LED lighting unique. Because of its technological flexibility, it offers numerous possibilities for design and application. Three areas (technology, application, and design) will differentiate the winners from the also-rans.

Technology: LED already outperforms traditional lighting technology, which it is rapidly replacing, but there is a vast potential for improvements, which will come in the form of increased efficacy, miniaturization, and light colour to name a few.

Applications: The possible applications of LED are almost limitless: street lights, TVs, stadiums, automobiles, appliances and so on. Numerous innovative concepts will emerge in the coming years as firms gain knowledge of the market and customer needs.

Design: Technology and new applications are tightly connected to new possibilities in design, and only a fraction of the possibilities have been realized thus far.

Legislation

Ecodesign regulation 1194/2012

The adopted regulation covers the following products:

• directional lamps
• light-emitting diode (LED) lamps
• equipment designed for installation between the mains and the lamps (including lamp control gear, control devices and luminaires)

This also includes lighting products that are integrated in other products.

The requirements are introduced in three stages:

• 1 September 2013
• 1 September 2014
• 1 September 2015

Labelling regulation 874/2012

A labelling regulation for electrical lamps and luminaires applies from 1 September 2013. The scope of the regulation includes :

• filament lamps
• fluorescent lamps
• high-intensity discharge (HID) lamps
• LED lamps and LED modules