If you had strolled down the lighting aisle at your local hardware store a few years ago, you would have seen an array of incandescent bulbs and fluorescent tubes.
But in December 2007, the US Congress quietly set the wheels in motion for a major change to America’s lighting market – one worth roughly $100 billion a year. It passed the Energy Independence and Security Act, which mandates the end of most incandescent bulbs between 2012 and 2014.
The reason for it is simple: Incandescents are energy hogs. Only 5% to 10% of the energy they consume becomes visible light. The rest is given off as useless heat. And given that lighting sucks up about 22% of the energy we use, you can see why much of that is wasted. You need only look at the average city skyline to see office buildings lit up – but nobody is in them.
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And if we’re not going to decrease our energy usage anytime soon, we’re going to have to increase our energy efficiency instead.
Mercury rising
The lighting industry responded to the efficiency call by manufacturing the compact fluorescent lamp (CFL). I have a dozen or so of them installed throughout my home. But I’m now rethinking my incandescent bulb replacement plan.
You see, CFLs have a big problem. While they are much more efficient bulbs, they also contain small amounts of elemental mercury. This represents disposal and potential health problems. And the trouble is, most consumers who purchase them are completely unaware of this hazard. Like everything else they throw out, most folks just toss CFLs in the trash. But this totally offsets the energy-efficiency element by unnecessarily dumping heavy metals into landfills.
If you break one, simply vacuuming up the mess contaminates your vacuum cleaner with mercury. Breathing in even small amounts of mercury can lead to pulmonary and central nervous system problems. Symptoms can include tremors, insomnia, irritability, short-term memory loss, headaches and even psychological changes. Ouch.
In addition, the fact that most CFLs are currently non-dimmable has lighting companies scrambling to come up with a better solution. But the answer has actually been around since 1962.
Six advantages of LED bulbs
If you go all the way back in time to the early days of the transistor, you’ll find the first design of light-emitting diodes (LEDs). They’re known as “semiconductors” – a term used to describe electronic devices composed of transistors and/or diodes. The movement of electrons inside a diode creates the light from an LED.
Early LEDs emitted a low intensity red light. But advances in LED technology mean that modern versions cover the entire visible light spectrum, plus ultraviolet. Infrared versions are used in most TV remote controls.
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But the development of the high-intensity LEDs has enabled them to be considered a viable replacement for incandescent light bulbs. Their advantages:
Like their mercury-containing CFL cousins, LED bulbs are highly efficient. To pump out the same amount of light as 40 to 100 watt incandescent, LEDs only consume 3 to 13 watts of power. But unlike CFLs, which can take time to warm up, LED bulbs produce all their light the instant you turn them on.
• LEDs emit no heat and work at low ambient temperatures.
• LEDs are dimmable.
• The average life expectancy of an LED bulb is upwards of 50,000 hours.
• There is no mercury or other toxic elements in an LED bulb.
There’s just one big problem with LEDs.
LEDs are pricy, but not for long
Because LEDs are being made in such small quantities, they’re expensive.
A 40-watt equivalent LED bulb will set you back about $30. A 100-watt replacement bulb is closer to $60. Have a few floodlights outside your house? LED versions of those bulbs currently sell for anywhere from $90 to 120 – each. Have fluorescent tubes in your garage or basement workshop? LED versions of those are available, but be prepared to pay about $70 each.
However, as an engineer, I can tell you that when high-volume manufacturing kicks in, the price of LED bulbs will decline dramatically. At that point, savings come in two ways: reduced energy consumption, and reduced maintenance costs to replace the bulbs, given the average lifespan of LED bulbs, compared to incandescents and fluorescents.
There’s no question in my mind that LEDs represent the future of both commercial and residential lighting. The commercial sector will likely adopt the newest bulb technology first, but we’ll likely see widespread adoption within the next five to ten years. And CFLs will be quickly relegated to the “it seemed like a good idea at the time” pile.
Who are the movers and shakers in the LED world?
With the LED market heating up, three companies are at the forefront of the industry…
• General Electric (NYSE: GE).
• Koninklijke Philips Electronics NV (NYSE: PHG, AMS: PHIA).
• Cree Inc. (Nasdaq: CREE).
In early April, GE announced the introduction of a 40-watt-equivalent LED bulb, which emits 450 lumens of warm light. The expected release date is early 2011. Not to be outdone, Phillips – the largest lighting manufacturer in the world – said it will release an LED bulb that will be a 60-watt incandescent equivalent. Its bulb will emit 806 lumens – about the same as a 60-watt bulb. It will also be dimmable and available on a large scale by the end of this year.
Other manufacturers besides these three include Osram, Toshiba, Panasonic and startups like Renaissance Lighting and Bridgelux.
The bottom line is that while LED bulbs are likely to remain expensive over the near term, they’re already cost-effective when you consider their 50,000-hour average lifetime.
For consumers, energy-efficient, long-lasting, safe LEDs represent a viable replacement for wasteful incandescent bulbs and an even better alternative to CFLs. And for investors, the switch to LEDs offers a way to profit from a smarter era in lighting before the masses catch on.
• This article was written by Dave Fessler for the free investment email Investment U