Strategies in Light Europe focuses on LED lighting and market transformation (MAGAZINE)

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This article was published in the November/December 2011 issue of LEDs Magazine.

View the Table of Contents and download the PDF file of the complete November/December 2011 issue.

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With more than 900 registered participants, the second annual Strategies in Light Europe 2011 conference and exhibition took place in Milan, Italy, on October 4-6, 2011. One new feature of this year’s event was the introduction of parallel tracks on Market Transformation and Technology: the latter is covered in a separate article on page 29.

The LED lighting market in Europe is expected to grow at a compound annual growth rate of 41% between 2010 and 2015, according to the Keynote presentation by Vrinda Bhandarkar, Strategies Unlimited’s Director of LED Lighting Research (Fig. 1). The replacement-lamps sector will grow most rapidly, as the impact is felt of Europe-wide legislation to remove inefficient lamps from the market.

FIG. 1. Bhandarkar said that the global LED lighting market had revenues of $5 billion in 2010, of which 21% was from replacement lamps and the remainder from luminaires. In general, performance is improving and prices are falling, but there are “huge issues with low-quality, under-performing LED products,” said Bhandarkar. She also said that standards setting is moving rapidly, but needs consistency between regions. Product quality, labeling, and standardization were all themes taken up by other speakers at the conference. Module standards, for example, were discussed by Andy Davies of GE Lighting (see www.ledsmagazine.com/news/8/10/10 and page 43 of this issue).

Also in the Keynote session, Dominik Wee and Arthur Jaunich from McKinsey & Company covered the main points of their recent report entitled “Lighting the way: Perspectives on LEDs and the global lighting market.”

A different perspective was provided by Simon Fisher, general manager EMEA for Indoor Luminaire Solutions with GE Lighting. Fisher, formerly an independent lighting designer, gave a talk entitled “Designing with LEDs: Redefining the Lit Environment” but he was keen to stress that LEDs are not the only game in town. “This is the Strategies in Light conference,” he said. “It’s important to develop LED solutions but not ignore other technologies…this is GE’s strategy going forward.”

Fisher advocated a holistic approach to product design, encompassing not only the components and application design, but also system integration and quality and reliability. “We need to have a solution-orientated approach to customer needs,” he said.

Focusing on modules, Fisher said that connectivity is the “design key.” While electrical compatibility reduces losses, good thermal contact sustains the LED lifetime and a strong mechanical connection maintains system integrity.

From a client perspective, good optical quality is key, said Fisher. Clients require a choice of beam angles, high light-output ratio (LOR), and repeatable performance. He then discussed GE optics that are compatible with the company’s module products, and also revealed that GE will introduce module-based luminaires for indoor use in Q3 2012.

Fisher said that the lighting industry has changed recently: “Five or six years ago the discussion was mainly on capital cost, now return-on-investment is part of the discussion,” he said. “This is important, because we’re going to be asking people to spend more on their lighting than they do at present.”

European SSL policies and actions

EU policies for the promotion of SSL were discussed in detail by Paolo Bertoldi of the European Commission (EC) Joint Research Centre (http://re.jrc.ec.europa.eu/energyefficiency). Energy efficiency, including lighting, is a key component for reaching Europe’s various climate and energy objectives by 2020. “Lighting is covered by many policies and actions, including the new strategy for SSL under the Digital Agenda for Europe,” said Bertoldi. Among the activities are energy labeling, public procurement, the Eco-Design directive, and R&D programs in the current FP7 and future FP8 programs. The general aim is to support the most efficient technologies, and to introduce financial schemes that can overcome the barrier of high initial cost, a particular problem for SSL.

FIG. 2. For many years, Europe has used the energy label, which grades appliances (including lamps) from A to G according to energy usage. This is now under review and is due to be revised by May 2012. Also, by setting minimum energy-efficiency requirements, the Eco-Design Directive has already had a major impact on the lamp market in Europe: 60W incandescent lamps were effectively outlawed from September 2011. As Bertoldi explained, the second phase of the Directive, covering directional lamps, is due to be adopted by July 2012.

Lighting is also part of the Energy Performance for Building Directive, which is aiming to move towards “almost zero-energy buildings.” However, feeling the need for a new impetus, the EC has put forward a proposal for a new Energy-Efficiency Directive (EED). One aspect would be to call on the public sector to lead by example, by purchasing products, services and buildings that have high energy-efficiency standards. Also, national energy-efficiency schemes could encourage utilities to distribute LED lamps to consumers, which Bertoldi described as a “great opportunity” for LEDs.

SSL is a central part of the Digital Agenda for Europe, which focuses on ways that information and communications technology (ICT) can stimulate the EU economy and benefit society. Specific SSL-related actions include a Green Paper, to be published later this year, and the large-scale SSL demonstration projects that should start at the beginning of 2012.

In R&D, the EC is currently funding various programs in LEDs and OLEDs to the tune of around EUR 90 million, said Bertoldi. He also gave a number of project examples from the GreenLight program (www.eu-greenlight.org), an EC-lead voluntary initiative to reduce lighting energy use in commercial and industrial sectors and in street lighting.

Standards and CELMA guidelines

Standardization was a central discussion topic at SIL Europe, and was covered in detail by Kay Rauwerdink of CELMA, an organization that represents the European lighting industry for luminaires and components. CELMA has written a guidance paper on quality criteria for LED luminaire performance that focuses on two Public Available Specifications (PAS) documents that were recently published by IEC, the international standards body. IEC/PAS 62717 covers performance requirements for LED modules, while IEC/PAS 62722 covers LED luminaires, in both cases for general lighting.

Rauwerdink said the industry needs to transition from “comparing apples and pears” when it comes to commercial products, and instead make apples-to-apples comparisons. “Evaluating performance claims from different manufacturers cannot be done without using a standardized set of quality criteria that are measured in compliance with appropriate standards,” he said. The CELMA guide suggests that users of LED luminaires should request LED luminaire specifications that are measured in compliance with the new IEC documents.

The documents were released simultaneously to ensure consistency between module- and luminaire-quality criteria. These criteria include a large selection of metrics, including input power, luminous flux and efficacy; luminous intensity distribution; CRI and chromaticity coordinate values, both initial and maintained; rated life (in hours) and associated rated lumen maintenance (in lux); and failure fraction (Fy), corresponding to the rated life of the LED module in the luminaire.

The CELMA guide explains the best methods for measuring these criteria, and why they are important. The document further explains the difference between lifetime claims based on lumen maintenance and luminaire lifetime claims that depend on component reliability.

LED Quality Charter

With the advent of the Eco-Design Directive to remove inefficient lamps from the European market, it was also deemed necessary to establish an EU LED Quality Charter (EU-QC), which was discussed at SIL Europe by Casper Kofod of Energy Piano. The EU-QC is a voluntary set of criteria that is intended to promote high-quality LED-based lamps, to raise consumer awareness and confidence, and to support promotion and procurement campaigns. Organizations can sign up to support the EU-QC, which is restricted only to LED lamps (not modules or luminaires), and to the residential, not commercial, sector.

Importantly, the EU-QC is not a quality label, although individual EU member countries can use the EU-QC to develop their own energy-efficiency labels, such as those introduced in the UK or in Kofod’s home country of Denmark. The recommended criteria can by viewed by downloading the EU-QC document from the Residential Lighting section of the JRC website.

Surprisingly, considering levels set by other similar programs, the EU-QC requirement for power factor (PF) is a minimum of 0.5. Kofod said that “the consumer has no advantages of high PF requirement, but disadvantages if an extra corrector-circuit is installed.” The disadvantages come in terms of additional size, consumption, cost and other factors. He also said that lighting is currently 15-17% of domestic consumption, but in the future, when LEDs predominate, it will be only 2-4%. In this case, a high PF will only provide a marginal advantage: “We’re talking about peanuts,” said Kofod.

The Danish Energy Savings Trust (EST) has developed a quality label for lamps that meet EU regulations and the requirements of the EU-QC, explained Kofod. The lamps are self-certified, but the EST may perform random testing. Demark is at the forefront of green policy development, and recently announced that renewable energy sources would be required to cover all electricity and heat consumption by 2035, and all energy consumption by 2050. “There is a great future for LEDs to help slash energy consumption in Denmark,” said Kofod.

However, not everyone agrees that EU member states should use the EU-QC to develop their own labels: one obvious potential consequence could be 27 different labeling schemes, one for each country. After Kofod’s talk, Jürgen Sturm of the European Lamp Companies Federation (ELC) said that the European lighting industry “favors a Europe-wide approach, not fragmentation of labels on a country-wide basis.”

Dekra performance mark

In his presentation, Jacob Neusink of Dekra, a quality and safety service-provider, asked: “Is there a need for an LED quality mark?” Not surprisingly, Neusink’s answer was yes, given that Dekra has already issued its own LED performance mark (Fig. 3) to two Netherlands-based manufacturers, Lemnis Lighting and Ledned.

In explaining why the mark was introduced, Neusink quoted comments from Dekra’s customers. He said that installers ask: “How can I be sure that the claims my supplier makes are true and how do I know that the products I buy will perform?” Meanwhile, manufacturers say: “I have a high-quality product with good performance, and my customer does not believe what I am saying.” To address such comments, the Dekra mark sets performance levels for LED lamps, or modules, or luminaires.

FIG. 3. Neusink pointed out that this is a “quality mark,” where testing confirms that the performance reaches or exceeds the required levels set by Dekra, rather than a “truth mark,” which simply confirms that the figures quoted by the manufacturer are accurate. It’s important to note that Dekra offers its mark on a commercial basis, as distinct from government-sponsored programs such as the Danish EST label mentioned above.

Global initiatives

The challenge of harmonizing SSL-related activities on a global basis has been taken up by at least two new organizations. The main aims of the International Energy Agency (IEA) Annex on SSL, as described at SIL Europe by Marc Fontoynont (Fig. 4), are to develop SSL quality assurance, to harmonize SSL performance testing, and to promote standards and develop an accreditation infrastructure.

Meanwhile, the lighting industry is represented by the Global Lighting Forum (GLF), a gathering of lighting organizations from around the world representing over 5,000 lighting manufacturers and US$50 billion in annual sales. Jürgen Sturm, GLF general secretary, explained that the GLF aims to share knowledge of global lighting trends and legislative developments. It acts as a networking forum, developing joint industry positions and communicating these to government authorities and other stakeholders. One of its specific priorities is to “accelerate the uptake of LED and OLED lighting solutions,” he said.

The benefits of SSL can be defined, said Sturm, in seven dimensions: energy, system, environmental, biological, business, design and quality. “The benefits over all other lighting technologies are unique, as only SSL combines all [these] dimensions,” he said. In the biological dimension, Sturm said that “biological effective lighting” can influence our well-being and health, and that LED technology can help to manage the effects of demographic change, particularly for aging populations. However, he described the biological dimension as a “research topic” that often “raises a lot of tension.”

In terms of business, Sturm said that “the characteristics and benefits of LED-lighting technology will lead to a change in business models in lighting.” Models based on recurring revenues from replacement sales (i.e. lamps) will be superseded by models based on revenues over life including energy savings, but these will require innovative financing models. Sturm also said that LED lamp sales will peak in 2018 due to the growth in sales of integrated lamps and systems.

LED market in Russia

Evgeny Dolin, chairman of the Russian national association for manufacturers of LEDs and LED-based systems, said that the Russian LED market experienced very rapid growth of 50-60% in 2010. Even so, LED lighting fixtures were only about 5% of the total lighting market in 2010, with revenues of US $67 million. These figures are expected to increase to 15% and $333 million by 2015.

FIG. 4. Dolin said that the Russian government is supporting energy efficiency and promoting the use of LEDs, while the biggest corporations are starting investment programs for LED lighting. One example is Russian Railways, which invested EUR 13 million in 2010, and EUR 24 million in 2011. Russia is trying to derive maximum benefit by switching directly from incandescent lamps to LED lamps, skipping the move to compact-fluorescent lamps (CFLs) that has been prevalent elsewhere in Europe.

Dolin’s organization is of course involved in standards work, and he said that Russia has adopted the LED color-coordinates specified in the ANSI C78.377 standard. Also, October 2011 saw a national requirement come into play for a minimum efficacy of 50 lm/W for LED lighting. In the case of retrofit lamps, the minimum is between 50 lm/W and 70 lm/W depending on color temperature.

Dolin said that the organization is working to harmonize Russian measurement laboratories with international efforts. He pointed out that it is difficult for Russia to use US-developed standards without modifications, due to differences such as climate, and the nature of the electrical grid.

Business development

One member of the Russian LED manufacturers’ association is Optogan, which has a major production facility in St. Petersburg and also recently opened an LED chip production facility in Landshut, Germany (page 14). Optogan’s Markus Zeiler spoke about how the company has set about enabling fast adoption of LED lighting. One strategy is to set up a network of “technological and regional champions,” he said, enabling each company to stay focused on its own technological areas of strength. One example is a technical cooperation on AC-LEDs between Optogan and Lynk Labs.

Another strategy is product modularity. “We need to reduce complexity and keep it simple for our customers,” said Zeiler, offering a preview of a scalable chip-on-board (COB) concept which he said was analogous to Lego bricks. Finally, he discussed new sales channels and the value of franchising via remote business owners with regional know-how, as an alternative to setting up branch offices. “This keeps investment low, but enables global branding,” he said.