Stimulating LED Innovation - New Focus for Demand-side Management

By Nils Borg
Spring 2013

SM, or demand-side management, is an old term that seems to be reinvented from time to time and given new content to suit our devloping understanding of how to stimlate energy savings in our economies. As the understanding on how to deliver savings, i.e., the continuing process of redefining DSM, the technologies targeted by such programmes are quickly evolving.

LEDs, short for light emitting diodes, applied to lighting is one of the most promosing technologies offering cost-effective solutions with low life-cycle costs. Since the turn of the century, LEDs eventually started to offer such good lumen per watt performance that they become interesting as a light source to replace incandescents and fluorescents. It didn’t happen as fast as we had hoped, but since around 2007 LED lighting solutions have begun to move out of the niche applications where they were hiding, into the mainstream lighting applications.

Today, LEDs offer roughly the same performance as fluorescent technologies and their colour performance is now generally acceptable, and in some cases even superior to fluorescent lighting. LEDs offer much better opportunities for control and dynamic lighting, so beyond the pure energy effieincy (lm/W) substantial savings can be harvested from intelligent lighting.

Things thus seem to be on track. Why bother about DSM or other activities that governments or utilties launch to stimulate savings? Can't we just let the market take care of this? Well, yes, and no.

The price of LED light sources are still prohibitive, especially for domestic consumers. LED manufacturers who invest in product innovation and product development face an uphill battle. Cheap and inferior products are offered to the market. Disappointed consumers shun the new technology and are simply unwilling to buy the products with a substantially higher cost than that of comparable technologies. Many serious and well established manufacturers struggle to make reasonable profits.

The US Department of Energy (DOE) recently completed a technology competition called the L prize where the winning lamp should be a viable replacement for a 60W incandescent lamp. The large and prestigeous prize was a way to create an incentive for manufacturers to invest in developing a quality product despite uncertainty in the market. DOE offered prestige, a clear target in terms of a good specification, and a comprehensive system of consumer information, testing and quality assurance to help the winner and its peers to market quality products. It is the systematic way of organising the market that is part of managing the energy demand and help securing investments in product development.

The International Energy Agency’s Implementing Agreement for Efficient Electrical End-Use Equipment (4E) runs an Annex on Solid State Lighting for which I happen to be the Operating Agent. DOE and nine other governments around the world co-operate in the SSL Annex around activities aimed at creating confidence in the market place.

The SSL Annex aims at providing funding governments with:

  • Tools to assess the performance of SSL
  • Information assisting formation of energy-efficient lighting policies, and
  • Provision for harmonized test procedures and laboratory accreditation

By working with stakeholders all around the world, the SSL Annex is promoting a framework for innovation and investment in SSL technologies. The market forces are very much at play here, but we hope to level the playing field and to broaden the market.

Another aspect of DSM is technology procurement. Here, the government works with important buyer groups to establish functional specifications for a product or system. Typically, these specifications outline a product that does not exist on the market but that is technically feasible, and most likely commercially realistic. The specifications should focus on functional requirements and not on specific technical solutions. This is up to innovative manufacturers to solve, and this is also the reason why this sort of process is sometimes called innovation procurement.

Winners of the competition are typically promised a first order. The important point, however, is not the size of the first order (it may in fact be unimpressive). Prestige and visibility plays a large role, as in the L Prize above. But more important is the fact that a carefully designed technology procurement activity brings together leading and competent buyers. Their functional specification represents something that the market is likely to ask for in the future, and a smart manufacturer will take notice.

The Swedish Energy Agency is currently looking into the possibility of setting up a technology procurement for LED street lighting equipment. Many readers will note that LED street lighting is already being installed at an increasing speed. So why would a procurement be needed here?

Many of the new luminaires may be efficient and offer very long life. But far too often, the optical performance is poor and it is very hard for buyers to know how to solve end-of-life problems. Unlike traditional fixtures it is not just to change a lamp. With LEDs, should a buyer go for an offer to replace the luminaire or replacing the modules? And how is easy is that? Another important aspect is to find luminaires that can be used to replace old luminaires on existing poles and thus utilizing the existing infrastructure.