May 18, 2010 / 2:39 PM / 7 years ago

LED market faces bright outlook but hurdles remain

<p>A display shows two energy saving light bulbs at a do-it-yourself store in Dortmund August 31, 2009. REUTERS/Ina Fassbender</p>

LONDON (Reuters) - The light-emitting diode (LED) sector is growing fast, especially in niche markets such as the car industry, but LED bulbs will not be a mass consumer item for some time, developers and experts said on Tuesday.

Lighting accounts for around 20 percent of global electricity consumption. LED bulbs use 20 percent of the energy of a traditional incandescent bulb and can last up to 25,000 hours, making them attractive in the drive to cut emissions.

However, the technology is expensive, which could prevent a widespread market take-off for some years.

“Certainly, this is a fast-growth area, but the domestic replacement market is still some way off,” Tom Whitehouse, chief executive of fund-raising consultancy Carbon International, told Reuters.

“The big question is how to get LEDs to market. For people to rip out existing lights and install LEDs, you need a disruptive technology,” he said, referring to the point at which switching to the new bulbs becomes cheap enough for consumers.

Major manufacturers like Philips and Osram are launching consumer LED bulbs this year, or in 2011, but prices remain high.

“You won’t see bright, lower-cost LED bulbs in homes for another three to four years,” said Richard Kirk, chief executive of UK-based organic LED (OLED) lighting system developer PolyPhotonix.

Established lighting manufacturers could also make it difficult for others to break into the fledgling market, Whitehouse said.

Smaller players could be more successful in supplying LEDs to the architectural and design industries or traffic lights or brake lights to the automotive industry.

“The big goal is the $100 billion lighting market, but to get there you have to go through the niche markets, such as architechtural lighting, design opportunities, automotives,” Kirk said.

LET THERE BE LIGHT

Mass producing LED products is also problematic.

“Getting your hands on the product is a big problem right now. The technology is not there yet, it is not mainstream,” said Gareth Jones, consultant for the UK government at the Photonics and Plastics Electronic Knowledge Transfer Network.

PolyPhotonix is launching a general lighting 8 inch OLED tile in early 2011 with a 60-lumen per watt efficiency. OLEDs are a thin film of material that emit bright white light.

“We have a holy grail of printing reel-to-reel, like newspapers, but that will take many years. The challenge for the OLED industry is to find a production method which provides a high yield,” Kirk said.

A Cleantech Investor report released on Tuesday estimates 25 percent of the lighting market could be LED-based in five years’ time, reaching 50 percent by 2020. Some LED developers are even more optimistic.

“By 2015, 50 percent of the light source market will be LED-based,” said James McKenzie, chief executive of UK-based commercial LED lighting manufacturer PhotonStar.

Philips expects LEDs to take over from conventional light sources by 2015, as the total lighting market grows to 80 billion euros ($99.33 billion) from around 50 billion in 2009.

LED developers said government regulation and support will drive market growth. In September last year, Europe started to eradicate traditional energy-guzzling light bulbs to boost energy efficiency by a fifth by 2020.

Reporting by Nina Chestney; Editing by Amanda Cooper

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