Like children in the back seat on a road trip, many LED enthusiasts keep asking: “Are we there yet?” The promise of LED lighting has been clear for a number of years, with high expectations that at some point LEDs will take over a significant share of the lighting market. But when, exactly, will that point come?
The primary barrier is cost. LED prices have fallen dramatically in recent years, but the cost premium over traditional lighting technologies can still be significant. A 14W, standard type A screw-in LED bulb retails for around $20. That is a huge drop from previous years but still far more than an equivalent incandescent or compact fluorescent bulb. The comparison is even worse for 4-foot linear tubes, the dominant form of lighting in commercial buildings. An LED product can sell for $65 or more, while the equivalent fluorescent product is less than $2.
Fortunately for the LED industry, it will not be necessary for LED prices to match those of traditional technologies before wide-scale adoption can take place. Increasing efficiency and a host of other benefits will make LEDs the clear choice in many applications, as long as the upfront cost can be paid back through electricity savings in a reasonable time. The real question is not when an LED tube will cost less than $2, but rather when will the payback period fall under 2 years?
The answer, needless to say, is not simple. Subsidies and rebates in countries around the world are already reducing LED payback periods to a point where the economics are favorable. The wide range of electricity prices between and within countries also affects the value of electricity savings. Furthermore, some end uses will become attractive targets for LEDs before others. Cold storage facilities, for example, are already adopting LED lighting en masse. In those spaces, low temperatures negatively affect fluorescent performance and other lighting types generate far too much heat, leaving LEDs the clear winner.
Navigant Research has synthesized all of the factors affecting LED adoption in a newly updated report titled Energy Efficient Lighting in Commercial Spaces. The chart below shows the share of LED lamps used in commercial lighting retrofit projects increasing from only 5% in 2013 to 63% by 2013, while fluorescent and other lighting types quickly fall off.
Share of Lamps in Retrofit Projects by Lamp Type, World Markets: 2013-2021
(Source: Navigant Research)
Tags: Building Systems, Energy Management, Lighting Innovations, Smart Buildings Practice
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