Friday, March 09, 2012

LED Bulb That Won Government Contest To Go On Sale

"LED Bulb That Won Government Contest To Go On Sale" is how headlines should read, but the Washington Post and right wingers are instead claiming that this is a government subsidy - emphasis on the subsidy - and that the LED bulbs are more expensive than those that are currently on the market.

Nothing quite like mixing apples and oranges.

First a bit of background. Legislation enacted during the Bush Administration called for the phasing out of incandescent bulbs, starting with the 100 watt and moving down to lower wattage bulbs in the course of a couple of years.

The whole idea was to improve energy efficiency in lighting and to reduce dependency on foreign energy sources. It's a wholly laudable idea and a CFL equivalent to a 100 watt bulb uses a fraction of the energy with the same light output (in lumens). LED bulbs offer the promise of a comparable savings over CFLs, with less concern over releases of mercury that are used in CFL (and even on that point, rules now restrict and limit mercury within the bulbs). LED bulbs would also last significantly longer than CFL and wouldn't suffer from the problems that many CFL bulbs do in terms of time to warm up to full temperature, change in light color as the bulbs age, etc.

However, LED bulbs cost more - a lot more - than CFL bulbs, but the costs are expected to drop as production increases and economies of scale take hold.

To help spur domestic manufacturing of LEDs, which are sophisticated pieces of electronics, the federal government came up with a contest - $10 million to the winning design.
The L Prize was meant to ease this transition by enticing manufacturers to create affordable bulbs to replace the most common type, the traditional 60-watt.

A Philips spokesman declined to talk in detail about the bulb or its price because the product has yet to be formally launched. It is expected to hit stores within weeks and is available online. But the spokesman said the L Prize bulb costs more because, as the contest required, it is even more energy-efficient, running on 10 watts instead of 12.5 watts. It is also brighter, renders colors better and lasts longer.

Still, the contest set price goals. According to the L Prize guidelines, manufacturers were “strong­ly encouraged to offer products at prices that prove cost-effective and attractive to buyers, and therefore more successful in the market.” The target retail price, including rebates from utilities, was to be $22 in the first year, $15 in the second year and $8 in the third year.

Energy Department officials defended the award, saying that they expect the cost of the L Prize bulbs to drop over time. “The L Prize competition played a critical role in driving manufacturing and engineering innovations in the U.S. lighting industry and helping to make the next generation of energy-saving LED lighting options more affordable for con­sumers,” said department spokes­woman Niketa Kumar.
This is a contest along the lines of the X Prize to develop private reusable spacecraft. It's meant to spur development in an area, and it allows for multiple manufacturers to consider ways to improve manufacturing and development.

So, even if the company that won the prize doesn't succeed in its business goals - other companies that participated in the contest might do well because of insights gained as a result of that participation.

Still, it's going to be hard for a domestic manufacturer to move ahead against competition from LEDs manufactured in places like China or India, where manufacturing costs are far lower.

It's meant to spur interest and development in alternative lighting to fuel-hog incandescents and on that point, it's going to save consumers quite a bit of energy costs over the long run.

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