The EU Ban on Inefficient Lamps

An Analysis of It’s Impact and Repercussions

                               Akhil Sivana...
Disclaimer

•   Frost & Sullivan takes no responsibility for the incorrect information supplied to us by manufacturers or ...
Certification

•   We hereby certify that the views expressed in this research service accurately reflect our views based ...
Phasing out incandescent lamps in the EU

In February 2009, the EC decided to implement a planned phase out of inefficient...
The Current Situation
Lamps Market: Current Market Scenario (Europe), 2009

                  Efficiency




             ...
Phasing out inefficient lighting:
   The Roadmap
Legislative Roadmap for Phasing out Inefficient Lighting (Europe)
    200...
Roadmap Explanation
    The EU has set 2 different targets for clear and non-clear omni-directional lamps. It should be no...
Impact on the Incandescent lamp market
Lamps Market: Current and Future Trends (Europe), 2009
                            ...
Impact on the CFL market
CFL Market: Current and Future trends (Europe), 2009

                       Growth




         ...
Impact on the LED market

LED Market: Current and Future trends (Europe), 2009
                                           ...
Conclusions


•     Incandescent technology will either be phased out completely or will have very niche
      application...
About Frost & Sullivan




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Who is Frost & Sullivan


The Growth Consulting Company
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Exclusively Focused on Growth         ...
T.E.A.M. Methodology

Frost & Sullivan’s proprietary T.E.A.M. methodology, ensures that clients have complete “360 Degree
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The Impact of the EU Ban on Energy Efficient Lighting

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A short market insight on how the ban on incandescent lighting is going to effect the lamp market; in particular the CFL and LED illumination markets.

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The Impact of the EU Ban on Energy Efficient Lighting

  1. 1. The EU Ban on Inefficient Lamps An Analysis of It’s Impact and Repercussions Akhil Sivanandan Research Analyst, Environment and Building Technologies July 2009 1
  2. 2. Disclaimer • Frost & Sullivan takes no responsibility for the incorrect information supplied to us by manufacturers or users • Quantitative market information is based primarily on interviews and therefore, is subject to fluctuation. • Frost & Sullivan Research Services are limited publications containing valuable market information provided to a select group of customers in response to orders. Our customers acknowledge, when ordering, that Frost & Sullivan Research Services are for customers’ internal use and not for general publication or disclosure to third parties. • No part of this Research Service may be given, lent, resold or disclosed to non-customers without written permission. • Furthermore, no part may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the permission of the publisher. • For information regarding permission, write to: Frost & Sullivan Sullivan House 4 Grosvenor Gardens London SW1W 0DH United Kingdom © 2009 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan. 9835-19 2
  3. 3. Certification • We hereby certify that the views expressed in this research service accurately reflect our views based on primary and secondary research with industry participants, industry experts, end users, regulatory organisations, financial and investment community, and other related sources. • In addition to the above, our robust in- house forecast & benchmarking models along with the Frost & Sullivan Decision Support Databases have been instrumental in the completion and publishing of this report. • We also certify that no part of our analyst compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this service. 9835-19 3
  4. 4. Phasing out incandescent lamps in the EU In February 2009, the EC decided to implement a planned phase out of inefficient forms of lighting for general illumination purposes. This resolution is mainly targeted at phasing out incandescent lamps starting 2009, but will over the course of a 7 year period encompass other forms of lighting. This article is intended to deal with the first two phases of the directive. It tries to give an explanation on: •The major technologies impacted. •The current and future strategies likely to be adopted by market participants in dealing with this. •Medium and long term implications of the ban. The main pieces of legislation that will impact the market during this time are: • The first two phases of the ban on clear and non-clear lamps that will be implemented from September 2009 onwards. The latter phases are still unclear as they will be modified post 2014. • Directive on the restriction of the use of certain hazardous substances in electrical and electronic equipment: 2002/95/EC (RoHS directive). • Directive on the energy performance of buildings: 2002/91/EC (EPBD). • Eco-design of Energy-using Products: Directive 2005/32/EC (EuP). 9835-19 4
  5. 5. The Current Situation Lamps Market: Current Market Scenario (Europe), 2009 Efficiency CFL LED Incandescent Size of bubble is indicative of market size. Growth Source: Frost & Sullivan • A look at the current lighting scenario shows a mature incandescent market outselling energy efficient technologies like compact fluorescent lamps (CFLs) and light emitting diodes (LEDs). • However, the CFL and LED markets are both growing at a higher rate. The increasing efficiency of these products helps sustain growth. • Costs of these products have also been dropping, making them more accessible to the consumer. 9835-19 5
  6. 6. Phasing out inefficient lighting: The Roadmap Legislative Roadmap for Phasing out Inefficient Lighting (Europe) 2008 2009 2010 2011 2012 2013 2014 2016 Incandescent and all Initial Draft. halogens which don’t Consumers and have A rating market discontinued. Only clear lamps with participants CFLs and LEDs with A low voltage halogen notified rating allowed. Second level with integrated or non- functionality integrated Energy labelling requirement for Incandescent/ Incandescent Incandescent All requirements transformers reaching all lamps conventional /conventional /conventional Incandescent and Review class B allowed. Other halogen > halogen > halogen > /conventional regulations as decided 100W below C 75W below C 60W below C halogen in stage 5 discontinued discontinued discontinued below C discontinued B & C Halogens allowed Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Clear lamps Notable exceptions: Source: Frost & Sullivan; Fluorescent lamps without integrated ballasts, European Commission Non-Clear lamps HID lamps 9835-19 6
  7. 7. Roadmap Explanation The EU has set 2 different targets for clear and non-clear omni-directional lamps. It should be noted that legislation covering directional lamps (i.e. – those with at least 80% of light output concentrated in a solid angle less than 120 degrees) is currently in the works and should come into play when new energy labels are implemented post 2012. A staged entry format is there for these targets in order to give manufacturers time to redesign or develop their products. For clear lamps: • The minimum standards for clear lamps will come into complete effect from September 2009. • All clear lamps which do not have an A rating under current eco-design ratings are to be banned from sale in stores unless they are for special illumination purposes. This will effectively stop sales of all incandescent and low efficiency halogen lamps. • The lamps used for special illumination purposes will have to be labeled as such, clearly marking their specific purpose and functionality as per EU guidelines as well as noting that they are not suitable for household illumination. For non-clear lamps: • The phase out will be more gradual. From September 2009 onwards, lamps greater than 100W with ratings less than C (i.e. D,E,F and G) will be discontinued. All lower wattage lamps of F&G class will be phased out so only E class lamps remain. • From September 2010 onwards, lamps greater than 75W below C class will be discontinued. The wattage is decreased every year as per the diagram until by 2012, all lamps (incandescent/halogen) below C class are discontinued. From 2013 onwards, the levels will be made progressively stricter, thereby phasing out all incandescent lamps. The second level functional requirements will come into being, also new technologies and labeling schemes will also come under review. 9835-19 7
  8. 8. Impact on the Incandescent lamp market Lamps Market: Current and Future Trends (Europe), 2009 100 Long term: 2 paths are possible. 100 Scenario 1: Complete replacement Lighting Market Share(%) by CFLs, LEDs or other technologies (like improved halogen) in all aspects. 0 Scenario 2: Continued development 100 and need of incandescent in specialist applications. Incandescent CFL LED Other technology (halogen, 0 0 long fluorescent etc.) 2008 2010 2012 2016 Source: Frost & Sullivan The legislation is slightly misleading as far as the impact on incandescent lamps is concerned. Immediate effect – Shift from general illumination to specialist applications for It does not outright ban the technology of incandescent lamps, but only those ones which are incandescent. used for general illumination and cannot meet the efficiency rating criteria (which most can’t). 9835-19 8
  9. 9. Impact on the CFL market CFL Market: Current and Future trends (Europe), 2009 Growth Size of bubble is indicative of market size. 2008 2012 2016 Source: Frost & Sullivan • Immediate application space for CFLs is in the residential sector. Over the span of the new legislation, it will gain greater market size in both residential and non-residential sectors as it begins to replace incandescent lamps. • High growth in the initial years as apart from long fluorescent lamps, CFLs are the only major alternative to incandescent lamps, especially for residential applications. This will decrease over time due to competing technologies and market saturation. • The problem of mercury content will be regulated by the RoHS (if unregulated, mercury emissions would increase from 2.9 tonnes in 2007 to 3.1 tonnes by 2020). However, continuing evolution of the technology might remove this problem altogether. From stage 2 onwards, it will be a maximum of 1.23 mg of mercury for each CFL. 9835-19 9
  10. 10. Impact on the LED market LED Market: Current and Future trends (Europe), 2009 Retail revenues Customised solution revenues Size of bubble is indicative of market size. 2008 2012 2016 Source: Frost & Sullivan Current scenario: More than 90% of revenues for illumination comes from customised projects and solutions for commercial applications. LEDs for illumination are classified as A class, but do not have significant volumes to warrant closer evaluation. Short term scenario: Not much change in status quo over the next few years. Gradual shift to main stream will take place. Long term scenario: Majority of revenues from off the shelf solutions through retailers rather than customised solutions. Establishment as a mainstream technology. 9835-19 10
  11. 11. Conclusions • Incandescent technology will either be phased out completely or will have very niche applications in the short term. • The main succeeding technology will be CFLs and to an extent long fluorescent lamps like T5s. This holds true for both the short and the long term. • LED lighting is still mainly for bespoke applications in the commercial sector. Large increases in penetration for the residential sector will not happen in the short term. • Manufacturers with greater experience in the new technologies will have greater success rates due to established reputations and an increased distribution base. • Stricter quality control measures after the first two stages will also play in favour of established manufacturers who will be better positioned to upgrade and improve their products. • Climate change legislation will also play a part. Partnerships with utility firms and other vested interests could boost market image and thus increase market penetration for new technologies and for manufacturers. 9835-19 11
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