The following interview appeared in Clean Energy Pipeline on 3/2/12.

INTERVIEW: LED market reaches critical inflection point, says Albeo co-founder

The market for light-emitting diode (LED) technology has reached a critical inflection point where the technology has become more efficient than incandescent lighting technologies, according to Albeo Technologies’ Chief Executive Officer and co-founder Jeff Bisberg.

Industry conditions have created a perfect storm where several separate but serendipitously interworking market conditions have converged in a way that is favourable to the technology, he told Clean Energy pipeline.

The drive behind the critical inflection point is two-pronged, in Bisberg’s view. Improvements in LED technology coupled with the growth of low emissions building technology have catalysed and fermented an all but tangible turning point.

“The technology is coming to age and reaching critical inflection point, where it is more efficient than all other lighting technologies,” he said. “It is a perfect storm and we’re taking advantage of that.”

A 2011 McKinsey report suggested that LED could reach 37% market penetration by 2015 if costs are reduced and government support provided, although growth to 50% within a decade would be optimistic in a business as usual scenario. According to the report, the technology can reduce energy consumption by over 80% compared with incandescent lighting.

Although the growth of the LED sector will invariably depend on local economies and conditions, Bisberg said Albeo is “bullish on overall growth in the market place and industrial space”. Advanced lighting technologies such as LED are benefiting from the growing interest in low emissions technology and energy monitoring, for example.

“The overall environment for clean green building technology is changing,” said Bisberg. “The proportion of [building technology] that is green is increasing tremendously. LEED certification, a rating system for green buildings, is the fastest growing of the new building section. Great desire in this community is driving the interest in LED.”

Eight year-old company Albeo’s rapid growth in 2011 is an apt illustration of the “perfect storm” Bisberg speaks of. The company recently announced a 50% increase in revenue and a 300% increase in retrofit projects, and is in the process of raising funds to support its expansion into new international markets, particularly in Europe.

Albeo’s trajectory to profitability has been unusually fast; it became profitable within two years of selling commercial and industrial LED fixtures and was last year named the tenth fastest growing manufacturing company in the US by Inc Magazine. It grew it sales to 26,675 fixtures in 2011 and is continuing to pursue the diversification of its products while growing its participation in the retrofit market.

“What sets us apart is bringing out the best in LED,” said Bisberg. “We aim to optimise cost, improve light levels and offer a flexible product that is 25% to 30% more energy efficient than other LED lighting technologies.”

LED technology is gaining increasing traction in the global lighting market in line with the reduction of its costs. Material flexibility is integral to the technology’s ability to succeed its ancestors and LED is space-efficient, robust and cool lighting technology. Its intrinsic properties mean it can at once be used to generate lighting that complements skin tone, while being the ideal technology for use in data centres due to its cool light.

“The LED is a disruptive technology in the way you build fixtures is different,” said Bisberg. “As LED comes into the market there is an expectation that it will be better. The total cost of ownership is better and the aesthetics are better. We have wireless sensors in the fixtures, aesthetically pleasing glare shields and flattering lights. We can put these additional design features in it due to the coming of age of the technology.”

For Bisberg, the transition to LED lighting technology will be as natural as the change to digital technology, and Albeo will continue to pursue new technologies and opportunities in line with this evolution.

“It’s still early in the cycle but certain markets are becoming available,” he said. “LED is intrinsically a better light. Now we’re seeing opportunity for light creation going to solid state LED. The LED is an enabler for the change of fundamentally what a light source does.”

Legislation and the need for energy security will be critical drivers in the acceleration of LED technology, according to Bisberg, who noted that “energy efficiency is low hanging fruit; converting to energy efficiency you alleviate costs”.

The adoption of LED technology, like that of digital electronics, will depend largely on whether it breaks through the cost barrier, however. Expense still remains an obstacle to its widespread implementation, as LED technology currently retails at three or four times the cost of traditional fluorescent lighting. In Bisberg’s opinion, LED technology could reach cost parity with older technologies in just two or three years. He noted, however, that true parity is neither a prerequisite for success, nor entirely essential to it.

“We can be cost competitive in two to three years, perhaps in 2013 to 2014,”said Bisberg. “The ramp-up can happen before that. The cross over to new technologies happens ahead of cost parity. At between 1.5 to two times the cost of other technologies, you’ll be well ahead of the acceleration.”