Policy & Progress: How Fast the LED Shift Occurred

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In 1962, Nick Holonyak, Jr. invented the first light-emitting diode bulb, or LED light bulb. Due to a variety of factors, such as cost and familiarity, incandescent bulbs led the way in sales into even the 21st century. But in 2007, the United States government passed legislation paving the way for a shift away from incandescent light bulbs.  By the year 2014, the manufacture or import of incandescent bulbs in the US was to be banned. In addition, by 2020 regulations requiring a 200% efficiency increase in bulbs was passed.  Incandescent bulbs that meet energy requirements are available, but are no longer as popular as they once were. Since then, the shift to LED has accelerated, with the LED light bulb leading the way in sales among all bulb types.

LED shift cta

LED Lead Has Grown

ashes-sitoula-32544In October 2015, LED bulbs already held a 35% share of the light bulb market in units sold, with incandescent bulbs at second with 21%. By April 2017, that share had grown to 44%, with all other bulb types losing share relative to the LED bulb.

Given LED’s higher price point, in dollar share the LED lead is larger. In October 2015 LED’s share sat at 51%, with incandescent bulbs second with 12%.  The lead fluctuated over the next year and a half as both the price and availability of LED started to drop, but LED bulbs still held 54% of the dollar share as of April 2017.

Policy and Economics Collide

Incandescent bulbs, long the standard in homes, carry the advantage of very low prices compared to more efficient options. On the other hand, because they only convert 5% of the energy they use into light, they burn out much more quickly. This led to the introduction of energy policies that demanded sharp increases in bulb efficiency, and in doing so, later eliminated manufacture and importation of most incandescent bulbs in the U.S.

Still, the shift in policy would only work to the extent prices became reasonable enough for consumers to see a long-term advantage to buying more efficient bulbs. As production has increased in the past few years,  prices have come down significantly, enough to push LED bulbs into a significant lead over their competitors.

The difference between unit and dollar share lead for the LED light bulb reflects the higher cost of LED. The unit cost has continued to decline, so the dollar share has not increased as quickly or steadily as the unit share. While these will likely never line up in a one-to-one way, the unit share will continue to increase more quickly than the dollar share.


Expect Continued LED Growth

raul-petri-172505While United States energy policy is always subject to temporary shifts, the money an LED light bulb saves will only increase the share this type of bulb maintains in the market–particularly in relation to the currently available alternatives. Everyday consumers now view these bulbs in terms of both environmental and economic advantages, so there are almost no market incentives that threaten to push the share backward.

One unknown in all of this, of course, lies with future technology. The LED bulb currently represents the best efficiency in bulbs, and their pricing makes them the most attractive option economically. Other potential future choices might include laser technology or even a revamped incandescent option with greater efficiency than LEDs currently provide. The combination of efficiency and pricing will remain the key driver in pushing consumers, either to additional LED growth or into options not yet readily available in the market. For the time being, expect the push into greater LED adoption to continue in the immediate future.