Onword to 2020

Today I am going to talk about the next five years in lighting. The next five years in lighting
are going to exciting and truly transformative.We are going to see exciting changes in how
people think about, purchase and value lighting. It’s going to be awesome to see a
previously deeply inefficient end‐use improve by leaps and bounds. And—the next 5 years
are going to challenge us as an energy efficiency industry. They are going to challenge us to
be better at finding the true opportunities and at leveraging market momentum, using
tools we are familiar with but with which we need to become far better at wielding.
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PRESENTATION FOR ESOURCE 9/29/2014 BY CARRIE COBB. IMAGES CREATED BY CARRIE
COBB. PHOTOS TAKEN BY CARRIE COBB & LAUREN GAGE. COLOR PALETTE “cheer up emo
kid” DEVELOPED BY ELECTRIKMONK ON COLOURLOVERS.COM SPECIAL THANKS TO ROB
CARMICHAEL OF CADEO GROUP FOR LIGHTING MARKET INSIGHTS
1

LEDs are poised for rapid market penetration. This chart is based on DOE research from
August of this year—hot off the presses. Using an econometric model, DOE estimates that
by 2020 48% of total lumen‐hours sold in the US are going to be in LED—without
intervention of utility rebates. This means if utilities stopped right now, nearly half the
market would go to LED in 5 years. This is truly amazing to see an energy‐efficient option
with so much momentum.
Source: Energy Savings Forecast of Solid-State Lighting in General Illumination
Applications, DOE, AUG 2014
2

In residential, it’s a third of the market moving to LED by 2020.
3

And in commercial 42%. These forecasts confirm what a lot of folks have been observing—
LEDs have momentum. This isn’t a market we have to desperately push up the hill.
4

And LEDs aren’t the only efficacious choice out there. The Energy Information
Administration (EIA) projects that by 2020 all residential lamps will be LED or CFL. This is
because of the 2020 leap in EISA—manufacturers are not doing R&D on halogens to meet
the new efficacy requirements of the law. So…
5

Absolutely. We are completely done with business as usual. We make efficiency happen,
not just watch it happen. So, while we are done with business as usual, we are not done
with lighting.
That means we need to re‐think lighting completely. We have to seriously re‐evaluate our
role in lighting and what utilities bring to the table. If we continue on with buy‐downs and
incentives as we have in the past, we risk paying millions and millions of rate‐payer dollars
for efficiency that would have happened independent of our dollars. As stewards of rate‐payer
funds and as efficiency warriors, it’s time we shake it up. And today I am going to
start with 4 areas to consider for your new awesome lighting programs that are going to
make the lighting transformation even more amazing.
7

Now, as baselines rise, moving upstream becomes more and more attractive. Which brings
us to our first area—moving midstream strategically. Midstream can cut costs and increase
effectiveness for a program. It can really create a “bang for the buck” as rate‐payer dollars
stretch further. But, I want to talk about a few things to consider.
8

There are two channels to hit midstream on lighting, retail or the distribution chain. In
general, the distribution chain mostly serves the commercial and industrial market.
9

In the Northwest, we collected data on the entire non‐res lighting market through the
distribution chain and estimated the efficiency within the entire market. We were not
concerned about attribution or why people did what they did—energy efficiency is a power
resource, and we wanted to know how big the resource was outside of our program
investments. And what we found blew our minds—45% of the energy improvements were
outside of our efficiency programs from 2010‐2012. Our programs were so active we didn’t
realize so much was happening outside of the programs. So it was great news to us that all
kinds of people were crowdsourcing the energy efficiency power plant and doing energy
efficiency without our direct investment. But here is the thing—had we operated mid‐stream
in this time period, we could have ended up paying for a lot more of the savings.
10

So when you move midstream, it can look like your program savings explode up, but really
it might just be that are just paying for more versus more happening.
11

Because what you really want is to increase the savings you are paying for and producing.
You want the total efficiency market to increase.
12

So—first, get that market data so you know what is happening in the market. NEEA & BPA
just collaborated on a great market study which is available on the BPA website, and we are
just about to go in the field for this year. Then, don’t pay for everything, but pay on goals
met. NEEA is currently working on a pilot in the Northwest on low‐wattage T8s. One
challenge has been the baseline, and they have found that sales are lumpy and the data are
really chaotic. So figuring out the sweet spot for not paying for everything but providing
enough real‐time incentives for the distributors to play ball is a tough balancing act, but
one we have to meet. And finally, always be working towards on an exit strategy on your
technology—this is the hardest part of all—but define success and then move on to new
technologies. The market is dynamic, which will mean the program to influence it needs to
be dynamic as well.
13

Area 2: Retail sales data. Now…I know what you are thinking. How could retail lighting sales
data ever transform the world?
Well, sales data is the foundational awesomeness that we are building our new lighting
programs on. And I don’t mean the sales data on what you incentivize—let me say that
again—I am not talking about the sales data we already get on our incented programs. I am
talking the Full‐Category Lighting Sales Data that no one can get at the level which is
required. I’m talking about the sales data on the inefficient and the efficient lighting sold in
the retail channel. And without these data, I can guarantee you right now, utility programs
in retail will be history because you need this data for baselines and program strategy now
more than ever. You need these data to prove your programs matter.
14

So let me talk a little about why. When we look at the market, we have two big categories
of market data—product flow and the product stock. Flow is all the new product coming
into the market. Sales data is how you track it. Stock, on the other hand, is everything that
is installed. Both types of market data are important. BUT they tell you different things.
Product flow tells you what is happening right now. It tells you what choices consumers are
making right now. Product stock tells you what people did in the past—it is a history of all
the choices ever made.
But in a dynamic market that is rapidly changing, stock is slow. It is the last thing to change.
Product flow is the agent of change—it is where the change happens. In a dynamic market,
you need to know where the change is happening in what consumers are buying and how
they are buying. And this is critical‐critical‐critical in lighting more than anywhere else,
because lighting is super confusing.
15

Because on one hand, we have Halogen sales increasing rapidly—from 2012 to 2013 sales
increased by 141%. This was a more rapid sales increase than what happened in LEDs in the
same time period.
16

But at Home Depot—who we can guess is likely the leader in selling light bulbs though we
don’t actually know because we don’t have market data—LEDs are prominently featured
and are rapidly increasing the amount of shelf space they contain. This picture is from
Northern Idaho, where LEDs were flying off shelves according to sales staff.
17

At the same time, we also see in Target, Wal‐mart and other retail channels the EISA –
exempt incandescent lamps, particularly 3‐way lamps. Our analysis shows that these EISA
exemptions are roughly about 4% of the total, but over time this could change.
18

So, we know halogen sales and LED sales are up, and we also see CFL sales declining. In the
Northwest, a great organization called NEEA does an annual consumer survey and they
have been asking consumers the same questions since 2010. Not only do we see that CFL
sales are declining, but the people buying CFLs are less satisfied with their CFLs as time
goes on.
19

With so much happening in residential lighting, sales data is more critical than ever. We
need dynamic market average baseline data to help us plan the most effective programs
possible and to prove that these investments have value to our ratepayers. And in the
Northwest, we are getting serious about sales data. We have already begun collecting full‐category
annually from our regional distributors on the non‐res side, but now we are
getting serious about residential lighting sales data
This month we had a large regional summit with residential program managers and
planners from the entire Northwest. And it was amazing. We have a regional plan and next
steps on how we can overcome the barriers to obtaining retail sales data. But one thing
that we identified as critical is partnering nationally. This is one of the most critical areas of
national collaboration in the next year: partnering together to collectively ask for retail
sales data. So you will be hearing more about this topic over the next year—my prediction
is this data is poised to be as sexy as behavior was a few years ago—so please hop on this
train! Please talk to me during the forum or email/call to learn more about our next steps
and how you can join us.
20

A national effort that BPA is a member of as well is the Consortium for Retail Energy
Efficiency Data, CREED. This effort, led by Scott Dimetrosky at Apex, is to gather utilities
nationally together to purchase sales data. It’s an example of how this topic is finally
gaining some visibility—but to be successful in gathering retail sales data there has to be a
critical mass.
21

So your action item—talk me at this conference about sales data or email me at
clcobb@bpa.gov.
22

The third area I want to touch on is efficacy. Utilities have been involved in efficacy
improvements through setting specifications via Design Lights Consortium—or DLC‐‐ for
Luminaires and Energy Star for lamps. To simplify a little, DLC covers luminaires, which is
“systems” that you see on the commercial side, and Energy Star covers lamps, which are
the screw‐in bulbs and you see them some in commercial and lots in residential spaces.
And LEDs have been increasing in efficacy, but this is an area where utilities have a strong
lever and need to use it.
23

And luminaires are showing steady efficacy gains. But that isn’t what we are seeing on
lamps covered by Energy Star, where efficacy isn’t increasing as much and competition is
around price.
24

And luminaires are showing steady efficacy gains. But that isn’t what we are seeing on
lamps covered by Energy Star, where efficacy isn’t increasing as much and competition is
around price.
25

The DLC has had success in pushing markets up on efficacy. April of 2012 and January of
2014 they had two rewrites of their specifications, and as you can see, a whole bunch of
products fell off the list. But then the product list rebounded, and the upward trajectory of
qualifying products continued.
26

I want to talk a little about where efficacy isn’t showing improvements, which is in PAR 38
lamps.
27

In 2012, DOE released a Caliper report which showed the efficacy of PAR 38 at that
time. Now, in 2014, which is two years later, we are still seeing the same amount of
efficacy, with most PAR 38 had an efficacy of 45 lm/w to 70 lm/w, with a few as high
as 90. It hasn’t changed in two years.
28

That might seem like no big deal, but two years is a long time in LEDs. PAR 38 are dropping
in price and manufacturers are competing madly on price. But the market isn’t indicating
any competition on efficacy—it is stuck.
29

So your action item—have your utility participating in national specifications, and push for
efficacy increases so that our utility funds are reserved for the most efficient lighting.
30

Now let’s talk about the 4th area: which is focusing on market niches.
31

There are niches where the total market dynamic isn’t in play and program opportunity
remains. One example is in residential T‐12s.
32

When we look at distributor data, we see that the new T12 standard is working famously. It
is great. T12 sales are dropping rapidly and we see that 32w is the new linear fluorescent
baseline. This is a fabulous achievement of energy standards.
33

But—the picture is much different in retail. In retail, we see a lot of T‐12s. And there is a
good reason for this—in a commercial space, it quickly becomes a good financial decision
to change out an old T12 system rather than pay a premium on T12 lamps that suck out
energy. But for residential, that change‐out is less easy. For the DIY’ers, replacing their
ballasts and lamps to T8 might not be a big deal, but for many people it is just easier to pay
the higher price for the compliant T12s.
34

And while we don’t have great data on how many lamps are sold via retail, we do know
that linear fluorescent is a good chunk of our remaining opportunity in lighting in homes.
Based on NEEA’s on‐site building stock assessment in 2011, over 10% of the sockets were
linear fluorescent, and 70% of those were T‐12. We found a lot of these sockets in high‐use
kitchens.
35

So, start to attack market niches with quick targeted campaigns. Help people convert their
T12s, starting with their kitchens.
36

In conclusion—we have an amazing 5 years ahead. What we learn in how to operate in a
market with rapid momentum are skills that will help us in the future in all markets,
because our entire industry is entering the age of cool. So figuring out how we can move
the dial & leverage market movement while being responsible stewards of ratepayer funds
is going to matter more and more every year.
So we have to get serious about sales data so we can invest our dollars wisely, and that is
going to require a lot of national cohesion to make the case to retailers why this matters.
We are going to need be aggressive in pushing efficacy gains, so that prices don’t just fall
but efficacy also increases. We are going to need to think dynamically in our programs
around market niches that don’t play by the same rules as the rest of the market. And as
we consider program models in the midstream space, we want to be careful how we
implement those programs so we don’t pay for more and call that success. Please feel free
to email me for any of the reports or information referenced in this presentation, thank
you.
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