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Global CFL Boom

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Once screw-base (or integral) compact fluorescent lamps (CFLs) had been introduced on a broad scale in the 1980s, they soon became the icon of energy efficiency. CFLs promised to replace incandescent lamps, the only technology of any kind familiar to members of every single electrified household in the world.

CFL market growth was very strong in the early 1990s, fueled by utility demand-side management (DSM) programs. However, by the mid-90s there were signs of a slowdown in growth, especially for integral lamps in OECD markets. This coincided with cuts in DSM program spending following the utility deregulation trend. Meanwhile, program managers had learnt that CFLs were harder to sell than previously thought, and many analysts now doubted whether CFLs would make it on their own. They were wrong, however: First, DSM programs in OECD countries never came to a complete end. In the UK, for instance, smart financial incentive programs have helped sustain a very healthy CFL market. But equally important, in countries like Denmark, where massive rebate programs had helped CFLs achieve a strong position in the market by 1995, extensive quality testing and massive information campaigns have helped the CFL market continue its maturation. Meanwhile, prices have dropped in these markets. Where CFL markets are still weak, especially in developing countries, various financial incentive programs and information campaigns are helping to lay the foundation for future, self-sustaining CFL markets.

In 1997, about 200 million integral and 150 million modular (pin-base) CFLs were sold globally. The savings achieved with these lamps are very hard to estimate. Unknown factors, such as burning hours, lamp life, the type and wattage of replaced lamps and whether the CFLs are used to increase lighting services, make any estimate complicated. There are, however, some indications that CFLs do affect sales of incandescent lamps (GLS) in some markets. About 10 billion GLS lamps were sold in 1997, and sales are growing by 3-5% per year. However, over the last few years, GLS sales have decreased by a few percent per annum in Europe and marginally in North America.

OECD COUNTRIES

In Western Europe, total CFL sales grew by a little more than 10% annually in 1994-96. In 1997, sales grew by 16%, and 110 million lamps were sold. Annual sales of pin-base and integral CFLs reached parity in 1994-95, and in 1996-97 integral sales were larger. Prices have fallen drastically, and electronic integral CFLs can now be found in shops for US$10 or less.

North America (excluding Mexico) has a weaker CFL market. Sales grew by about 10% in 1994-95, but then slowed down to an annual 6-8% in 1996-97. Although modular lamps are still sold in larger numbers than integral ones, the gap slowly closed to a 20% difference in 1997.

In Japan, total CFL sales reached about 40 million units in 1997. Growth rates have decreased slightly over the last several years, from about 20% per annum in 1994 to about 15% in 1997. The gap between integral and pin-base lamps closed to about 20% in 1997 in Japan as well.

REST OF THE WORLD

Sales of CFLs are increasing very quickly, especially in developing countries. As a rule, both growth rates and sales in absolute numbers are higher for integralthe lamps than for modular ones. In Eastern Europe, Asia Pacific (excl. China) and the rest of the world, total growth was over 30%, whereas integral lamps grew by some 40%.

In Latin America, growth has been slower than in other developing countries, and it seems that large-scale CFL programs have had a harder time getting up speed than in Asia and Eastern Europe. Estimated Chinese sales had already reached 100 million units by 1995. However, according to Mr. Chen Yansheng, Executive Vice President of the China Association of Lighting Industry, only about 35 million integral CFLs and a couple of million modular ones were sold in 1997. Still, even these lower estimates are formidable: In 1997, Chinese CFL sales grew by some 170%!

FUTURE ISSUES

Chinese and Far-East CFL production is a key issue. Previously published estimates of annual Chinese CFL production indicated that 1996 production was as high as 300 million units. A more realistic estimate is that production in 1997 ended up at about 100 million units, with integral lamps making up about 90% of the production, according to Mr. Chen. He also emphasizes that it has been increasingly difficult to gather data and statistics in China since the economic liberalization began. The 300-million figure represents the Chinese production potential rather than actual production. (The number of CFL producers grew from 500 to 1000 between 1995 and 1997!)

Since global production capacity seems to be far greater than demand, it is likely that the price of CFLs will continue to decrease. However, quality remains a crucial issue. Some of the Chinese and Far-East products have a reputation for poor quality. Still, low quality should not be considered the general rule. Many of the major lighting manufacturers have established joint ventures in China, but they are also buying lamps from independent Chinese manufacturers built to their own specifications. According to Mr. Chen, Philips and GE Lighting bought a total of 12-20 million CFLs from independent manufacturers in 1997 to be sold under their own labels. Philips has even set up a laboratory in Shanghai to test independent products.

It is clear that CFL prices will be under increasing pressure owing to a number of factors. The financial crisis in Asia is likely to attract even more CFL production to the region. However, as more and more manufacturers enter the market, consumers will find it increasingly difficult to distinguish between low-quality and high-quality lamps, and the role of independent testing, labeling, and standards will become increasingly important.

It could be argued that quality testing is a luxury that only affluent countries can afford. However, no country can afford to sacrifice quality for price. This is illustrated by a story told by Ms. Liu Hong at BECon, the Beijing Energy Efficiency Center: ³Recently I bought a CFL. It was electronic and cost only 15 Yuan (~US$2). This is cheap, but still a significant amount for us. I was offered a 30-day warranty. The lamp broke after 32 days.³

Nils Borg

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