LEDinside: China to Raise LED Market Demand with Incandescent Bulb Phase-Out Policy and LED Subsidies

---

---

LEDinside: China to Raise LED Market Demand with Incandescent Bulb Phase-Out Policy and LED Subsidies

The Chinese government recently announced a time frame for the phasing-out of incandescent lamps. China will ban imports and sales of 100W and higher incandescent bulbs starting from October 1, 2012, and ban on 60W and higher incandescent bulbs starting October 1, 2014. October 1, 2015 to September 30, 2016 will serve as an evaluation period. Starting on October 1, 2016 the ban will be extended to 15W and higher bulbs, or adjusted according to the results of the evaluation. The policy is expected to save 48 billion kilowatt hours of power per year and reduce carbon dioxide emissions by 48 million tons annually.

China’s CFL (compact fluorescent light bulb) to incandescent light bulb output ratio was already one-to-one in 2010. China’s CFL output accounted for 85% of global consumption, with a total production volume of 3.85 billion units in 2010. 1.07 billion of those units were sold on China’s domestic market, and the remainder was exported. Once the phase-out policy is underway, the number of incandescent lamp manufacturers will eventually decrease, as will incandescent lamp production volume. The freed-up capacity will be available for LED and CFL lighting products.

How the Step-by-Step Phase-Out Policy will Affect the Energy-Saving Lighting Industry

LEDinside, a research division of TrendForce, indicates that the roadmap for China’s phase-out policy is longer than that of other nations. China’s decision to implement the change gradually was mainly in consideration of the actual status of market supply and demand. While the ban will be instated on October 1, 2012, the initial benefit to LED and CFL bulbs will be minimal, as the first stage of the policy only prohibits 100W and higher incandescent lamp; the proportion of 100W and higher products consumed is relatively small. As for 100W and higher luminaires, the incandescent lamp phase-out will benefit high-power LED luminaires and relatively high-cost downlights. The effects of the second phase-out stage, to begin on October 1, 2014, will be more significant, as the volume of 60W to 100W incandescent bulbs is immense; the elimination of this product category is vital to LED advancement on the lighting industry. Therefore, 2014 will be a turning point in the LED industry development. As for other countries, all 27 nations of the European Union implemented the ban on imports and sales of 100W and higher incandescent lamps on September 1, 2009, Japan is considering prohibiting incandescent lamps entirely in 2012, and South Korea has plans to do so as well by the end of 2013.

LEDinside believes that while China’s gradual phase-out schedule will take longer to complete in comparison to other nations, as this emerging market is immense and of global importance, their mere participation in the ban is already a milestone for the LED industry and energy-saving in general. The Chinese government has labeled the LED market as an important developing industry – their 12th Five-Year Plan includes subsidy policies, expected to be announced in the near future, for the promotion of LED products. Although 60W and higher incandescent lamps will not be removed from the market until 2014, China’s new subsidies will help raise LED lighting market demand and hopefully speed up the popularization of LED and CFL lighting.

China’s LED Industry to Reach US$7.6 billion in 2015

According to LEDinside statistics, in 2010 the size of China’s lighting market was US$12.2 billion (excluding automotive lighting), their LED lighting production was valued at US$1.03 billion, and significant growth is expected for the next few years. LEDinside estimates, propelled by government subsidies and incandescent lamp ban policy, China’s LED market value will reach US$7.6 billion in 2015, entering the ranks of the three largest LED markets worldwide. Playing a major role in both production and consumption, China will become a critical market for both international and domestic lighting manufacturers.