LED Lighting Systems: Prospects for the Russian Market
LED lamps and lighting systems are today the most energy efficient solutions for illumination. Demand determines supply. At what stage of development is the Russian LED market? Who is interested in purchasing these products, first of all? and which of the domestic suppliers should we select? What can we expect in the long run?
Creation of the Russian LED market
The first LED systems for industrial and outdoor (street) lighting appeared on the Russian market in 2005-2006. However, before the beginning of 2010, the use of LEDs was limited mainly to small pilot projects, which was due to both the modest characteristics of LEDs parameters and the high cost of the lighting systems. Moreover, there were no examples of long-term (more than 3 years) experience of successful maintenance and operation of this type of device as only the guaranteed use of LEDs over many years would economically justify transition to this type of lighting.
A pivotal change in the situation in the Russian LED lighting market took place in 2009-2010. It became possible, first of all, due to the newly adopted governmental strategy to increase energy efficiency of the Russian economy (see Federal Law No.261-FZ“On energy saving measures…”. For the lighting industry, prohibiting the sale of 100W incandescent lamps from January 01, 2011, was the most significant provision in this document.
After 2010, transition to LED lighting was declared in the majority of adopted regional and branch energy saving programmes as a priority measure for lighting modernization, including industrial and outdoor lighting.
Potential for development
In 2010, sales volumes of the Russian leading manufacturers of LED lighting systems increased severalfold. The total consumer market amounted to 4.2 billion rubles according to Research TechArt agency.
And the market continues to grow. The total Russian LED market in 2012 reached almost 7.5 billion rubles according to the leading experts of state-owned companies.
The main constraint in the development and distribution of LED systems is their high price compared with the traditional light sources and, hence, increased capital expenditure for the facilities which use LEDs, and increased payback period.
The average payback period for the LED lighting systems is usually about 2 years In comparison with incandescent lamps, the transition to LEDs may be paid back less than in one year.
The Financial capacities of the Russian enterprises are quite limited, and the governmental mechanism to support modernization of lighting systems, as well as implementation of energy-saving projects in other industries, still leaves much to be desired. We have to set strict rules to define financing procedures and conclusion of contracts when implementing energy saving programmes. To this end, it is necessary to make appropriate amendments to the following federal laws: No.261-FZ, No.94-FZ and No.223-FЗ1 (the latter specifies the procedure of purchasing by state-owned companies).
The Pattern of demand on the LED market
In the LED lighting market, the industrial, street and office lighting systems are the most popular products which experience sales growth.
This pattern of demand is directly determined by the development and dynamic growth of the leading LED system consumers. These are, first of all, public and municipal institutions and industrial enterprises which implement energy saving programmes.
As regards industrial lighting, the main stimulus for the market growth is to increase the number of lighting improvement projects and, not least, to increase the scale of these projects. For example, in 2012 the number of LED lighting system installation projects increased by 50% compared with 2011, while the overall production of these lighting systems by the leading manufacturers increased by almost 100%.
Commercial companies and organizations show growing interest in LED systems, too. Here the manufacturers of low value-added products, such as foodstuffs or consumer goods, require modernization of their light systems most of all. Transition to LED-based lighting is especially needed by the companies which have been provided with limited amount of energy for consumption.
Automated control systems in LED lighting
High efficacy dimmable LED lighting systems are optimal for application with automated lighting control systems (ALCS). Replacing traditional lights with LEDs and simultaneous installation of ALCS allows up to 75% of the company’s production capacity to be released and redirected for any other production needs.
The use of ALSC is of special demand in highway illumination, where its implementation results in a reduction of energy consumption by 15%, and sometimes even 30-40%. As in industrial companies, the most promising option is to supply ALCS complete with LED lighting systems, which are considered the most promising light sources as an alternative to the existing road lighting systems equipped with high pressure sodium lamps.
The pilot LED lighting projects for highways which have already been implemented have proved that LEDs comply with the illumination standards, including uniformity of road surface illumination.
At the present time, leading manufacturers in Russia either develop new or improve their existing outdoor lighting systems paying special attention to the following aims:
- to increase luminous efficiency,
- to improve the optical system,
- to increase the protection level,
- to simplify maintenance and repair procedures (e.g. removing the power supply from the system housing, etc.).
Today you may notice signs of consolidation in the LED market: 4-5 leading Russian manufacturers hold about 40% of the LED lighting system market. Moreover, we can pinpoint several dozens of companies which are close to the market leaders in the quality of their products.
Recently, there is a tendency towards the creation of Russian LED brands for the producers that enjoy real respect, such as AtomSvet, Ledel, Optogan, Svetlana-Optoelectronika, Focus and other large manufacturers. Within the last one or two years, the leading Russian producers of traditional lighting systems, such as “Svetovye Technologii”, Galad, etc., have also entered the ‘LED race’.
The majority of the leading Russian LED manufacturers use imported LEDs produced by Nichia (Japan), Cree (USA), etc. Korea has also increased production of LEDs with attractive prices and good quality.
Some Russian manufacturers produce their lighting systems based on in-house LEDs (Svetlana-Optoelectronika, Optogan, etc.).
Quality paves the way to success
Speaking about LED lighting, we cannot avoid touching one more aspect. To guarantee proper operation of LED lighting systems over the entire specified service life (25,000-50,000 hours or more), you not only need to select adequate quality LEDs, but also develop a proper design of the lighting system, and use trusted components , particularly power supplies. Only in this way, can you provide a high degree of protection and reliable operation in the severe conditions of the Russian continental climate.
Nevertheless, home-made LEDs are still lagging behind the products of the leading world manufacturers in several respects. However, the general tendency today is to increase reliability and quality of the products manufactured by the leading Russian companies. Even today we can name some manufacturers whose products are as good as European brands, and are even superior in certain parameters, including lower prices.
Apart from the market leaders, there are several hundreds of companies which produce poor quality lighting systems based on imported Chinese LEDs. Competition with Chinese manufacturers – both of LED lamps and lighting systems – is probably the most serious challenge in the LED lighting system market. Meanwhile, the share of Chinese LED systems and equipment in the Russian market has reached at least 30%. The reason is low prices.
The share of Chinese LED lamps in the segment which is an ‘admission ticket’ to the household LED light market is approximately 95%. At the same time, the sale of LED lamps increased severalfold in 2012. Therefore, a number of the leading Russian players are trying to seize their share from China in the market. To some extent, the situation now resembles the previous boom in energy saving lamps which then failed even more often than incandescent lamps. Such a loss of reputation with respect to LED lighting represents a serious danger which should not be neglected.
Also, the share of Chinese LED lighting systems is large in the Russian market due to low prices. However, there are some nuances.
The share of Chinese imports in the segment of industrial and street lighting systems is very small because quality requirements placed by the end users are very high particularly in this very segment.
However, the share of imported Chinese lighting systems is very large in business segments, such as office lighting systems and architectural and lighting systems. While the Russian manufacturers generally managed to halt the ‘Chinese expansion’ in the segment of office lighting systems, the decorative lighting segment has already been lost by the Russian manufacturers according to some market players.
We expect that the development of the Russian LED lighting system market will in general be in tune with progressive growth of the world LED lighting market. By 2015, according to AtomSvet LLC expert estimates, the share of LED lighting sources in the Russian market will amount to at least 15%, while the share of these systems in the global market will reach, by various estimates, 30-50% by that time.
Further improvement of the efficiency of LEDs will be the main focus in the nearest 2-3 years. The prices for the LED lighting systems will continue to decrease due to reduction of LED prices and the prime cost of LED systems through integrated solutions. Solar-powered LED lighting solutions also seem very promising. We have already started using these autonomous outdoor LED lighting systems in our country for illumination of public transport stops, pedestrian footways, etc.
Apart from the traditional LED lighting applications (architectural, industrial, street and office lighting, etc.), very promising trends, such as lighting systems for greenhouses and livestock farms will be further developed and improved. LED solutions will occupy a prominent place in the segments of explosion proof equipment for mines, etc.
In the long run, the future of the LED industry will depend on technologies that are at the experimental stage or at the pilot project stage. These include, for instance, development of silicon wafer LEDs and lighting systems based on organic LEDs.
The LED industry is not standing still. The future will show which trends are likely to become the most important and vital.
Prepared by Anastasia Riabykh
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