The future of electric power is full of uncertainty. How we generate power, where we generate power, how we deliver power are all important issues that are driving change in the utility industry. Those changes will factor into the future price of electricity, but even more important is understanding the demand side. Will power demand increase, decrease or remain the same?
Among the issues that bear on the future of energy demand are the Department of Energy’s approach to efficiency. Many efforts have been made, for example, to increase the efficiency of the electric motor but the technology has reached a limit. There is emerging recognition that greater energy gains are available by looking at the motor, load and control system. Pump systems are a great example where large gains are possible by controlling the system based on load demand.
But there are other technology trends that can potentially impact energy demand in a big way. Lighting in the United States consumes over 17% of all electricity generated annually. Over the last few years there have been a number of new technologies impacting lighting demand. The most significant has been the falling cost of LED lighting. Costs for LED light bulbs have, like all things in the semiconductor industry, fallen dramatically. The efficiency is remarkable and products are available that will replace almost every type of light in the market.
What makes this significant is that the efficiency is so dramatic that it can actually take whole percentage points off of the total energy usage of the United States. Compared to traditional incandescent lighting, LED lamps are 5 times more efficient. They are more twice as efficient as most cold fluorescent lamps.
In order to impact the total power demand in the US, LED technology has to be mass produced at a dramatic scale and the pricing has to be close enough to existing products for the benefits to be valued by the consumer. To meet this challenge CREE has been developing the technology for decades and made the transition form an LED component supplier to other companies to a full line lighting supplier. Direct marketing of end products has helped reduce prices to the consumer and increase the revenue opportunity for CREE. All of this taken together is dramatically increasing the sale of LED lights.
It will take a few years for the trend to reach the scale needed to impact the overall demand for power in the US, but there is not doubt that this is a major trend to watch.