CFL Lighting Market Update & Trends

CFL Lighting Market Update & Trends

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CFL Update

Description: Paper is about Northwest Energy Efficiengy Alliance,. Discussion about CFL Update, Market Update, Lighting and ENERGY STAR Homes, Major drivers in the decline, 2009 Widget Report logistics, National Issues, 2007 Energy Independence and Security, DOE’s biggest concern, CFL program approaches, LEDs, General Logistics, NEEA Managed Lighting Project History, Data Sources. Findings: CFL Sales, NW Promotional CFL Sales, CFL Market Share, CFL Availability, CFL Affordability.


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Domain:  Green Tech Category: Lighting Subcategory: Compact Flourescent Lights (CFL) 
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CFL Update
November 5, 2009

Market Update

Lighting and ENERGY STAR Homes
Activities we have done this year include;
Builder, showroom, verifier/BPS, and utility trainings Product development and design support for local manufacturers Purchasing consulting for showrooms, retailers and builders Lighting 101 trainings Plan reviews Display purchase and design coordination One on one trainings with designers Coordination with manufacturers Monitoring new technologies Assistance on understanding code changes Marketing assistance for manufacturers and showrooms

Market update

2009 Sales Data � NW Widget Report
Q1 decrease of 28.13% from Q1 2008 Q2 decrease of 34.6% from 2008 and 41.47% decrease from Q1 2009. Typically the Q1 to Q2 decrease is 36% Early reporting from Q3 indicates 49% decrease from 2008

Appliances & Consumer Electronics
Consumer Electronics down ~8% Appliances down ~13% Retail overall ~9%

Market Update

Major drivers in the decline � All retail
Collapsing channels Lean Inventory Lower Consumer Spending

Major drivers in the decline � CFLs
Same as all retail Imports down Consumers purchasing based off first cost (Economy)

Most of the opinions I have heard and have personally relate more to corporate purchasing not consumer

Market Update

2009 Widget Report logistics
Who is reporting
Major retailers (except Lowe's and Wal-Mart) Some small retailers

What has changed since 2008
Grocery has started reporting We lost some small retailers

How can you help
Require data reporting for all products (not just incentivized) Submit data to us early for all activities

Market Update

National issues
Nexus Market Research Multi-State Modeling Report
Indicates a net to gross ratio ranging from .5 to 0 depending on the state
In other words programs have NO impact on purchasing of CFLs

These are EARLY results and being heavily contested

DOE push for intensifying program activities
In part a response to the
above study a concern about inventory issues as we enter into Federal Standard changes Pressure from various utilities LEDs not being ready

Market Update

National Issues continued
DOE CFL summit and essentially a task force
Goal is to spread the word about issues Work collaboratively to collect sales data Share ideas that work in moving CFLs into the market before the Federal standard changes Get ahead of commissions making decisions to not allow CFLs to count towards the savings goals

DOE sales data collection
In order to report they need FIVE major retailers to report They have FOUR

Market update

2007 Energy Independence and Security Act (EISA)
Begins phasing in standards over a three year period beginning January 1, 2012 and this phased in approach applies to general illumination lighting.

Lamps Excluded by EISA
3-Way --Reflector --Globes>5" --decorative --candelabra

Plus numerous small volume specialty bulbs (e.g. oven lamps, bug lights) Legislation allows DOE to institute standards for excluded lamps should their sales increase significantly.

Market Update � DOE Concern "Heading for a Crisis"

Potential Market Shock Potential Sales Gap


Sources: Historic Shipments from U.S. Department of Commerce. Projections from D&R International.

Market update

DOE's biggest concern
European Union recent ban on 100 watt
Hoarding in Germany and Britain Public outcry Shortages on CFLs

Limited production capabilities
Only a few manufacturers use automated production
Most of those are generation 1 machines with limited output The shortage in imports reduces the probability of upgrading to the new machines

Market Update

CFL program approaches � ideas from other regions
Fund raisers Door to door sales Direct mail/door to door delivery Giveaways Flu clinics, Red Cross, etc. Direct install programs Online sales Buy-downs, mark downs, and coupons Corporate outreach programs Rewards programs Socket saturation studies

Market update

Two basic technology approaches
Screw based solution
Primarily made by CFL and Incandescent manufacturers Category with potential

Category immerging

Avoid other products

This group is setting the market up correctly, but it is going to take time How much time?
3-5 years for quality down lights General illumination outside of down lights is a wild guess on a moving target This slide is the opinion of Brian Simmons from Fluid Market Strategies and based of information in the marketplace and a few speculations. You are encouraged to weigh all information provided to you and make the decision best suited for your organization.

Market Update

General Logistics
Widget report manager
Megan McCabe � (503) 808-9003

General information
Presentations and reports used to compile this update

ENERGY STAR Homes Lighting team
Cheryl Fretz � Nicole Cecchini � Chris Boroughs � Tim Clemens �

Lighting Tracking Study

Conducted by KEMA on Behalf of the Northwest Energy Efficiency Alliance (August, 2009)

November 5, 2009


NEEA Lighting Project History Northwest Lighting Market Tracking Efforts Key Findings
Total CFL Sales and Promotional CFL Sales Regional CFL Market Share CFL Affordability CFL Availability CFL Diversity

Conclusions Recommendations


NEEA Managed Lighting Project History

NEEA Lighting Project Activities
� Addressed market barriers such as high first cost; lack of product availability; poor aesthetics; lack of consumer awareness


� Provided retailer education; salesperson training; advertising/marketing support


� Continued retailer focus (primarily big box stores) � Coordinated with national campaigns � Supported CFL quality research and new product development


� Provided upstream incentives to CFL manufacturers � Covered broad geographic area (including rural communities) � Included big box and non- big box stores in promotion


� Continued to provide incentives to CFL manufacturers � Excluded large home improvement and some big box stores from promotion


� Ceased active intervention in NW CFL market � Continued to monitor Northwest CFL market


Northwest Lighting Market Tracking Efforts
Sales data reporting

Frequency Elements Tracked
Quarterly � Promotional and non-promotional CFL sales by retail chain and store type

Market share estimation


� Northwest ES CFL market share of residential medium screw-base lamp sales

Retail store shelf inventories

2005, 2006, 2008

� Presence/absence of CFLs; CFL price; number/diversity of models available; other elements by region, lamp style, store type

Interviews with CFL suppliers Interviews with utility program mgrs, retail store mgrs, NEEA project staff Customer telephone surveys

2006, 2008

� Perspectives on market activity; current and future market trends

Subset of these on annual basis

� Perspectives on market activity; current/ future market trends; program plans; CFL stocking patterns; satisfaction with NEEA promotions; other issues

2005, 2006, 2007

� CFL awareness; purchase rate; installation behavior; satisfaction/perceptions of CFLs


Data Sources
Sales Data
Actual and estimated CFL sales data obtained from Northwest retailers

Market Share Estimates
Estimated market share from a linear function based on relationship between national CFL and non-CFL MSBL sales Derived two estimates based on two data sources (US DOE shipments; Itron RMST)

Retail Store Shelf Surveys
Representative samples of retail stores selling residential lamps in the Northwest (by geography, store type) Panel of stores visited in both 2006 and 2008


Findings: CFL Sales
Total 2008 sales reached 24.7 million ENERGY STAR CFLs Increase of 36% over 2007 Unit sales of promotional CFLs... Increased from 5.9M units in 2007 to 6.6M 2008 Decreased as a proportion of total CFL sales from 32% to 27%
Estimated Northwest Residential ENERGY STAR CFL Sales, 2001-2008
Northwest Energy Star CFL Sales (in Millions)

25 20 15 10 5 2001

NEEA incentive Other Incentive Non-incentive



2004 Year





Sources: Fluid Market Strategies, 2009; PECI, 2006.

Findings: NW Promotional CFL Sales
Between 2007 and 2008, sales of promotional CFLs shifted toward big box stores Proportion of total regional CFL sales between big box and non big box stores held constant
Northwest Promotional and Total Residential ENERGY STAR CFL Sales by Store Type, 2007 and 2008
6 5 4 3 2 1 2007 Year
Source: KEMA, 2009.

12% 33% Non Big Box Big Box 88% 67%

Total NW Res ES CFL Sales (in Millions)

NW Promotional CFL Sales (in Millions)


25 20 15 10 5 2007 Year 2008 70% 30% 30% Non Big Box Big Box 70%



Findings: CFL Market Share
� CFL market share in the Northwest consistently higher
than in U.S. as a whole � Northwest market share continued to increase in 2008 while declining at the national level
Estimated Residential ENERGY STAR CFL Market Share of Total Residential MSBL Sales, Northwest and US, 2001-2008
60% Residential Energy Star CFL Market Share 50% 40% 30% 20% 10% 0% 2001 2002 2003 2004 Year
Source: KEMA, 2009..

Northwest (based on Itron, 2006) Northwest (based on U.S. DOE, 2009) U.S. (based on U.S. DOE, 2009)





Findings: CFL Availability
Percentage of Northwest stores carrying bare spiral CFLs increased between 2006 and 2008
Significantly among non-metro and non big box stores

Percentage of stores carrying specialty CFLs also increased Significantly among non big box stores
Percentage of Stores in Sample Carrying CFLs by CFL Style, 2006 and 2008
2006 % of Stores in Sample 100% 95% 90% 85% 80% 75% Bare Spiral CFL Style
Source: KEMA, 2009.


97% 92% 88% 83%


Findings: CFL Diversity
Average number of spiral (non-specialty) CFL models per store increased significantly between 2006 and 2008
Particularly among non-metro and non big box stores

Average number of specialty CFL models per store remained constant
Average Number of CFL Models Per Store By CFL Style, 2006 and 2008
2006 Mean # CFL Models/Store 25 20 15 10 5 0 Bare Spiral CFL Style
Source: KEMA, 2009.


15.8 13.3 7.2 13.3


Findings: CFL Affordability
No significant change in average retail price for CFLs between 2006 and 2008
By style, store type, or region (metro vs. non-metro)

Average Price per Lamp by CFL Style, 2006 and 2008
2006 Average Price per CFL $8.00 $6.35 $6.00 $4.00 $2.00 $Bare Spiral CFL Style
Source: KEMA, 2009.

2008 $6.36




Withdrawal of NEEA's CFL incentives had no major impact on market
However, other sponsors continued to provide incentives

Big box stores did not lose ground despite shift in CFL incentives toward specialty lamps
Maintained share of total regional CFL sales Maintained availability, diversity, price

Non big box stores did not lose ground despite shift in CFL incentives toward big box stores
Maintained share of total regional CFL sales Increased availability and diversity of models stocked Maintained price


Recommendations from KEMA � Undertake rigorous market tracking efforts
CFL sales data (at highest possible resolution)
Consider participant ability/willingness to provide this data as a criterion for program eligibility

Consumer adoption rates Household-level saturation rates CFL prices Non-CFL sales


Next Steps - 2010
Research Activity Quantitative Consumer Survey Field Date Q1 2010 Objectives
Awareness Perceptions Purchase habits Stocking patterns Sale data for 2009 Market share assessment Availability Price Diversity On site audit of sockets (how many and location) On site usage survey

Sales Data Review

Q1 2010

Store Shelf Survey


Socket Saturation from Residential Building Stock Assessment

Q2/Q3 2010


Status of 2009 CFL Savings Forecast

Corporate Planning

Historical Total Regional Savings Savings result from new conservation capacity produced by CFL sales in the region
Based on total regional bulb sales less the bulbs used for replacements Retail sales of CFL bulbs Total regional savings results from all market change efforts: utilities, NEEA, consumer behavior, etc.
Year 2005 2006 2007 2008 Gross Total Regional Bulb Sales (Millions of CFLs) 6.8 10.7 18.9 25.2

Historic Total Regional aMW Savings, Con't.

Total Regional Savings
90 80 70 60 aMW 50 40 30 20 10 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Years

82 aMW

2009 Savings Forecast Forecasts are based on Roger's Diffusion of Innovation Theory

Forecasting the CFL Market

Develop a Diffusion of Innovation Curve (`S' Curve) for CFLs
Fit the `S' Curve through the existing historic data
market share data

Develop Terminus � EISA 2007
Lighting efficiency standards starting in 2012 Assume maximum CFL saturation at 90% Assume 5 year lag period to reach maximum

2009 Forecast Under `Normal' Conditions
Regional Share of Total Bulb Market w/ Corresponding 'S' Curves
100.00% 80.00% 60.00% 40.00% 20.00% 0.00%
19 97 19 99 20 01 20 03 20 05 20 07 20 09 20 11 20 13 20 15 20 17
2009 37% market share 2008 25% market share

Regional Market Share

� Under `normal' market conditions, a 37% market share would have equated to approximately 30 MM CFL bulb sales in 2009

Extreme Market Conditions Actual Q1 and Q2 data results - estimates 8.5 MM in CFL sales for these two quarters
38% drop from last year

2009 Forecast � Between 15 and 19 MM in sales (Market share is dropping)
Equates to 46 aMW Total Regional Savings Much lower due to high number of replacements Hard to predict due to abnormal market conditions
May need to readjust the `S' curve to better reflect market conditions