ETS Interview: LEDs and Energy Efficiency
Today, Energy Tech Stocks has the fifth installment from our interview, outlining my LED stock picks. He quotes me at the start saying that it's "going to be a gigantic market" about LEDs. It is, but only when compared to the current size of the market... you can ramp up a lot from a very small base.
LED bulbs are increasing in brightness and decreasing in price rapidly. It's these quickly improving economics that make me bullish about LEDs.
Unlike many energy efficiency technologies, LEDs are a product that a business can sell. Much of energy efficiency involves a complete revamping of our ways of doing things. The truly gigantic market is the whole energy efficiency space, but it is much more difficult to invest in behavior change than it is to invest in product. Nevertheless, there are ways, such as with performance contracting companies, more efficient transmission, or smart metering.
Before we get carried away looking at the sheer size of the potential energy efficiency market (as measured by the cost of wasted energy that could be saved), we need to remind ourselves that just because a market inefficiency exists does not mean that anyone has yet invented a business model which can profitably exploit it. The fact that energy efficiency is so much cheaper than new generation is, to me, a priori proof that the market is inefficient.
LEDs have a simple business model that is likely to capture a rapidly growing proportion of the lighting market... but lighting is only a small part of the energy we use (and waste), so I'm always looking for other practical business models that can help to make something we do more energy efficient, and capture enough of that value to make the business self sustaining and, we hope, a good investment.
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