How Soaring Phosphor Prices Will Affect Utility Programs
Published: January 18, 2012
Lee Hamilton
Fluorescent lamps—including compact fluorescents and linear T5s and T8s—are the workhorses of the lighting industry and a mainstay of utility efficiency programs. That’s why there’s concern in the utility world about the rapidly rising costs of the rare-earth metal (REM) phosphors that these lamps depend on. REM phosphors account for about 50 percent of the cost of a fluorescent lamp, so increasing REM prices mean higher lamp prices—and that, in turn, reduces the cost-effectiveness of utility lighting programs.
Rare-earth metals grow rarer. A combination of surging demand and export chokepoints is driving the huge REM price increases. China, which produces more than 95 percent of the world’s supply, has significantly cut REM production and raised export taxes. These moves come amid expectations that REM demand will nearly double between 2009 and 2013.
Unfortunately, the situation could get worse before it gets better; most experts predict that global demand for REMs will outpace supply for years to come. Although Australia and the U.S. are expected to reopen existing REM mines in 2012, none of them are expected to be fully operational until 2014.
What’s a utility to do? Utilities that are concerned about the impact of these price increases can take several steps to soften the blow. Based on our own analysis as well as a recent KEMA report, Response to Lamp Price Increase (PDF), we encourage utilities to explore the following program strategies and technologies:
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Encourage delamping by providing information on, or incentives for, the use of high-output lamps and ballasts.
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Provide incentives for products or actions that reduce lamp on-time and therefore replacement frequency. Building automation controls, new lighting-control systems, occupancy sensors, and behavioral changes all fit the bill.
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Reduce replacement frequency by focusing program efforts on fluorescent products with longer life spans.
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Investigate new fluorescent products that use less phosphor. Sylvania has announced a new product line—the Octron XV—with reduced phosphor content. This approach will keep costs down while providing nearly the same lighting performance.
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Look beyond fluorescent products. Light-emitting diodes (LEDs) use far fewer REMs than fluorescents. LED prices are still high, but that differential will get smaller as LED prices come down and REM costs push fluorescent prices higher.
There’s no doubt that this REM supply shortage will continue to affect lighting costs and utility lighting programs, at least for the near term, but utilities can look at this as an opportunity to further increase the efficiency of their programs. The low-hanging fruit of simple lighting upgrades might not be as reachable as before, so looking to more-efficient products with longer lifetimes and better quality may be the appropriate response even after the REM market stabilizes. For more information, see the E Source report Will the Rare-Earth Metals Crunch Hurt Fluorescent Lighting Programs? (for members of the E Source Technology Assessment Service) and the recent Critical Materials Strategy report from the U.S. Department of Energy. |
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About the Author
Lee Hamilton
RESEARCH ASSOCIATE
Lee Hamilton, as a member of the technology assessment team, researches and writes about topics such as energy benchmarking, retrocommissioning, emerging technologies, and operations and maintenance. Before joining E Source, Lee worked with Strategic Sustainability Consulting, a firm that blended sustainability with business strategy management, along with providing other services like green auditing and carbon footprint analysis. He also has experience as a manufacturing and quality engineer for a valve and regulator manufacturer. Lee holds an MBA and a BS in mechanical engineering from Virginia Tech. He is also a Leadership in Energy and Environmental Design (LEED) Green Associate.
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