Energy efficiency is driving the lighting market: Philips’s Harshavardhan Chitale
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New Delhi: The quest for energy efficiency is transforming India’s Rs15,000 crore a year market for lighting systems. Conventional lamps are being replaced by efficient ones starting from simple LED (light emitting diode) bulbs to sophisticated movement-detecting lighting systems for smart cities and businesses, opening up a host of opportunities to lighting companies from the very bottom of the pyramid to high-end consumers. Harshavardhan Chitale, vice-chairman and managing director of Philips Lighting India Ltd, speaks to Mint about the industry’s changing dynamics.
Edited excerpts from the interview:
What is your strategy for growth in India?
We have actively contributed to improving the health of power distribution companies with energy savings. Lighting as a whole contributes to 18-20% of total power consumption in the country. To bridge our energy deficit, we need to either increase power generation or reduce the need for power itself, through energy efficiency. If the entire lighting system of the country is converted into efficient LED lighting or smart connected lighting, our total lighting-related power demand will get reduced by half. It frees up about 30 gigawatt (GW) of our over 300GW generation capacity. That more than bridges our peak power deficit, which is the result of increased power consumption for lighting at peak hours.
Secondly, in spite of the drive to electrify all the villages, there will always be parts of India where providing grid-connected power is not economical, as the cost of laying wire will be much more than the cost of power generation. About 20 crore people, or four to five crore households in the country, have either no access to power or get only intermittent supply. Making energy-efficient lighting, especially those run on solar power, available to them will solve our energy access problem.
What are the growth opportunities that energy efficiency offers to companies like yours in urban areas?
Home lighting, lights used by businesses and organizations and infrastructure and street lighting are the three major areas of power consumption. India has about three crore street lamps which remain lit for about 10 hours a day, which is a major segment of consumption. For businesses, upgrading to energy-efficient lighting offers a high return on their investment by way of savings in power bill. Payback period for upgrading all lighting systems ranges between two and three years.
Almost three-fourth of all new lights bought by businesses are energy-efficient LED lights. There is also a trend among businesses to go for smart lighting, which can sense movement of people and the number of people in the surrounding and produce light accordingly. This intelligent lighting offers about 30% of energy saving in addition to the 50% saving that LEDs per se offer. Some organizations are now getting into what is called managed services.
That is, companies like ours upgrade their lighting infrastructure and they pay us in instalments for using that infrastructure. Their savings from power bills helps them pay their instalments to the service provider. Manufacturing companies as well as information technology firms, which are very familiar with the concept of managed services, are going for this.
Is smart lighting of streets catching up?
Many states have started to adopt efficient street lamps because of the Smart City initiative, but a lot more is to be done. India has 5,000 towns and at least 100 large cities and three crore street lights. Some cities have upgraded to connected smart street lights. One example is Naya Raipur, the new capital of Chhattisgarh. This city has probably the world’s most modern connected lighting infrastructure that is monitored remotely. The city engineer monitors the infrastructure from his office.
If a bulb needs replacement, it gets reported automatically. We are also upgrading the lighting infrastructure of many cities in Tamil Nadu, including Chennai. Finances of the state and the municipalities concerned are important in going for an upgrade. The upgrade is quicker where the municipality concerned has a clear financial model such as central government funding or multilateral aid or lending. Besides energy saving, the cost of maintenance for efficient lights is less and the quality of light is also better.
In overseas markets, especially in Europe, we have executed projects where lights remain dim when there is no one in the street and the light intensity goes up when movement of people or vehicle is detected. Indian cities have not gone for this level of sophistication, but the journey has started.
The government promotes LED bulbs in a big way. Has it captured the market for home lighting?
In the consumer segment, about 30% of the lights sold today are LED bulbs and the rest are conventional bulbs. The large market share that conventional bulbs still enjoy is not because of any price advantage, but because they are more easily available in the neighbourhood. It’s a question of distribution. Some of the LED options are cheaper than conventional bulbs. We need to address this.
How can this be tackled?
Firstly, the products that should be adopted have to be of high quality and should be designed for the domestic market with high voltage fluctuation tolerance. Use of poor-quality products can sabotage the adoption of LED bulbs as it would adversely affect public perception of the benefits of energy-efficient products. The next wave of LED adoption will get supported by a robust retailing ecosystem.
We go to a nearby retailer to replace a bulb, not to a power distribution utility that stocks these products. The total lighting market in India as per industry estimates is Rs15,000 crore a year. This excludes new pockets of demand such as the remote areas where solar-powered LED bulbs would be required.
More than 93% of the lighting equipment that Philips sells in India is designed for India and is made in India.