Bright future

Perspectives of LED market in Russia and worldwide. Interview with George Gogolev, Marketing director of Optogan factory.

The first LED factory in Russia marks new stage in development of presidential programme for nano technologies. Acknowledged investors like state corporation ROSNANO, group ONEKSIM and ”Respublic investment company” of Respuclic Sokha became project shareholders. What attracts reputable investors to finance the sector? And what are the real perspectives of this tecjnology in Russia?

World market review

Promising sectors always attract market attention, products which were once of high demand and experienced rapid growth decline due to emergence of substitutes. Twentieth century ended up with peaking prices for energy – its production and distribution enjoyed steep rise. However, market of 21 century turns to new sectors – and alternative energy sources and energy saving technologies start to show sharp increase.

Indeed, LED industry growth rates attract investors – for example, report published by Strategies Unlimited agency in November in Frankfurt reveals that total revenue from LED components totaled 9,1 billion USD in 2010 and represented 68% growth. The forecast shows that annual component annual growth rate (CAGR) would be in average 27,8% for the period from 2009 to 2014 and would result in 18.4 billion USD revenues. On this stage the most promising sector for LED technologies is lighting, its growth rate is expected to be 34% in 2010. Outdoor lighting and conversion of conventional lighting would contribute the most to the demand. These tendencies naturally determine development of the sustainable market – conventional lighting consumes 20% of energy produced worldwide and switching to LED can help to decrease these figures to 6-8%. Wider LED utilization can improve both ecology and economy with annual 106 billion euro economy and decline in carbon footprint up 555 million tones per annum.

Main factors for LED market expansion include technology development, demand for energy efficient lighting, improved brightness of new generation LEDs and dropped production costs due to economy of scales. Benefits of LED compare to conventional lighting include low energy consumption, better durability (e.g. 50 times longer than traditional bulbs) and improved quality of light – they do not pulsate and have better index of color rendering.

Russian LED

In short, investors would release significant value from LED investments. How does Russia fit to the world trend? And how successful would be our life with non-oil economy?

In November 2010 the first LED factory was launched in Saint Petersburg. The factory announced ambitious plans – the first line capacity is 360 million of diodes per annum. The total square of the factory is 15 000 sqm and 5 000 sqm devoted to clean rooms. Total investment is 3.35 million rubles. “By the end of 2011 we plan to expand production because we expect increase in demand. Diodes would be sold on Russian and international markets. We have already signed first sales agreements in Saint Petersburg. We target our LEDs to supply manufacturers country wide. And we will be proud to put a mark “Made in Russia” on all our products”, – commented Vladislav Bugrov, factory CEO, during the launch ceremony.

RuGBC interviewed Georgy Gogolev, the Marketing and PR director of Optogan factory.

Could you please tell us about the benefits of LEDs produced on Optogan?

We guarantee quality of our products through successful track record of work on global market and our experience in setting up production in Germany. The main technological feature of our products is crystalline structure of diodes – due to patented technology we managed to reduce amount of defects in our chips and that results in better conductivity and brightness. In addition the durability of the chips has improved. This innovative technology also influenced on the size of the crystal – with the same brightness the size reduced. As a consequence the production costs fell, particularly for larger volumes. We are proud to claim our factory one of the top ten quality LED producers. Furthermore Russian consumers would benefit from reduced import fees

In which sectors your diodes would be most demanded? And where do you see the highest potential?

At the moment we target b2b market and work with large scale producers. Eventually, LED is very attractive due to state energy efficiency programmes and manufactures use them in premises with high ceilings – workshops, warehouses and production lines.

In general, conversion programme for the conventional lighting (forced by the energy efficiency law from November 2009) would be the main area of LED technologies implementation. We see the Household Utility Services as our major client. We would develop a series of new lighting fixtures for them. We also refer traffic and outdoor lighting sectors as the most perspective ones, and where economies of scales might be significant.

Besides, we approach the mass market – recently we had developed a household LED fixture design together with the famous Artem Lebedev studio, now the fixture is being tested.

What are the benefits of LED lighting for developers and designers?

Developers would enjoy improved quality of light and reduced utility costs. LED has no competition due to its quality of light – the spector is close to a natural one, the colors rendering is solid and there is no pulsation. Characteristics described above improve indoor environmental quality and job enrichment, productivity in LED lightened premises rises. A lot of research has been done in this field by Russian and international scientists. The financial benefits consist of two components – reduced energy consumption savings (up to 80-90% compare to conventional lamps), and increased durability (life span of LED lamp is 50 000 hours). The LED cost premium pays back in 3-4 years.

The value of the technology stands out in Moscow due to its high switching costs for utilities – all projects payback on construction stage due to lesser energy capacity. Designers would be attracted by variable options to change color and shape. LED lighting has maximum possibilities to organize dynamic RGB schemes and maximize design opportunities due to small sizes. Any shape of light fixture could become true. Currently Optogan produces only blue and white chips but we plan to increase variety of offered colors.

What are the perspectives of LED in Russia? Do you plan to expand globally?

At present Optogan cannot cover Russia`s internal market, even so we plan expansion. Next year another 2 production lines would be launched. In Saint Petersburg we produce diodes and matrixes, while lighting fixtures are produced in regions where the labor costs are cheaper. Chips are produced and imported from Germany, and we expect that soon the full production circle will be based in Russia. Russian and German factories ensure our global reputation. In future we see Asian market as the most perspective. Furthermore, we already trade with some corporate clients. Asia shows dramatic growth fed by demand from the state and the industry. For instance, during the Shanghai World Expo 2010 up to 10.5 billion LED were used, and the municipal showcase project, which included 21 China towns, increased LED fixtures installation country wide up to 1.7 fixtures and that resulted in economy of 0.16 billion kW.

We hope that soon new era will come, when conventional lamps of Iliich would be converted to modern lamps from Lebedev with help of such pioneers as Optogan