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Previous Page | Contents | Zoom in | Zoom out | Front Cover | Search Issue | SubscribeqMqM | Next PageqqM qMMQmagsTHE WORLD’S NEWSSTAND ®national focus | CHINAto implement the programs. Financial subsidiesfrom central government were low,and restricted to the LED companies.• Technical assessment of the productsoffered by local companies and site applicationswas often insufficient, leading toa mismatch between the product and itsapplication.• Quality standards, LED procurement specifications,and project management processeswere lacking. National LED lightingstandards were still in development whenthe program unfolded.• Business modeling was challenging, due tounderestimated maintenance costs associatedwith non-standardized products andextensive product failures.• Low electricity prices and high LED costsextended payback periods under idealconditions to eight years or more in manycities.• A dearth of energy-service companies inChina with strong financial expertise in_______________energy-efficiency technologies made it difficultfor municipal governments to raiseadequate funding.• Regional trade-protection barriers withinChina prevented quality products frombeing used in many cities.Major recommendations coming out ofCSA’s review included creating nationalLED evaluation criteria; setting up quality-controlsystems; providing central-governmentsubsidies to local governments;implementing better coordination amongcentral government’s agencies; improvingLED manufacturing processes; and supportingfurther R&D. After the review, theMinistry expanded the program to a secondgroup of 16 cities in 2011.Guangdong leadershipDespite the early problems encountered,demonstration projects undertaken by citiesin Guangdong province proved very successful.This was due to the implementationof rigorous technical requirements and standardsassociated with the energy managementcontract (EMC) business model pioneeredin China by these cities.Under the EMC model, banks provideproject financing to the cities to coverthird-party testing data, feasibility analysis,street reconstruction, and light sources.The loans are repaid from energy savingsover a six-year period, which involves periodicfield monitoring. Typically, 10% ofthe project cost is subsidized by Guangdongprovince, 15% by the municipal government,and the remaining 75% financedthrough the EMC with an energy-servicecompany.Guangdong’s leadership in LEDs is drivenby the importance of the technology to theprovince’s economy. Companies located inthe province supplied 70% of China’s LEDpackages in 2010, with foreign investmentapproaching $1.5 billion in local LED firms,much of it centered in Shenzhen’s SpecialEconomic Zone.In order to maintain this momentum,Guangdong relies on aggregating local procurementto expand the provincial marketfor locally-produced LED luminaire products.As of the end of 2011, 200,000 streetlightluminaires had been installed on2,000 km of provincial streets and roads,including 100,000 units in the capital,Guangzhou (see also page 8). Installationof another three million LED street lightsis planned soon.In part due to the “21 City, 10,000 LEDLights” project and Guangdong’s leadership,China now leads the world in thedeployment of LED street lights. In 2010,approximately 350,000 LED street lightswere installed in Chinese cities, 74% of theglobal total, according to Strategies Unlimited.A temporary contraction is expectedin 2011.12th Five-Year Plan (2012-2016)China will continue its ambitious LEDlighting program in the next Five-Year Plan,which ambitiously aims for LEDs to achieve30% market share of China’s general lightingmarket by 2015. Guangdong provincehas adopted probably the most ambitiousprovincial goal: the installation of 30 millionindoor LED lights by 2015. Key elementsof the national plan include:• Continued R&D, industry promotion,and scale-up of niche applications suchas street lighting, tunnel lighting, andindoor uses.• Establishment of national photonic testinglabs in various regions, includingGuangdong.• Development of Chinese technology in thefield of metal-organic vapor-phase epitaxy(MOCVD).• Inclusion of LED domestic lamps in thecentral government’s Green Lights program,which offers substantial subsidiesin the A-lamp mass market.While quality issues have dogged China’sHB-LED efforts to date, these are notlikely to dampen the country’s long-termambition to become one of the top threeleaders in manufacturing LED products.It is expected that Chinese governmentswill effectively address LED product qualityproblems all along the supply chainthrough home-grown R&D and procurementinitiatives, and joint ventures withwestern LED companies such as Cree,while deploying a mix of well-coordinatedpolicies, subsidies, and market aggregationinitiatives that capitalize on the largesize of China’s market to gain comparativeadvantage globally.52 NOVEMBER/DECEMBER 2011 LEDsmagazine.comPrevious Page | Contents | Zoom in | Zoom out | Front Cover | Search Issue | SubscribeqMqM qMM MQmags| Next Page q qTHE WORLD’S NEWSSTAND ®