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Nov 03, 2023

Here Come the Lumens

LEDs are great even if they won’t necessarily result in large net energy

LEDs are great even if they won't necessarily result in large net energy savings.

LED technology is exploding, enabling entire new categories of lighting. My favorite example is the new "bulbs" that screw into regular sockets (E26/E27), but use multiple LED panels to supersize the total lumens.

One of the best sellers on Amazon is a 120-watt "bulb" that produces 12,000 lumens. Let me pause for a second to let that sink in. An old-school 60-watt incandescent bulb generates 800 lumens, so this is 15x brighter! It is so bright that the instructions warn users to avoid looking directly at the light due to potential eye damage.

I’m sure it won't be long before someone cries "rebound effect". Indeed, these new bulbs are a perfect example of how an improvement in energy efficiency can spur increased use. Replace your incandescent with one of these and your energy consumption goes up, not down.

But even if LEDs don't result in large net energy savings, they are still creating immense economic value. For today's post, I want to celebrate all this LED innovation. LEDs are the latest example in a long history of humans finding ingenious ways to consume more lumens. More and brighter lighting inside and outside our homes and businesses, and throughout our communities can make us happier, more productive, and safer.

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Falling Price of Lumens

LEDs are the latest chapter in a long history of technological innovation in lighting. In a pioneering 1996 paper, Nobel laureate economist Bill Nordhaus traces how the price of light has fallen throughout one million years of human history.

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Rising Consumption of Lumens

At each step of the way, humans have increased their consumption massively. Economists Roger Fouquet and Peter J.G. Pearson calculated that lighting consumption per capita in the United Kingdom increased 6,500 fold between 1800 and 2000.

Over these long time periods, it is hard to perfectly disentangle falling prices and rising incomes, but there is no question that the rebound effect for lighting has been very large. Before the development of modern lighting, it was simply too expensive to consume much lighting so most people lived in near complete darkness except from the sun and the moon.

Thus, these new supersized bulbs and other innovations with LEDs are the natural next step in this long-running human thirst for ever increasing quantities of lumens.

The Department of Energy says that LEDs "use up to 90% less energy" than traditional incandescents. The DOE is not wrong. But, what they have in mind is very short-run: (1) unscrew an incandescent and (2) screw in an LED that puts out the same quantity of light.

Over the long-run, there are countless ways for people to use more lighting, just as they have responded to lighting innovations throughout history.

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Just at the Beginning

My sense is that we are just beginning to see what is possible with LEDs. Yes, LED technology has been around for a long time, but it was not until the 2010s that LED prices started plummeting and consumers started buying them in large volumes.

It has taken time for LEDs to saturate the different lighting categories. Commercial bay lighting, recessed lighting, under the counter lighting, LED strip lights, rope lights, grow lights, ambient lights, flood lights. Across countless categories, there are smart entrepreneurs developing new LED technologies.

It will take time. We won't all rush out immediately to buy a bunch of LEDs for every possible usage. But, over time, as homeowners, landlords, and business owners remodel their buildings, you can bet that they will add lighting.

Outdoor lighting is particularly ripe for price-induced increases in consumption, despite real concerns about light pollution. Maybe it didn't make sense to have so many lumens in your backyard before, but now it probably does. And wouldn't it be nice to have brighter street lighting, particularly in areas with lots of pedestrians and cyclists?

How much farther can this go? I don't know. But historical precedent shows that humans have an almost insatiable appetite for ever larger quantities of energy services.

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Keep up with Energy Institute blogs, research, and events on Twitter @energyathaas.

Suggested citation: Davis, Lucas, "Here Come the Lumens" Energy Institute Blog, UC Berkeley, March 27, 2023,https://energyathaas.wordpress.com/2023/03/27/here-come-the-lumens/

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electricity, energy efficiency, renewable energy

Lucas Davis is the Jeffrey A. Jacobs Distinguished Professor in Business and Technology at the Haas School of Business at the University of California, Berkeley. He is a Faculty Affiliate at the Energy Institute at Haas, a coeditor at the American Economic Journal: Economic Policy, and a Research Associate at the National Bureau of Economic Research. He received a BA from Amherst College and a PhD in Economics from the University of Wisconsin. His research focuses on energy and environmental markets, and in particular, on electricity and natural gas regulation, pricing in competitive and non-competitive markets, and the economic and business impacts of environmental policy.