quotedcleantech

by Andrew Hore

AIM has a selection of companies with exposure to the cleantech sector, and one niche where there are a number of such firms is the LED and energy-saving lighting sub-sector.

Demand for solid state lighting is growing in response to regulatory and environmental pressures. Focus on the efficient use of energy will continue to increase demand for LED lighting, which could halve the power consumed by lighting in the US by as early as 2025.

The first practical demonstration of a light emitting diode (LED) was in 1962, but the technology is now widely used. LED lighting has some important advantages over other lighting technologies. For example, LEDs produce more light per watt than incandescent bulbs; they can produce the equivalent output of a 100W incandescent bulb by consuming only 13W. LED-based lights also have longer durability.

Enfis, which was spun out of Swansea University in 2001, offers the most direct exposure to the LED lighting market for AIM investors. Even in growing markets it is not easy to prosper, and Enfis has had its problems in recent years. The company is losing money, which has led management to initiate a strategic review of operations.

Enfis has decided to target up-market manufacturers of lighting fixtures and equipment. It also plans to reduce costs of production and increase functionality, which will open up new sectors where Enfis was previously regarded as too expensive.

Target markets for Enfis will be entertainment (film and theatre), medical, architectural and high-end retail lighting. Once the company’s technology has been designed-in to manufacturers’ products this should ensure substantial sales over a number of years.

AIM-quoted security products supplier Eruma acquired emergency lighting company Illuminex in July 2007. The lighting uses the latest LED and battery technology, with 90% of the components being recyclable. In the UK all public buildings are required to have emergency lighting, which is governed by fire safety legislation.

According to Illuminex, its lighting reduces electricity consumption by up to 71%. The company also says that its Xscape lighting system uses lights which have a lifetime of 60,000 hours and are 40 times brighter than conventional LEDs.

Having good technology is not in itself sufficient to ensure success, but a link-up with Philips means Illuminex is in a strong position to take advantage of the market. It will take time to grow, though. The sales cycle for new build and building refurbishment contracts can be between one and three years, whilst even the maintenance sales cycle can be up to 18 months.

It is not just lighting companies that stand to benefit from the regulatory and environmental pressures. IQE is an outsourced epitaxial wafer manufacturer and LED lighting is one of its potential growth markets.

The manufacturing process involves growing a thin layer of crystalline material on the surface of a gallium arsenide substrate. The semiconductors which use these epitaxial wafers can operate at faster speeds and higher temperatures whilst also consuming less power. IQE works with Enfis, among others, on solid state lighting products.

Last October, IQE acquired UK-based NanoGaN, which specialises in gallium nitride materials and devices. This enables the company to produce high quality, free-standing gallium nitride substrates needed for manufacturing ultra high brightness LEDs for solid state lighting.    

Technology development company Sagentia is also building up a reputation in the area of LEDs. It has developed high definition LED lighting technology with Yorkshire-based medical lighting firm Brandon Medical. The lighting, which uses less than one-third of the energy of medical lighting using tungsten halogen bulbs, is estimated to reduce carbon dioxide by 1.25 tonnes per year per operating theatre.

Sagentia retains the rights to the technology, which also has other potential uses such as retail display lighting, film lighting and architectural illumination.

There are even newer technologies as well. AIM-quoted Nanoco (profiled in Quoted Cleantech May 2010) is one of the world’s leaders in quantum dot technology. Quantum dots are tiny particles of a semiconductor material, which range from 2 to 10 nanometres in diameter (about the width of 50 atoms). They emit photons under excitation, which are visible to the human eye as light. Quantum dots offer advantages over phosphors used in other LED lighting technology, including improved colour performance.

Other AIM companies are also becoming involved in the LED lighting area. Electronic components distributor Advanced Power Components is keen to expand in the sector, and Singapore-based Alternative Energy is developing LED lighting products.

it is likely that not all of these companies will be successful; however, each of them has exposure to a market that is expected to grow rapidly over the coming years.