Market Assessment of Chile


5. Lighting

Market Opportunities

The US lighting industry has an immediate opportunity to manufacture electronic ballasts in Chile. The commercial building industry is booming and lighting designers and building developers are increasingly specifying energy-efficient technologies like electronic ballasts. These conditions, coupled with high commercial electricity costs, will also create longer term market opportunities for efficient luminaires and controls.

Market Conditions

The total lighting market in Chile is estimated at US$25 million annually. Two of the world's largest multinational lighting companies, Philips and General Electric, have a significant presence in the Chilean market. Philips in particular has aggressively pursued the Chilean market for energy-efficient lighting and has set a goal for itself that by the late 1990s, 75 percent of its total sales will be energy-efficient products. These companies have increased the installation of energy-efficient technologies in apartment and office buildings. Other large multinational companies like Osram and Sylvania have been less aggressive in securing a position in the Chilean lighting market.

Lamps

The lamp market does not hold promise for new US industry players. However, it is important to understand the structure of the lamp market and the impact that large lamp manufacturers have had on the Chilean market.

Imports & Exports of FluorescentsFIGURE 6: ESTIMATED IMPORTS AND EXPORTS OF FLUORESCENT LAMPS

Fluorescent Lamps

Five million fluorescent lamps are sold every year in Chile. Ninety percent of these are domestically produced. Two million fluorescent lamps are exported from Chile every year. The value of domestic and export sales totals US$8 million.

Fifty percent of the lamps sold locally are for lamp retrofits and the other fifty percent are installed in new fixtures. Specialty lamps are imported while high-demand items are produced locally. With a combined market share of 95 percent, Philips and General Electric dominate the Chilean market for fluorescent lamps. The rest of the market is split among other large multinational companies (such as Osram and Sylvania), local importers (such as Rolec) and imports from Asia.

Seventy percent of lamps sold for commercial uses are 40W, T12, 4 foot long tubes. Thirty percent are 20W, T12, two foot long tubes. In 1981, Philips introduced energy-saving 36W and 18W T10 fluorescent lamps for local production. Philips reports that 70 percent of its sales of 4 foot lamps are 40W lamps and 30 percent are energy-saving 36W lamps. Philips also exports its locally-produced 36 and 40 watt lamps to the United States, Peru, Argentina, Bolivia and Uruguay.

Compact Fluorescent Lamps

Chile sold 200,000 compact fluorescent lamps (CFLs) in 1994, worth over US$2 million. Sales of CFLs have doubled in the past two years due to rigorous marketing. This trend is expected to continue. The majority of these lamps have magnetic ballasts. Philips, General Electric, Osram, Sylvania and various Asian manufacturers sell CFLs in Chile.

Estimated Unit Sales of CFLsFIGURE 7: ESTIMATED UNIT SALES OF CFLS

High-Intensity Discharge Lamps

Philips and General Electric also lead the market in public lighting. They sell lamps, ballasts and fixtures for high-intensity discharge lamps. Chile's National Energy Commission estimates that the country has approximately 716,000 public lights, of which 513,000 use mercury vapor or incandescent lamps. Seventy percent of Chile's public lights could be replaced with metal halide or high-or low-pressure sodium lamps.39 Since 1991, prices of high-intensity discharge lamps have fallen by 30 percent due to municipal relamping projects in Chile.40

Both the Chilean and regional markets for energy-efficient street lighting hold promise for manufacturers. If Chile's municipal relamping projects continue and expand to neighboring countries, the market for efficient public lighting will also grow. A proposed project in the Argentinean province of Buenos Aires identified 700,000 fixtures that could be retrofit in 130 municipalities. The project could cut energy consumption in half and increase demand for energy-efficient outdoor lighting. Currently, the project is stalled due to lack of financing.41

Ballasts

Two million ballasts are sold each year in Chile, a market worth US$5 million. The price of a 40W magnetic lamp ballast is just under US$3.00. Over 8 million ballasts are sold each year in the Southern Cone region (Chile, Argentina, Brazil, Uruguay, Paraguay), a market worth an estimated US$24 million.

Most ballasts sold in Chile are magnetic ballasts for 40W and 20W fluorescent lamps. These models lose as much as 10W due to inefficiency. General Electric and Philips both import ballasts and purchase them from local companies.

There are two local players in the ballast industry. B y P Limited is the largest local manufacturer of ballasts with 65 percent of the Chilean market. The company has a semi-automatic assembly line that produces 4,000 magnetic ballasts per day. B y P also exports to the Southern Cone region. The other major player in the market, Rolec, manufactures fixtures and imports lamps and ballasts. It specializes in high-quality lighting technologies. Rolec imports Lutron ballasts from Europe and has begun to sell a small number of electronic ballasts in Chile.

Estimated Ballasts Imports & ExportsFIGURE 8: ESTIMATED BALLAST IMPORTS AND EXPORTS

Electronic Ballasts in Chile

There is an immediate opportunity in Chile to manufacture electronic ballasts for Chilean and Southern Cone markets. Commercial building construction is growing and the lighting industry is prepared to market electronic ballasts based on their electricity savings. Rolec is already beginning to advertise on this basis. Also, many lighting designers have begun to specify electronic ballasts but have been unable to obtain imported technology at a competitive cost. On one recent project, the building owner agreed to the purchase of electronic ballasts but they could not be imported in time to meet the builder's timeline.

Rolec, B y P, and Philips are likely to be the key competitors in sales of electronic ballasts. B y P Limited is interested in introducing the local assembly and, eventually, the full production of electronic ballasts to Chile. The company wants to maintain its market advantage by being the first company to introduce the technology. It also wants to export electronic ballasts to the Southern Cone region. Philips is also targeting the Chilean market for expanded electronic ballast imports.

The industry's major concerns about the introduction of electronic ballasts in Chile are technical. It must be able to introduce a reliable product that has low total harmonic distortion and high power factor. The dependability of the product is the industry's foremost concern.

Luminaires

Approximately two million fluorescent lamp fixtures are sold every year in Chile.42 The recent building construction boom has boosted annual sales of luminaires. The same manufacturers competing in the sale of lamps and ballasts also sell luminaires. Companies like General Electric, Philips, Rolec and B y P both import fixtures and manufacture them locally.

Increasing awareness of the importance of light quality and energy efficiency among manufacturers and lighting designers is increasing the market for high-quality luminaires. Considering the expertise and market access that Chilean lighting companies have, the best opportunity for US luminaire manufacturers is to target the high-quality fixture market by linking with a Chilean company.

Luminaires for public lighting retrofits are also produced locally. Due to the success of the municipal relamping program, the potential market for high-intensity discharge luminaires is significant.

Controls

Beyond simple switch technology, advanced lighting controls are imported into Chile by representatives of US and European companies. Occupancy sensors have been available in the Chilean market for 20 years but they are marketed for security purposes, not for energy efficiency. Honeywell and Lutron currently sell lighting controls in the Chilean market. Johnson Controls is scheduled to enter the market in 1996. Larger companies, like Honeywell and Johnson Controls, are more focused on entire energy management systems and are not as concerned with lighting systems.

The largest market for lighting controls is the new commercial building sector. Building owners, however, are not familiar with the life-cycle cost savings from lighting controls and thus consider the technology to be too expensive. There is currently no retrofit market for lighting controls. Nevertheless, because commercial electricity rates are high, there is an opportunity to demonstrate their cost-effectiveness.

Developments in Energy-Efficient Lighting

Compact Fluorescent Lamps

In May of 1994, Chilectra, Chile's largest lighting distribution company, teamed up with Philips to test compact fluorescent lamps in the Santiago region. They replaced 80 percent of the lamps in 10 houses with CFLs and reduced average household electricity consumption by 30 percent. This initial test was followed by a technical study to evaluate the impact of a large number of CFLs on the power system. Most utilities in Chile face daily consumption peaks in the late afternoon due to residential lighting loads. There are no current plans to implement rebate or incentive programs for CFLs, but Chilectra's testing indicates that there may be reason for distribution utilities to reduce evening peaks with CFLs.

High Intensity Discharge Lamps

Potential for Energy Efficient Public Lighting FIGURE 9: POTENTIAL FOR ENERGY-EFFICIENT PUBLIC LIGHTING IN CHILE

The success of the Antofagasta streetlighting retrofit project has led to the implementation of efficient public lighting projects in at least 150 other municipalities, including Santiago.

Distribution of Lighting Technologies in Chile

There are various distribution channels for lighting technology in Chile. Manufacturers and importers sell directly to electrical distributors, large stores, and to the building and construction industries. Large hardware stores oriented to families and Chile's growing middle class are also a distribution site for lamps, ballasts and fixtures.

Marketing

The tendency to market technology based on life-cycle cost has begun to reach distributors in Chile. Distributors describe CFLs as "the economic light bulb" because of savings accrued on the electric bill. Distributors use simple payback calculations to demonstrate that the higher price will soon be repaid through electricity savings.

Notes:

39 Uso Eficiente de la Energía: Alumbrado Público y Auditorias Energéticas, Comisión Nacional de Energía, Chile, 1993, p.1.
40 Personal communication, Daniel Blazquez, National Energy Commission, January 1995.
41 Personal communication, Guillermo Spini, Director, Philips Lighting Argentina, April, 1994.
42 Personal communication, Douglas Leonard, Rolec, December 1994.


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