Firm's bid to switch us on to LED

ROB STOCK
Last updated 05:00 23/03/2014
Chris Mardon
LAWRENCE SMITH/Fairfax NZ
CHRIS MARDON: 'I would never have thought I would be going door to door selling lightbulbs.'

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Following a successful pilot project in Auckland, NZX-listed Energy Mad plans to roll out a door-to-door direct sales campaign promoting its new range of LED lightbulbs later this year.

It's the beginnings of a big change for the company which has been built on the successful manufacture and mass-distribution of energy saver bulbs both here and in countries like Australia, the US and Germany.

On the company's website, LEDs, which have been the talk of the lighting world for some years but have yet to achieve mass popularity, are described as "coming soon" by Energy Mad.

But managing director Chris Mardon said the pilot project in Auckland had achieved a high proportion of sales, and Energy Mad has been comfortable with the performance of its LED bulbs for about six months, and importantly for use in the home, their appearance and the light they produce.

Mardon said: "They have got to the stage where I would call them sexy, not ugly."

Around the middle of the year the LED direct sales operation will be ramped up with sales staff from contractor Appco Group NZ heading out door-knocking. The speed of the ramp up will depend on Energy Mad's ability to manufacture and source bulbs.

The move into LEDs marks a significant shift in the technology Energy Mad believes its long-term future is based on.

When Energy Mad launched on to the stock exchange in 2011, the rise of competitors selling LED bulbs was counted among the risks the company faced. It's now seen as a big opportunity.

Energy Mad was born just over ten years ago in Christchurch on the dream of putting compact fluorescent energy saver bulbs (known as CFLs) into half of all houses in New Zealand.

At the time energy saver bulbs had been available in New Zealand for more than a decade but were being used in only a tiny proportion of homes.

Through a series of projects with power companies, Energy Mad had remarkable success in selling CFLs, which it manufactures in a factory in China it part owns, and passed its goal quickly.

It's vision has now got bigger, and gone global with success in Australia, the US and Germany. But Energy Mad now plans to manufacture and sell LEDs and CFLs in tandem, though in time Mardon expects LEDs to become the dominant technology.

The reason for that is that LEDs use less power than CFLs, look better now designs have improved, reach full brightness at the click of a switch, and last longer, Mardon said.

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Energy Mad's CFLs are projected to last for 8000 to 15,000 hours depending on the type. Its LEDs have lifespans of 25,000-40,000 hours.

Mardon said most people with CFLs won't rush out to buy LEDs, because where a CFL provided a roughly 80 per cent energy saving on an old light-equivalent incandescent bulb, an LED provided only a small further advantage, using around 90 per cent of the power of the incandescent.

And the cost is not negligible. Energy Mad's pilot is selling them at $26.45 each, though it discounts that price by $5 for each of the old incandescents and halogens it takes away.

The return can be significant however.

As part of the preparation for this article, Energy Mad did a lighting assessment of an Auckland home. For a price of just under $850 to replace existing halogens, incandescents and CFLs with LEDs, the company projected savings of $5510 over 15 years, based on current electricity prices. Mardon said: "I'm in the school that says electricity prices won't go up for a while, but I would have said that 10 years ago. They've more than doubled since we have been in business."

CFLs will remain a big part of Energy Mad's work for some time as they are more attractive to power companies than the more expensive LEDS. The power companies get more bang for their buck if they invest in distributing the cheaper CFLs to reduce power usage, Mardon said.

Energy Mad spoke of its growing direct sales operation in its most recent half-year report, and Mardon said it had proven to be a successful way of getting householders to break the habits of a lifetime.

"I would never have thought I would be going door to door selling lightbulbs," he joked.

Selling comparatively expensive energy saving light bulbs takes more than just putting them on supermarket shelves next to cheap incandescents, Mardon said.

Energy Mad's direct sales force is currently focused on replacing inefficient downlights, including halogens, with its own CFL downlight fittings, which it says can cut home power bills by up to 25 per cent.

In its half-year results report, Energy Mad estimated there were around 900,000 households with inefficient incandescent and halogen downlights, which expend the majority of the energy they use giving out heat rather than light. Because its bulbs don't reach heat levels which could start a fire in insulation, homeowners can fill in the insulation gaps in their roof spaces, which they have to leave around their current downlights. Filling in the gaps reduces heating loss in the colder months.

Replacing inefficient downlights with Energy Mad's downlight fittings is more expensive than leaving them in place and switching out the incandescent bulbs and halogens for LEDs.

Mardon admitted there is a question of whether the sales of the CFL downlight fittings and pending LED sales should be merged so homeowners get pitched the best option for both rather than one only.

- Sunday Star Times

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