Korea Introduces Encouraging Policies to Help LED Industry Through Hard Times

In 2006, South Korea established the target of “15/30 (30% penetration before 2015)” for LED lighting, and began to fully introduce LED lighting. The first to replace the traffic lights, outdoor displays and billboards into LED products, so many companies see it as an opportunity to expand their business, have entered the LED lighting market.

However, the current situation is that in South Korea, LED lighting is not as popular as planned. Through large-scale investments by large companies, South Korea has leapt to the second place in the world in the supply chain and other upstream areas of LED chip manufacturing in a short period of time. In the downstream industries such as lighting fixture manufacturing, small and medium-sized enterprises have also shown positive attitudes toward entering overseas markets. However, due to the large number of companies involved and the continued rapid decline in unit prices, the Korean LED industry has now entered a difficult period.

To its detriment, the popularity of LED lighting in Korea has stagnated. In 2010, LED products accounted for 2.5% of total lighting, and by the end of 2011 it was 4% (about 6% in Seoul), and the penetration rate has not been improved. In order to support enterprises and reduce power consumption, the government implemented several LED popularization policies (the results are shown in Table 1). To achieve the government’s “15/30” target in 2006, it will start to grow at a rate of at least 6.5% per year starting in 2012. However, from the current point of view, the goals set by the Korean government seem to be difficult to achieve.

If the domestic LED penetration rate in Korea has been at a low level, the future of companies that cannot compete in overseas markets will be difficult. Therefore, the Korean government, Seoul City, and the LED industry group Korea LEDAssociation (KLEDA) all stood by their respective positions and introduced measures to further promote the spread of LED. Let's introduce the promotion policy of Seoul City that wants to take the lead in popularizing LED lighting.

Targeting lighting 100% LED

Seoul City had previously launched a very active LED distribution policy. From 2007 to 2009, a total of 23 billion won was invested, replacing 156,000 lights in transportation facilities and 38,000 lights in public institution buildings into LED products (Table 2). As a result, electricity and electricity bills saved each year reached approximately 42.24 million MWh and approximately 1.6 billion won.

In 2012, based on this policy, the Seoul Metropolitan Government added additional measures to achieve 100% LED lighting. Seoul City announced in June 2012 that the city’s public institutions “have the obligation to use LED lighting in new public buildings”. As of the end of June 2012, the use of LED lighting by public agencies in Seoul has reached about 10%. According to reports, it will be further expanded in the future. The goal is to make use of LED lighting in public institutions reach 50% in 2014 and 100% in 2018, making private LED lighting use 100% by 2030 (Figure 1).

The goal is to make the LED lighting penetration rate of public facilities reach 100% in 2018, and the popularity of non-governmental LED lighting will reach 100% in 2030.

The target of LED lighting replacement before 2014 is 7.8 million yen. Including 50% of the lighting of public institutions, ie 800,000, and 25% of folk lighting, 7 million. According to projections from Seoul City, if this goal is achieved, it will save about 1,100 GWh of electricity each year, which is equivalent to about 30 times the annual electricity consumption of the "63 Building" of a representative high-rise building in Seoul (approximately 35 GWh in 2011). When converted into money, the annual cost can be reduced by about 120 billion won.

The objects of the public institution building include the Seoul Metropolitan Government Building, 25 districts, 17 business offices, 218 subway station buildings, and 20 underground shopping malls. The lighting in these places will all be replaced by LED lighting and it has now begun to be implemented steadily. Each district in Seoul will also increase the LED lighting usage of new public buildings to 50% in 2012, 70% in 2013, and 100% in 2014.

Also introduced a policy of using LED lighting in underground parking

In addition, Seoul City plans to cooperate with KLEDA, an industry group that aims to popularize LED lighting, to promote the popularity of LED lighting in underground parking lots. In May 2012, Seoul City and KLEDA issued the “Enjoyment of LED lighting for underground parking lot and underground parking lot for large-scale commercial facilities” as an encouragement policy, which has been implemented since June. In fact, similar policies have been implemented since February 2011 in Gyeonggi-do and Daegu, and this time it has expanded to Seoul.

According to this encouragement policy, LED lighting is available for free in the underground parking lot of apartments and large commercial facilities in Seoul. Although personal introduction is not free, LED lighting can be purchased at a price less than 40% of the market price.

Seoul City intends to use this measure to replace all lighting in underground parking lots in Seoul with LED lighting before 2014 to significantly reduce lighting power consumption. The target of this policy includes a total of 1.2 million residential apartments and 800,000 large-scale commercial facilities. If all the underground parking lot lighting (2 million) of all buildings were replaced with LEDs, it is estimated that about 297 GWh of electricity and about 32.7 billion won will be saved each year.

The reason is not just that the price is high

To increase the use of LED lighting, in addition to public institutions, private facilities will also need to increase the use of LED lighting. Previously, South Korea has also taken various measures to promote popularization. In spite of this, the popularity of folk LED lighting is still not much improved, there is a reason. According to Jeong Hyun Jeong, Minister of Public Relations of KLEDA, “One of the reasons why we cannot promote popularization in the private market is of course the high price, but there are many unqualified products for LED lighting at the initial stage of product launch. This is also a big reason.”

This time, Seoul City and KLEDA took into account the people's sense of quality. Jeong said, “We held a briefing session to introduce the free-of-charge after-sales service with a 5-year warranty, which has aroused great response. We found that everyone’s interest in LED lighting is high, and the willingness to switch to LED lighting is also very high. strong". It is said that many applications for LED lighting have been received and the work has been carried out smoothly. Jeong also introduced that "a lot of people are hoping that, in addition to this underground parking lot, future indoor lighting can also be replaced with LED lighting." It seems that we have actually felt the trend of LED lighting will be popular in the private sector.

In this introduction work, the problem of high prices that had previously been hindered was also solved. Through the cooperation between KLEDA and the company, the price of LED lighting equipment was reduced from about 100,000 won to about 50,000 won. The system adopted this time is "first free installation, and then charge the saved electricity fee" to achieve "actual free" when importing LED lighting (Figure 2) Note 1). Due to the decline in the unit price of LED lighting equipment, the payback period for installation costs based on "power saving difference" has been shortened. In this way, it is possible to build a system in which financial institutions are more easily involved.

A schematic diagram of LED lighting import support policies for underground parking lots developed by Seoul City. Figures 1 to 5 support the introduction of LED lighting. In addition, in addition to Seoul’s support policy, there is a support policy of about 70 billion won that is dominated by the Korean government.

Note 1) According to the KLEDA, an apartment in Busan City replaced the lighting of the underground parking lot with a 300-inch straight-through LED lighting a year ago, saving an average of 7.5 million won per month. At the time of introduction, the number of LED lighting fixtures per unit was 161,000 won, and the replacement of 300 units cost 48.3 million won. For ordinary apartments, the burden is greater. With this in mind, the free import measure is of great significance.

Green building of new government building in Seoul

The reason why Seoul City is actively importing LED lighting is to consider the electricity situation in Seoul. According to the Seoul Metropolitan Government, lighting accounts for about 20% of the city’s total electricity consumption. If only the buildings are counted, the ratio is as high as about 37%. In South Korea for two consecutive years in 2011 and 2012, power outages occurred during the summer when power demand increased. In South Korea, people’s awareness of energy conservation continues to increase, and at the same time, there is a growing demand for concerns about rising electricity bills year after year. This is reflected in the active introduction of LED lighting policy.

Under this circumstance, in 2012, the Seoul Government’s new government building that adopted a variety of energy-saving measures was introduced together with the promotion of LED popularity. After six years of proposing the project, the building was put into use in September 2012 after four years and five months of construction. Office workers have already started to work in the new building. The new government building will also be open to the public in October.

The Seoul Metropolitan Government has established a plan to target all newly-built public facilities and save more than 40% of energy use. Seoul's new government building is no exception. The building has become an environmentally friendly green building under the guidance of the concept of “Building Energy Rationalization”.

The new government building is a 13-story, 5-story underground building (Fig. 3). The annual energy consumption per square meter is set below 300 kWh, which is divided into design, construction, completion, and use. The building was built by South Korea’s Samsung C&T.

Multi-functional halls, places other than Hanul (meaning “sky” in Korean) square halls, roads, and toilets, etc., mainly use LED downlights with an input power of 20 W to illuminate them (Fig. 4). The corridors, halls, etc. on each floor are mainly made of LED downlights manufactured by Phoenix Engineering Co. of Korea. A total of about 3,000 lamps have been installed. The library located in the government building is also fully equipped with LED lighting. However, the office area uses a T5 straight tube fluorescent lamp.

The front of the photo is the old government building in Seoul, followed by the new government building. The new government building uses a lot of glass on the wall, and it can change the exterior color of the building by dimming and tinting the LED lighting installed inside.

The appearance of LED lighting deployed throughout the new government building. The downlight in the picture uses a product with an input power of 20W. LED downlights are manufactured by Phoenix Engineering.

Why did the Seoul New Government Building, which actively introduced LED lighting, use the T5 straight fluorescent lamp? When asked by the relevant person in charge in Seoul about the cause, the other party answered that it was because of "project planning and budget reasons." LED lighting, "When Korea contracted out projects in 2006, LED lighting has not yet been popularized in Korea, and the KS standard* for LED lighting has not yet been established. It was still difficult to make a decision to use LED lighting at that time."

*KS Standard: An abbreviation of Korean Industrial Standards. It is the Korean industrial standard. This is an industrial product standard based on the Industrial Standardization Law. The purpose of this standard is to improve and ensure the quality of Korean industrial products. In 2009, the safety and performance requirements for LED lighting were added to the KS standard.

However, the construction plan of the new government building was changed when Lee Myung-bak, the current president of South Korea, served as mayor of Seoul. The city decided to change the exterior of the building to its current shape and decided to actively introduce LED lighting. However, LED lighting has been introduced in all places where changes have been planned, but the original construction plan was still carried out within the original budget. Therefore, LED lighting is not used in the entire building.

In the future, in addition to LED lighting, Seoul City plans to increase the use of sunlight, solar heat, and geothermal systems in public buildings. The city has announced that since 2014 it will increase the use of renewable energy to 20% in all new public buildings. The standard applies to all public facilities such as art galleries, hospitals, museums and children's facilities.

There is also a dawn of private demand

As in the Seoul city described in this article, in Korea, from the initial stage of the introduction of LED lighting, the government provided strong support to the LED lighting industry. Only civil demand did not appear in Japan as the signs of widespread use of LED lighting. In Korea, about two years ago LED bulbs appeared in supermarkets, but now, LED light bulb counters are getting smaller and smaller, and there are often cases where the inventory on the display shelf is only a few products, which is completely contrary to the situation in Japan.

However, recently, South Korea's LED lighting industry began to show good signs. The price issue that hinders popularization is also being solved. In the future, due to the rationalization of the price of LED lighting equipment and the subsidies provided by the government, South Korean LED manufacturers will increase their domestic demand in addition to overseas sales. With companies that have always maintained a good relationship with public agencies and can improve their performance, LED manufacturers are expected to continue to receive orders.