PROJECT EASY GREEN

Bridgelux, which makes light emitting diodes (LEDs) and other technology for solid state lights and bulbs, has raised $60 million in a fifth round of funding, according to an SEC filing.

The company to date has raised $180 million and it might add $20 million more to the current round. That's not the most ever raised by a green technology company. Solyndra raised over $1 billion from its investors. BrightSource Energy has raised $530 million. Fisker Automotive has raised over $1 billion and delivered one car. Building factories takes quite a bit of cash.

Nonetheless, Bridgelux’s total might be the most ever raised by a lighting company. Some will see it as a positive — Bridgelux now has funds to grow. Others will ask what they’ve been doing with the cash they got earlier. Competitor Luminus Devices has raised $172 million since 2002, but booming sales have always seemingly been just around the corner. (In the overall efficiency market, though, the top fundraiser is probably still GridPoint, which raised over $200 million for something or other.)

Bridgelux faces an explosive, yet challenging market. Solid state lighting is expected to grow rapidly, fueled by lower prices, higher electricity bills, regulations and efficiency initiatives. Lights represent the last vestige of the vacuum tube era. Even better, some lights can pay for themselves in saved electricity in a few years or less.

The number of manufacturers and manufacturing capacity, however, has swelled. Vizio — the company that brought LCD TVs to Costco — will soon come out with LED bulbs. Meanwhile, the price of LEDs — the little chip inside of solid state bulbs that produces lights — has declined.

Just look at the tale of woe that is SemiLEDs, a Taiwanese LED maker with some interesting recycling technology. It went public in December for $17 a share. Many Wall Street analysts, on cue, gushed enthusiastically.

Since then, SemiLEDs has reported consecutive losses and the stock wallows at around $5.

At the same time, the established manufacturers have begun to expand their portfolios to offer complete lighting solutions. Cree, which makes LEDs, earlier this year showed off a relatively inexpensive LED-powered ceiling light for offices. People are still talking about it.

Low prices, high manufacturing costs, Asian competitors, uncertain regulations: it sort of sounds like solar, doesn’t it? Lighting will generate billions in revenue, but who wins and loses remains unclear. (Interestingly both the CEOs of Luminus and Bridgelux told us in 2009 that we’d see household LED bulbs in the $25 to $50 range in two years. Correct they were: Philips and Lighting Science sell 40 to 75 watt equivalent bulbs for $18 to $40.)

Bridgelux has landed deals with customers like Tyco and has amassed an array of components that make putting together a solid state bulb or light fixture much cheaper than normal. (The picture shows packaged LEDs from Bridgelux.) But the company also doesn’t have nearly the same factory capacity or reach right now as someone like Osram, Cree or Philips.

The future of the company increasingly will be tied to its success (or not) with silicon LEDs. Right now, LEDs are made by building gallium nitride crystals on sapphire or silicon carbide substrates.

Growing GaN crystals on silicon substrates would be much cheaper, cutting the cost of individual white-light LEDs from 35 cents to 45 cents to 5 cents. More importantly, there are thousands of fabrication facilities around the world designed to handle silicon wafers, CEO Bill Watkins told us earlier this year.

Bridgelux's early silicon LEDs, in fact, were made in an aged fab in Silicon Valley. 

"This is the holy grail. This is why all of the big semi guys like Samsung, LG and Toshiba are looking at LEDs," he told us a few months ago. "The problem for the semi guys is that they don't know how to do it yet."

Bridgelux hopes to produce these chips in two to three years. It also may license and/or enter into joint ventures with conglomerates to achieve scale quickly.

Is it easy? No — which makes this a big 'if.' Growing the layers on silicon is challenging. Another problem: silicon and gallium nitride heat up and cool off at different rates, and extreme temperatures are required in the growing process. This often results in cracking. Bridgelux has inserted thin films between the gallium nitride and silicon to buffer this.  

Watkins said he began to accelerate the silicon process when he became CEO, but that the work has progressed faster than expected. (He told Greentech Media in December that the company was working on silicon LEDs.)

Serious Energy firmly denied that it has acquired any trade secrets from Scientific Conservation Inc. (SCI) by hiring away its founder and a top sales exec.

"They can't bring anything from their former employer. Nobody allows it," said Serious CEO Kevin Surace, noting that Serious obtained the technology it needs for managing buildings when it acquired Valence Energy last year.

"Maybe Scientific Conservation needs to take a look at how they run their business and treat their employees," added Surace.

Last week, Serious hired John Pitcher, SCI's founder and former CTO, and SCI's vice president of sales, Chip Pieper. The announcement was somewhat surprising. Pitcher is a well-known figure in energy management. He served as the first energy manager for McDonald's and helped develop technology that become Cisco Mediator. More importantly, he owns quite a bit of stock in SCI, which has also raised money from General Electric, Intel Capital and Draper Fisher Jurvetson.

Founders sometimes retire or step down, but you don't see them scurry to competitors often, particularly during the early growth phase of a company.

A few days later, SCI filed suit in Georgia, where Pitcher works, seeking damages for misappropriation of trade secrets. SCI is also seeking an injunction. Although filed, the suit has yet to be served on Serious.

We have no idea who will win this suit — which pits two quite prominent VC-backed companies against each other — or which allegations are true. Nonetheless, it highlights the high stakes involved in the multibillion-dollar market for building management. Commercial buildings consume approximately 20 percent of the power in the U.S. and much of that power is wasted. Air conditioners can flip on in the middle of a chilly rainstorm. Heaters sometimes refuse to turn off. That beautiful urban evening skyline is just light pollution by a different name.

Ultimately, demand response and smart grid applications will get married to building management software. Siemens, Schneider Electric, Johnson Controls and IBM have bought companies in this space in recent months and expect more to follow.

SCI takes the mathematics behind neural networks (Pitcher's area of expertise) and examines weather, HVAC, occupancy and other data, and then compares it against computerized simulations to determine what's not working or what's about to fail. Right now, building owners have to hire consultants to do this sort of examination. SCI can't give as precise an answer as an army of blue suits, but it's a lot cheaper. And it can give ongoing advice. CEO Russ McMeekin says getting SCI's services are similar to buying Quicken for your taxes instead of hiring a live accountant.

Last month, it acquired Servidyne, which will allow it to shift from just providing advice (via software) to actually managing buildings and fixing problems.

Last November, McMeekin told us that SCI's software oversaw 10 million square feet of real estate and that within a year, that figure would balloon to 100 million to 150 million square feet, a tremendous expansion. Has it happened? GE and Intel have agreed to install the software at some facilities, but it's not clear if SCI is near its goal and, by the way, the year is nearly two-thirds done.

Serious is something of a newcomer to energy management. The company started out as a green building products outfit. It popularized EcoRock, a version of drywall that takes less energy to produce. It won awards from various magazines and even Joe Biden singled out the company for praise. It also won a contract to install thermal windows in the Empire State Building.

The collapse of the building industry, however, pretty much killed interest in green drywall for the moment. A commercial-scale factory, originally expected to break ground or at least get announced in 2008, has yet to be built and may not get built for a while.

Last September, the company shifted into management by buying Valence, which spun out of Santa Clara University. As an added plus, Valence already had customers.

John Pitcher, the founder of Scientific Conservation Inc. (SCI) and one of the more prominent experts in energy management, has left the company he founded to join Serious Energy, according to sources.

Vice president of sales Chip Pieper has also left.

The sudden departure of Pitcher is clearly a coup for Serious, which has repositioned itself as a building management company, and will likely raise questions about what, if anything, is going on at SCI. Pitcher, after all, is not departing because he's a founder that insisted on being CEO. Russ McMeekin, a Honeywell vet, has been CEO of SCI for more than two years. Before SCI, Pitcher worked at Sterling Planet, Envenergy (whose software became the basis of Cisco Mediator) and served as the first energy manager at McDonald's.

SCI has been a rising star in building management, pulling in investment from General Electric and Intel Capital. In June, it bought a company called Servidyne, which provides facilities management and demand response services.

SCI takes the mathematics behind neural networks (Pitcher's area of expertise) and applies it to building management, examining data concerning weather, the HVAC system, and occupancy, and then compares the data against computerized simulations to determine what's not working, or what's about to fail. The system then feeds this data into the existing building management system. Maintenance workers can go fix AC units or replace overheating parts while the building management system adjusts the air conditioner. In the end, the building is continually commissioned.

SCI, however, only points out problems and inefficiencies with buildings. It doesn't manage or control HVAC systems. Competitors like Serious and EnerNoc can pinpoint inefficiencies as well as manage buildings, and in the past they've had no compunction about pointing that out. Whether or not SCI's strategy would be a plus or a shortcoming in sales has been the subject of debate in the industry.

SCI has had grand growth plans. Back in November, McMeekin, CEO of building management specialist Scientific Conservation Inc., told us that the company's goal for 2011 was to expand the amount of commercial real estate it controlled from 15 million square feet to a whopping 100 million to 150 million square feet. Much of that expansion has been expected to come through deals with GE and Intel. GE and Intel have agreed to put SCI's software in place at some locations, but massive, industrial-scale rollouts have yet to be announced.

We haven't received official word from either company on the executive switch. We hope to get more updates and explanations soon.

Serious is mostly known for trying to popularize green building products like energy efficient windows and green drywall. The decline in building and new construction, however, made building products a tough sell. A commercial-scale factory for EcoRock, in fact, has never been built.

To that end, Serious in September 2010 bought Valence Energy, an energy management company spun out of Santa Clara University. Serious Energy used to be known as Serious Materials.

A Republican effort to repeal light bulb efficiency standards failed in Congress today, but you can count on the debate continuing.

The final vote on the Better Use of Light Bulb (BULB) Act came to 233 in favor and 193 against. Thus, it won a majority, but it was brought to the floor in a manner that would have required a two-thirds majority to pass. Thus, the bill failed.

The BULB provision sought to reverse light bulb efficiency standards contained in the Energy Independence and Security Act of 2007. The law — passed by former President George Bush — effectively forces manufacturers to phase out conventional 100-watt incandescent bulbs in 2012 and eliminate conventional 75- and 60-watt incandescents by 2014. LED bulbs and compact fluorescents would begin to take their place. Although some manufacturers continue to tinker with efficient incandescents, the regulations pave the way for LED bulbs, which use about one-tenth of the power.

Incandescent bulbs are incredibly inefficient. Only around five percent of the power injected into them gets converted into light; the other 95 percent becomes heat. That is why Easy Bake Ovens and lizard terrariums come with incandescent bulbs. Many other countries — Australia, Canada, the EU — have passed similar legislation. Many manufacturers, including those that have already shut down incandescent factories and invested in LEDs, support the regulations and opposed BULB.

Sponsor Joe Barton (R-Texas) and others object to the regulations on various grounds. Barton, for one, calls CFLs "the little, squiggly, pig-tailed" bulbs. Representative Michelle Bachmann said that the law is an example of bureaucratic overreach by President Obama, conveniently ignoring the fact that Bush, a Republican, actually passed it.

Rep. Fred Upton (R-Mich.) also supported BULB, despite being one of the sponsors of The Energy Independence and Security Act in 2007.

Some consumers have objected to the regulations on the grounds that 1) incandescents are cheap and 2) the light quality is fairly good. These are valid concerns. Nonetheless, LED technology is taking care of both problems. Toward the end of the year, a number of 60-watt equivalent LEDs will be on the market that sell for around $20. Yes, that's $19 more than the average $1 incandescent, but LED bulbs can cut power bills by around $10 a year and will last a decade or longer. Thus, consumers will save in the long run. Color and light quality have also drastically improved.

Despite the failure of BULB, the news may — weirdly — give Barton exactly what he wanted in the first place. Namely, a way not to fiddle with national policy while stoking lots of residual anger. The Act is defeated. Thus, he doesn't have to take the hit for reversing a law and setting back U.S. energy policy. Defeat also means Republicans in the Senate won't have to weigh in on the bill.

At the same time, he can claim the will of the people was thwarted. BULB won a majority of the votes, after all. A symbolic defeat perhaps was the ultimate intent of introducing the bill in a way that required an impossible-to-achieve two-thirds majority.

STOCKHOLM — For municipal waste fans, this is the equivalent of the electric car.

The Envac waste disposal system replaces the ritual of trash day and the noise and smell of garbage trucks with neighborhood-wide networks of vacuum tubes that whisk away trash any time you want.

Put your trash into hallway or sidewalk receptacles and a few seconds or minutes later it is whizzing off at 50 miles an hour to meet its maker. The organic waste heads to a facility where it gets converted to methane, the generic trash goes to an incinerator that feeds Stockholm’s district heating system, and the paper winds up at a recycling facility.

To top it off, the convenience of the system, as well as the fact that other residents might see you when you take out the trash, cuts down on people leaving extra bags of garbage on the sidewalk or trying to shove their crud into someone else’s trash cans.

“Your neighbors can see you recycling,” said Jonas Tornblum, director of marketing for Envac. “It is extremely rare to see someone doing the wrong thing. People would do that if it [the receptacle] was hidden.”

Envac installed its first vacuum network in the '60s in Stockholm. Since then, it has put in around 600 systems in South Korea and Southern Europe. While many of the systems have been installed in new neighborhoods, Envac has also installed them in cities with stringent historical preservation standards. Barcelona has one and another runs underneath the old quarter of Vitoria in Spain’s Basque regions. The pipes are placed around one to two meters underground.

The company, which pulled in around $200 million in revenue last year, is currently in discussions with New York City about a network.

Like the auto industry, the waste industry is in the midst of a transformation — call it The Story of Garbage — in which basic technologies and processes are getting retrofitted. And as with electric cars, the change Envac creates in  underlying technology leads to a number of repercussions. First, of course, it’s a convenience for residents and it keeps trash off the streets.

Second, it makes trash disposal more environmentally friendly. Electric generators for the vacuum system effectively replace trucks. In Hammarby Sjostad, a live/work district planned around sustainability principles in Stockholm, Envac’s local network has reduced the number of diesel-burning collection vehicles by 60 percent (bottles and cans still get picked up by trucks.) The vacuum strength comes to around 20 to 30 kilopascal, which is considered a low-power vacuum.

But it also has an impact on land values. In Hammarby Sjosten, the company estimates that it adds about a half square meter to each household. A 17-kilometer network in Yongin City in South Korea serves around 14,000 apartments: a survey of residents showed that 70 percent thought it added to the value of their homes.

Over time, it’s also cost-effective. The system takes capital to install, but drastically cuts operating expenses. A set of receptacles can serve approximately 30 to 50 households. For each 2,000 or so residents, Envac builds a separating/processing center that effectively routes the trash from a neighborhood to the recycling processing centers.

Tornblum took me in one of these facilities. It resembles something out of a steampunk comic book. Blue and green pipes shuttling air and garbage hang overhead. Every few minutes, pneumatic valves open and trash begins to rumble through the pipes.  Mysterious suction noises follow and off it goes.

No people work at the center full-time. It is a building on autopilot. Very little garbage, he added, gets stuck in the pipes.

The place didn’t even smell that bad. A slight whiff of rotting vegetables hung in the air, but it was about as strong as standing near a dumpster in a parking lot. The building emits little noise. If you didn’t know what it was, you’d mistake it for a self-storage facility.

Then there is the impact on recycling and fuel production. By making it easier to get rid of organic waste, the biogas facility down the line has a more stable flow of feedstock. In the Hammarby network, 95 percent of the waste that gets tossed into the green organic waste pipes can be converted into biogas.

Finally, other applications can be adapted to the system. In Barcelona, a hospital employs a vacuum system to send linens to the laundry: potentially, that can reduce the possibility of free-floating infections. Airports are studying how to get rid of all the cups and bottles after a flight. Vacuum receptacles at the end of terminals would eliminate the need to have trucks zipping between planes.

But in the end, the appeal really lies in the wacky, unexpected nature of it. Economics and energy savings will vary over time and by location, but you’ll always have the satisfaction of knowing that your garbage is flying through space at near-freeway speeds. 

STOCKHOLM — Aerogel has been the world’s best form of insulation for nearly 100 years. The material, however, has only occupied niche markets because of its Rolls-Royce prices.

Even inexpensive aerogels — which look like hunks of plastic but are actually complex, porous strands of silica that capture air or molecules — start at approximately 50 to 80 euros ($70 to $112) and can sell for far more. The high cost comes largely because the raw materials get cooked in high temperature/high pressure environments in relatively small batches.

Svenska Aerogel (SA), one of the numerous companies in Sweden trying to break out of an incubator, has devised a process that can convert silica into aerogels at ambient temperatures at low pressures in a continuous (instead of a batch) fashion, according to CEO Anders Lundstrom.

“We’re talking a price reduction of about 90 percent,” he said.

Along with requiring less energy, the process also lets aerogels take different forms. Conventional aerogels look like pieces of nearly-clear plastic. SA can make aerogel pellets (see photo) or powders, which in turn opens up markets beyond insulation.

Aerogels, for instance, could be added to concrete to make it less susceptible to cracking. Some potential customers want to evaluate it for de-humidification and filtration: active particles are dispersed in an even array inside the gel. In one de-humidifying trial, the aerogel-enhanced equipment removed moisture from a room 50 percent faster than normal, boosting the output of the equipment by 33 percent.

Researchers at the company also believe spray-on aerogels will be possible: a thin coating could make fabrics or paint repel or absorb paint, depending on the desired effect. Another possibility: deploying them in fuel cells to disperse catalysts like platinum more evenly and efficiently on membranes.

“It is a network for capturing molecules,” he said. “A sugar cube-size amount of the material has the same surface area as tennis court. [...I]t keeps its functionality up to 600 degrees.”

If funds can be raised, the company hopes to graduate from sample manufacturing to commercial production next year.

What’s the secret? Lundstrom isn’t telling. The research began in 1997 as a way to improve filters. “Aerogels can capture material. It should be the best molecular filter in the world,” he said.

The company then got formed in 2000 and has been refining the process ever since.  Although he remained vague, Lundstrom said the company’s techniques aren’t related to existing processes.

One of the first major commercial applications will likely be insulation for buildings. Mixed into mineral fibers, aerogels trap air and create an air barrier between the outside and inside. (In this video, a centimeter-thick sheet of aerogel insulation from Aspen Aerogels is protecting my finger from a gas flame.) The EU, California and a few other government agencies have passed building codes that will require commercial and residential builders to improve insulation. A centimeter of aerogel insulation works as well (and can be easier deployed) than 10 centimeters of regular insulation, thus saving time and floor space.

SA will take various routes to market. In some cases, it will sell raw aerogels. In other situations, it may create a joint venture with an industrial company or license the technology.

Like a lot of material science startups, the company will have to wade through detailed testing procedures before customers will commit to orders.

And, like many European startups, SA will likely have to figure out how to attract U.S. investors and/or manufacturers from other parts of the world. Although Europe has fantastic technology and has minted companies like Skype, U.S. VCs often decline to back European companies because time zones and physical distance make it difficult to evaluate a company’s ongoing processes. Europeans love incubators, but their ability to mint giants remains suspect.

Then there are stateside incumbents like Aspen to be reckoned with. BASF and others put $21.5 million into the New England-based company last year. This week, regulatory filings showed that it raised another $30 million. Chinese manufacturers are getting into the game, as well.  

Nonetheless, engineers have been trying to incorporate aerogels into products for quite some time. If the process can be scaled, it could draw some interest.

A few months ago, I asked an executive from a Chinese manufacturer of LED streetlights what made his fast-growing company different from the thousands of lighting fixture makers popping up all over the country.

Simple, he said. He bought his LEDs — the chips inside the street lamps that actually produce light — from Cree, the North Carolina-based chip maker.

While China has colonized solar and pretty much every other heavy industry, the country still lags, according to many, when it comes to solid state lighting. Simply put, Chinese LEDs, and lights made with Chinese LEDs, don’t have a great reputation. Chinese LEDs and bulbs costs less, but anecdotes and word-of-mouth comments often tend to focus on inadequate light output, poor color rendering and other issues.

Part of the problem comes from the complexity of making solid state lights. The quality of an LED depends on the epitaxial, or crystal growing, processes employed to turn a lab-manufactured sapphire ingot into a wafer that can be chopped up into chips. The engineers who know how to do this are relatively small in number and most of them work in Germany, Japan and the U.S. (Yes, many of the complaints about Chinese LEDs come from western companies.)

Making light fixtures also requires know-how in optics and design. Lunera, a Silicon Valley startup, was co-founded by a guy that once worked as a lighting designer for Annie Liebovitz. You don’t meet a lot of people in solar whose work showed up regularly in Vogue.

Will it change? Sure, over time. And that’s why GSR Ventures, which specializes in Chinese investments, has plunked $10 million into SunSun Lighting, which makes LED bulbs. SunSun has a 9-watt bulb that puts out as much light as a 60-watt bulb. The company’s secret sauce revolves around its PowerXplore technology, electronics which help drive light and boost overall efficiency.

The big hurdle facing SunSun remain the intangibles. Will the light bulbs produce enough light? Will the light be a warm, white light or will it be a cool blue, sort of like the light that might emanate from the business end of an alien medical probe? Will the lights last? Will Home Depot sell them, or will they get scared away by fears about returns and people confusing them for solar panels?

And how will they compare against bulbs like the liquid-filled LED bulb coming from Switch toward the end of the year that will cost $25?

And who is making the LEDs? Even Western companies advertise, Intel Inside-like, when they employ Osram or Cree LEDs.

Believe me. Light bulbs look simple, but in the past year I’ve tested a heck of a lot of bulbs. They all have different personalities. Many are great, even for the price, but some certainly suck.

Then again, the selling point here may be electronic engineering. SunSun could ultimately become a component supplier to bulb makers, i.e., it could sell PowerXplore technology to others who would have to worry about placating finicky American consumers. Switching business models, if possible, would help the company limbo under a lot of the issues above.

Think of it. In a "horizontal" lighting market, you could have established companies make the LEDs and some phosphors, Chinese, Korean and/or Taiwanese companies produce the supporting electronics and phosphors, and someone from the West design bulbs and lamps with Chinese or Taiwanese contract manufacturing backing them up.

GSR is also an investor in ShineOn, which makes LED packaging, a crucial (yet faceless) component for LED bulbs. We profiled them a few months ago. ShineOn recently raised $51.5 million from Accel, Mayfield, GSR and others.

Last week I attended Lightfair, North America’s largest lighting show, in Philadelphia.  It was my first time attending the show since May of 2008, when it was held in Las Vegas.  It was amazing to see just how much had changed — which until the last couple of years hasn’t been much.

The biggest innovation in lighting (after Edison invented the incandescent bulb) was fluorescent lights, which GE started selling in 1938.  The second was probably the invention of the solid state dimmer switch in 1959 by Lutron.  Sure there have been improvements since then, but there are few (if any) technical fields that have seen fewer changes than the lighting world (especially when you consider how massive the lighting industry is).

That was true, of course, until LEDs came into the picture. Back in ’08, there was a smattering of LED-based lights (or solid state lights — SSL), but the majority of them were fluorescent, halogen or based on some other technology.  Today, as last week proved, it is all about LEDs. Despite the fact that SSLs are still in their infancy (the biggest use cases today are in street lights, specialty retail and some museums), there was a plethora of lights and enabling technologies being showcased at Lightfair this year. Here are some of the trends that I found most interesting.

The LED version of Edison’s classic

There’s a reason why Edison’s invention is still talked about 100 years after the fact –  the endurance of the original light bulb design is remarkable. Its time may be running out, however, as numerous governments have, or are investigating outlawing the bulbs in favor of more energy efficient versions. At Lightfair, I saw a number of screw-in replacement bulbs made out of LEDs. There were literally dozens of 40W replacement bulbs from behemoths like GE and young upstarts like Lemnis Lighting. As I looked for higher-wattage bulbs, however, the list got shorter. At the top of the range I saw only two 100W replacement LED-based bulbs. One was from Sylvania: it was behind a case and you couldn’t touch it. The other was from a startup that was just out of stealth, Switch Lighting (and you could play with their bulb). Switch’s bulb looks really interesting (check out a picture here) and was one of the few bulbs that was liquid-cooled (i.e., the bulb is filled with a liquid vs. a gas). Switch also claims to have a proprietary driver technology that allows them to achieve the 100W mark.

The big question to me in this market is whether someone will develop technology that gives them a sustainable cost advantage. Markets like light bulbs show tremendous price elasticity.  To be successful, I think companies need to show that they can have a cost advantage through some cleverness or distinctive intellectual property in their design. My investment interests aside, it’s clear to me that consumers are about to get access to high-quality LED bulbs that will naturally get cheaper over time.

The desire to educate consumers on light quality

In the past I’ve seen the benefits of SSL marketed in terms of energy reduction (that’s the driver for our investment in Redwood Systems). At the show, however, I saw a number of companies that were aiming to educate consumers on the benefits of SSL to deliver higher quality light.  We’ve all experienced low-quality light — from the dull blue light given off by the 1970s-era fluorescents to the eerie yellow light of a high-pressure sodium bulb. I didn’t fully understand the benefits of higher-quality light until last week, however.

There were a number of vendors (the most impressive of which to me was Xicato) that demonstrated how the same objects could look completely different under different kinds of light. In one of the more eye-opening cases, a brand new red towel was illuminated by an SSL source and a traditional compact metal halide (CMH) bulb, often used in retail. The towel under the CMH looked as if it had been washed hundreds of times using a low-quality detergent. The SSL light made the towel look brand new.

In addition to having obvious applications in retail, this particular vendor also talked about the benefits to consumers (why spend $10,000 on a kitchen remodel and then use low-quality light to illuminate the new kitchen?). I was just happy my wife wasn’t there to hear the pitch! All joking aside, the SSL market needs segments that differentiate on areas other than cost and reliability. Light quality is something that I expect to hear more about in the next five years as SSLs become mainstream.

The arrival of Korea Inc.

In addition to the usual suspects showing off their products, it was hard to miss LG’s enormous booth near the entrance of the show floor. LG was touting a myriad of different lights (mostly for commercial and retail applications) that they’d developed. Samsung had a booth as well, though they had more of a meeting suite on the show floor — you couldn’t look at what they’ve developed.

I think the arrival of LG and Samsung as major players in SSL is important for one reason: cost. The biggest barrier to the adoption of SSL (by far) is cost.  LG and Samsung have massive operations combined with equally large channels (Samsung also has a partnership with Acuity, the largest fixture manufacturer in North America). If there's one thing both companies know well, it’s how to improve quality while reducing cost. That’s bad news for the incumbent fixture manufacturers, but it’s great news for everyone else in the industry. LG and Samsung will help drive down the cost and accelerate the adoption of SSL.

There’s no question that it is still very early for SSL, but it’s looking like my colleague Jason Matlof was correct when he said late last year that 2011 was finally going to be the year of SSL.

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Mike Dauber is a vice president at Battery Ventures and generally concentrates on efficiency and enterprise IT investments.

Everyone knew Lightfair 2011 was going to be all about LEDs.

LEDs had their coming-out party at Lightfair 2009.  Back then, fluorescents still dominated, but white LEDs showed up in 'soon to be released' form, providing excitement to an industry that hadn’t seen real technical change in 30 years.

Lightfair 2010 became LEDfair, with new product introductions covering every category and the largest vendors marketing LEDs front and center, ahead of their traditional products.

At Lightfair 2011, we witnessed LED 2.0.

Attendees now speak LM79 and LM80. Real customer case studies are more plentiful.  Chips have 30% higher performance.  Second-generation products with the latest chips have replaced last year’s first and worst designs, correcting mistakes based on another year of selling, and learning, and redesigning, and retooling, and re-introducing.

On the technology front, some newer, more controversial approaches are appearing.

By moving the phosphor away from the surface of chip, remote phosphor designs claim 10% added efficiency.  Philips thinks this can work, as does Intermatix — but the approach uses blue LEDs with a specific wavelength range, and those chips only come from Philips and CREE.  Luminus Devices and Bridgelux are betting on bigger chips for higher performance, while CREE has introduced a smaller, more specialized chip package which reaches high performance levels for specific fixture form factors, first implemented in their recent MR16 lamp.  And Lighting Science Group, Switch (formerly Superbulb) and Liquidleds have all bet they can address the LED heat dissipation problem by adding fluid to the cavity around the LED chip.

While last week’s LSG announcement with Google caught people’s attention, the power of the networked LED system is now well marketed by companies like Redwood Systems, Daintree Networks and our friends at Digital Lumens.

In our Enterprise LED Research Report published last year, GTM Research profiled 50 credible vendors and listed 250+ in our running database. With all of this week’s new product introductions, both of those lists will be growing.

Last year, the newest LED products had both high-dollar pricing and low performance in comparison to existing light sources. This year, performance has advanced by 30%, but fixture prices still have an initial cost that is 50% to 100% more than the traditional lamp sources. Prices for chips are expected to continue to come down, with Philips predicting a 50% drop for their A lamp in the next five years.

So while it is clear that LEDs eventually can cost effectively replace every type of lighting fixture, vendors must now combat the customer perception that if expensive products have made so much progress since last year, they may be better served to wait for LED 2.1, when the math gets better.

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Jon Guerster is the CEO of Groom Energy, a consulting firm that focuses on energy. Groom and Greentech Media have collaborated on projects in the past.

UPDATE: Last year, Philips Lighting unfurled a 12-watt LED bulb at LightFair that provided the same amount of light as a 60-watt incandescent.

This year the company upped it to a 75-watt equivalent.

The new EnduraLED A21 consumes 18 watts of power and lasts 25,000-plus hours. It will sell for $40 to $45 when it hits store shelves later this year.

UPDATE: NXP, a multinational chip company that spun out of the Philips conglomerate, announced that it has developed what it calls GreenChip, a low-powered networking device that can be inserted into bulbs for inexpensive networking. It is based on the 6 LoWPAN standard, a favorite because: 1) it consumes very little power; 2) it communicates with the other basic household standards; and 3) it combines both numbers and mid-word capitalization. Google last week announced plans to put networking into bulbs.

Philips proper has not announced it will use the chip, but these companies do have each other's addresses. In the past decade, executives have cycled between them.

Marvell, another chip company, announced a controller for using low-cost LEDs and a bulb reference design.

LED bulbs save between $10 and $20 a year, so the bulb will pay for itself in a few years. Philips estimates that 90 million 75 watt-ers are out there in the world. Swapping them out would save $630 million and cut energy demand by more than 5.2 gigawatts.

While that's impressive, the new EnduraLED comes to market amid increasing competition. Switch, a startup out of Silicon Valley, will have a 75-watt equivalent for $25 in the fourth quarter. Switch lowers the price by filling the bulb with liquid to dissipate heat, much in the same way computer overclockers dip motherboards in mineral oil. Better heat dissipation allows Switch to drive more power to each LED and thereby to cut component costs.

Lighting Science and Google, meanwhile, will come out with a networked LED bulb you can control from an Android phone and a DSL box at home. Marvell, with Cree, has come up with a reference design for an inexpensive LED bulb.

Thus, competition is getting tighter.

We reviewed the 60-watt EnduraLED last year. Good points: lots of light and a nice warm color. Bad points: not as much light as some other bulbs, the light was a little too yellow for some, and my wife thought the novel heat sink — an engineering marvel — made the bulb unattractive. More on the video with last year's bulb, which uses a similar form factor, here.