Wednesday, April 18, 2012

Gov‘t Backed ’Green’ Light Bulb Meant to be Affordable Costs $50

The U.S. government last year announced a $10 million award (the “L Prize”) for any manufacturer who could create a “green” but affordable LED light bulb, The Washington Post reports.

Energy Secretary Steven Chu said the prize would encourage companies to find a way to make the expensive LED lights more “affordable for American families.” The administration was also careful to inject a “buy American” element into the prize deal – potions of the light had to be manufactured in the U.S.

The prize was awarded to Phillips, the bulb was developed and built, and it’s ready for market. It costs $50.

Wait. $50 dollars for a light bulb?

Unsurprisingly, several analysts say the Philips-manufactured bulb is way too expensive to appeal to a broad audience. Think about it: similar LEDs sell for half that price, as the Post points out.

“I don’t want to say it’s exorbitant, but if a customer is only looking at the price, they could come to that conclusion,” Brad Paulsen, merchant for the light-bulb category at Home Depot, the largest U.S. seller of light bulbs, told the Post, “This is a Cadillac product, and that’s why you have a premium on it.”

But wasn’t the entire purpose of the “L Prize” to encourage and incentivize manufactures to build an affordable LED light? How does this make any sense?

“A Philips spokesman declined to talk in detail about the bulb or its price because the product has yet to be formally launched,” the Post reports, “It is expected to hit stores within weeks and is available online. But the spokesman said the L Prize bulb costs more because, as the contest required, it is even more energy-efficient, running on 10 watts instead of 12.5 watts. It is also brighter, renders colors better and lasts longer.”

But still, doesn’t that undo the point of the “affordability” guidelines set by the “L Prize”?

Manufacturers were “strong­ly encouraged to offer products at prices that prove cost-effective and attractive to buyers, and therefore more successful in the market.” The target retail price, including rebates from utilities, was to be $22 in the first year, $15 in the second year and $8 in the third year, the Post reports.
To put it plainly, Phillips comes nowhere near these numbers.

“This bulb is pretty amazing,” says VP of Merchandising Chris Weber, according to Market Watch. “It is really hard to believe that you can get the equivalent of 940 lumens of warm, ambient light from a bulb that only uses 10 watts.”

“Philips has done it and we can’t wait to get this bulb into the hands of our customers,” he adds.

But we just can’t get around the fact that $10 million was awarded to develop an “affordable” LED and Phillips came up with a $50 bulb.

“You keep using the word ‘affordable,’” Cato‘s Aaron Ross Powell writes, addressing the Obama administration, “I do not think it means what you think it means.”