Drive to Energy Efficiency Creates New Opportunities

By Ash Sharma, Research Director, IMS Research



Some may view the power electronics industry as notoriously slow to change. Perhaps in the past this has been true, but certainly not any longer when you consider the rapid advances being made towards better energy efficiency and energy savings in industry, the workplace and the home. I wrote on the topic of energy efficiency a year ago, highlighting the achievements of the industry over the past decade regarding energy savings, and looking back over the past 12 months, I can see that further small, but important steps have been made towards the goal of a low-carbon environment. In the last 2-3 years, suppliers in the power electronics industry have had to grapple with the effects of the global downturn and the subsequent rapid recovery and allocation situations in 2010. However, this period of instability did give suppliers a chance to reflect, reorganize and re-strategize with an increasing focus for many suppliers on "new" markets, almost all of which are linked to energy savings and efficiency. Some of the more significant changes in the industry last year included the rise of the full electric vehicle, the advancement of "smart" appliances for the home, the massive surge in new solar installations, the on-going shift to more efficient lighting, and the introduction of a universal charging standard for mobile phones. Almost all major vehicle manufacturers have announced plans to release an electric vehicle. Two suppliers, Nissan and GM went even further, releasing their Leaf and Chevrolet Volt models respectively in 2010, and selling not insignificant volumes last year. If volumes of such vehicles rise into the millions per year as expected, this will create huge growth opportunities, both within the drivetrain and associated battery technology, and also in the charging infrastructure required to support these vehicles. During January's Consumer Electronics Show in Las Vegas, we witnessed several major companies, including the likes of LG and Samsung, announce plans to release "smart" appliances. These products not only offer the consumer greater functionality, such as remote control via a smartphone, but also aim to reduce energy consumption costs, by using smart meters and a Wi-Fi connection to take advantage of off-peak electricity rates. These announcements reflect a broader trend towards a "connected home" which will allow consumers to take a more active role in reducing their energy usage. Fossil fuels and nuclear technologies continues to rule the energy generation world, but further steps were made in 2010 to increase the proportion that came from renewable energy sources. Wind power capacity continued to expand, and for the first time, China actually overtook the US, in terms of newly installed capacity, indicating China's important future role in the market's development. Solar power, which has always been wind power's smaller brother, also enjoyed a major growth spurt in 2010. Newly installed capacity of around 17GW in the year, helped to nearly double total capacity to some 35GW. Utilities in Germany, the major driver of new installations last year, claimed that solar power now handles 20% of the country's peak power requirements. As the capacity of both wind and solar increases, so does the opportunity for power component vendors. The push towards energy storage in the grid, accelerated by vast numbers of renewable energy generators presents further major opportunities. Another major change in 2010, which will affect the consumer, is the European Commission's recently introduced "Universal Charging Standard". The standard which was backed by 14 of the top handset suppliers intends to reduce wastage of mobile phone chargers by having a single micro-USB protocol for all new handsets. This presents one of the few developments in the industry that may in fact reduce power electronics opportunities due to restricting charging volumes and associated power component content. These few examples demonstrate just some of the recent developments in the power industry relating to energy usage. The full list is much larger and should provide massive new opportunities for many companies in 2011 and beyond.