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High Oil Prices Spur Demand for Low Energy Electronics

Reuters
Jul 06, 2008

(Spencer Platt/Getty Images)
(Spencer Platt/Getty Images)


SEOUL—These days when customers walk into electronics stores, the first question they ask is how much electricity the fridge, washing machine or laptop computer they are contemplating buying consumes.

"Energy savings were not exactly a hot topic among customers last year," said Kim Dong-han at South Korean electronics retailer Hi-Mart. "But this year, nine out of ten people ask point blank whether a product will help them save money."

With oil at around $145 a barrel and electricity costs jumping, consumers are becoming preoccupied with keeping down their power bills. Electronics makers that develop energy efficient product lines and market them effectively to customers may get an edge in a gloomy global economy, firms say.

"Going green is not only eco-friendly but crucial for business," said Kim Jik-soo, a spokesman at LG Electronics Inc. "This goes beyond just products, extending throughout the development and manufacturing process."

From washing machines that use steam instead of hot water, to fridges that use low energy compressors, to low power computer screens, electronics firms are furiously developing energy efficient products and heavily promoting lines already on the market that use less electricity than competitors' brands.

"My electricity bill more than doubles in the summer as we turn on the air conditioner," said Park Yu-jin, 32, a housewife in Seoul with two kids.

"I also have to do lots of laundry for the kids. The bill now easily tops 170,000 won ($162) a month."

Homemakers such as Park are increasingly buying front-load washing machines, which use gravity to move water instead of agitators as in top loaders.

And now, newfangled washers from LG Electronics Inc and Whirlpool Corp offer an option to use steam instead of hot water, cutting water and power use by more than 70 percent compared with some top-load models.

"We will gradually shift to front loaders and the steam technology will become more mainstream," said LG spokesman Kim.

LG expects four out of ten frontload washers it sells in North America to use steam technology by the end of this year, compared with two out of ten currently.

Their biggest appliance plant in South Korea makes mostly front loaders, while recently built plants such as one in Russia have stopped manufacturing top loaders altogether.

Using Less Power

Among refrigerators, which consume 30 percent of overall power in a typical home, traditional compressors are giving way to linear compressors that use up to 40 percent less power and make less noise.

In the computing industry, power-saving has long been a key priority as bigger and hungrier gadgets challenge battery life.

PC makers from Apple Inc to the Lenovo Group are replacing screens lit by conventional cold cathode fluorescent lamps (CCFLs) with light emitting diode (LED) displays.

"LED saves up to 40 percent of the power used in traditional backlights," said Jeff Kim, an analyst at Hyundai Securities. "Next year they will be commonly found in notebook screens, and will be increasingly used in TV panels from 2010."

Market researcher DisplaySearch expects LED-backlit displays to account for 50 percent of notebook panels in 2010, up from 12 percent this year. By 2015, all laptop displays will use LEDs, generating sales of $6 billion.

LED is also set to claim traditional incandescent lamps in buildings and on streets. Samsung Electro-Mechanics Co recently replaced lighting in the South Korean parliament building with new LED products and reported LED consumed just one sixth the power of incandescent bulbs.

Higher Price Tag

But too often, these energy-efficient products carry a hefty price premium to reflect the cost of developing new technologies, which in turn hampers faster adoption.

For instance, Whirlpool's washing machines with steam feature are sold at $1,300-$1,500, compared with a traditional machine priced at $700.

Still, makers argue that the lifetime savings from green products could amount to the price of the appliance itself.

"You could buy another 32-inch LCD TV within 3 years with the money saved on electricity from our 52-inch power-saving TV," said LG's Kim, referring to a new TV model with a sensor that adjusts brightness to match surrounding light levels.

Sometimes a little incentive helps.

Japanese electronics retailer Bic Camera Inc is running a campaign in which buyers of eco-friendly products get extra credit points that can be used for future purchases.

"That's a little nudge to help people buy products that are more efficient, even if they are slightly more expensive," said Naoko Ito, a Bic Camera spokeswoman. "Consumer interest is high."

A U.S. survey by Forrester Research last year found that green consumers, who agree to pay extra for electronics that use less energy or come from an environmentally friendly maker, are more brand-loyal than average consumers.

"More than 25 million U.S. adults fall into this segment, enough for even the largest consumer electronics marketers to target," Forrester analyst Christopher Mines said.

"Green-targeted PCs and other electronics will evolve as part of the consumer electronics industry's move to go beyond 'beige box' design," he said. "Apple certainly leads the way here."

A green-technology product that establishes new benchmarks and appeals to concerned consumers "will have an iconic market presence if done right," Mines adds.


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