Post updated through April 19 - May 1 with new information.
Also, more about Philips lobbying finance in the more recent post here with Senate disclosure records etc.
Otherwise, the post from April 23, and posts that follow about the prize committee lab testing, are also copied below to keep the information complete in one place.
Regarding the earlier post here:
"Philips, Osram, the UN and the World Bank:
How we will "en.lighten" the World in 2012"
As seen that was about the worldwide en.lighten program, with public subsidies allowing major manufacturers to dump otherwise unsold bulbs on developing countries.
Philips have been in the news again regarding their prize USA bulb
(Competition website: Competition rules)
Some are entirely made and tested in China, while for the American market, at least in terms of information given in relation to the prize, it is assembled in the U.S. from components manufactured in Shenzhen, China with LED chips made in San Jose, California.
A lot seems to have been going on about it behind the scenes, which also illustrates light subsidy issues more generally, albeit more a reflection of the US Dept of Energy than on Philips, who obviously will take whatever money is going :-)
One of the first articles reporting back on the issue came from the Washington Post, Peter Whoriskey, on the 9th of March, extracts:
The U.S. government last year announced a $10 million award, dubbed the “L Prize,” for any manufacturer that could create a “green” but affordable light bulb.
Energy Secretary Steven Chu said the prize would spur industry to offer the costly bulbs, known as LEDs, at prices “affordable for American families.” There was also a “Buy America” component. Portions of the bulb would have to be made in the United States.
Now the winning bulb is on the market.
The price is $50.
Retailers said the bulb, made by Philips, is likely to be too pricey to have broad appeal. Similar LED bulbs are less than half the cost.
How the expensive bulb won a $10 million government prize meant to foster energy-efficient affordability is one of the curiosities that arise as the country undergoes a massive, mandated turnover from traditional incandescent lamps to more energy-efficient ones.
A rebuttal from both the Dept of Energy and Philips, was to note that the price was expected to come down to 20 dollars or so.
First of all,
this of course raises the general issue of "paying upfront for future savings", and the many reasons that hardly holds with energy efficiency regulations,
in particular light bulb legislation: As extensively covered on Ceolas.net website
from http://ceolas.net/#li12x onwards, and summarized in the deception rundown on the blog, as in savings point 8.
The issue about "CFLs and LEDs becoming cheaper in the future",
is also covered in that rundown, and taken up more extensively on the Send Your Light Bulbs to Washington post, "Will CFLs and LEDs become Cheaper?"
Still, the Philips story has a lot of behind the scenes intrigue to it...
soon after the Washington Post story, also on 9th March, the Reason.com article by Katherine Mangu-Ward Feds Pay $10 Million for $50 Light Bulb, extracts and highlights:
In 2007, when Congress passed legislation that would gradually ban old school incandescent light bulbs, they added a carrot to the pile of sticks: A $10 million dollar prize to encourage the development of a cheap, green, domestic light bulb to replace the dearly departed Edison model.
Five years later, that bulb is coming to a hardware store near you. It will cost you 50 bucks. It also fails to meet many of the original prize specifications. The winner, Dutch electronics company Philips, was the one and only entrant, suggesting that the prize failed to stimulate widespread additional private spending on R&D. The portion of the LED bulb made in America is less than initially envisioned. And the guidelines for pricing were utterly ignored: The goal was $22 price tag in the first year, falling rapidly to $8 by year three.
In this case, the prize was a first-past-the-post arrangement. So electronics giant Philips, which also makes a Chinese-manufactured version of the same product for half the cost, quickly fiddled with the specs and figured out a way to make some of the chips in San Jose—all jobs that will go to American citizens, no doubt—and do the assembly in Wisconsin. Two other companies had announced their intention to join the fray, General Electric and Lighting Science Group, when the Department of Energy abruptly declared a winner.
"We are pleased to be the only one who has submitted anything," chief executive of Philips Lighting North America Zia Eftekhar told National Geographic. "Even though I'm unbelievably happy we won, it's still good to challenge the entire industry to move the technology forward."
One part of that statement is undoubtedly true—Philips was likely quite satisfied to be the only company in the running—but the idea that the prize has moved or will move the industry forward is silly. Instead of spending the time and energy on genuine innovation, Philips diverted resources from developing the bulbs they were planning to build overseas and sell in the United States to tweak their product to conform (not even all that well) to semi-arbitrary guidelines written by a bunch of bureaucrats with the goal of dispensing some guilt cash that was tacked onto a bill that made a product preferred by virtually everyone in the country at the time illegal.
The goal for this prize shouldn't have been fastest, it should have been best. By the time the rules of the competition were announced, it was already apparent that the nation's basic light bulb needs were not going to go unmet. But rather than aim high, the Department of Energy set its sights squarely on a successful press conference at which the backs of congressmen, department officials, and energy execs could be patted and/or scratched. Mission accomplished.
The trade publication Energy Efficiency & Technology notes that the bulbs that are coming to market are actually a little different than the model that won the competition: “The commercial lamp has three rather than four optical segments and uses fewer LEDs. The reason, says Philips, is that LED technology has progressed a bit even since the end of the contest.” In other words, the carrot is worse than irrelevant. Philips dropped whatever they had into the feds’ laps in order to grab the prize and will continue to improve the bulb, running as fast as they can ahead of the stick. (Frankly, it’s a little surprising the sticky gears of the energy bureaucracy didn’t require the company to stick with the federally tested and approved model in order to maintain its favored status. Thanks goodness for small favors.)
While a $10 million check to sell a slight variation on a product you were developing anyway seems like a pretty sweet deal, it’s actually chump change compared to the real prize: preferential treatment by federal buyers and others major players who are beholden to the feds, such as the many utility companies offering subsidies to customers who purchase the bulbs. The knowledge of this pot of gold at the end of the rainbow further reduced Philips' incentive to keep prices low.
But wait: Why would a company that sells power want to subsidize products that help people consume less of what they’re selling? Ordinary economics no longer applies once you go through the looking glass into much of the heavily regulated utility sector. In California, for example, profits and consumption have been “decoupled”: Prices are based solely on what the state deems to be a fair rate of return. Which means that more demand for energy—accompanied by the possibility that new power plants must be built—is just an expensive pain in someone’s butt, not an opportunity to make more money.
Add in a nudge from your industry’s primary federal regulator, and voila!: Power companies are dropping boatloads of Hamiltons on their customers. In fact, that $10 million figure is likely to increase as the Department of Energy pressures utilities to take a bigger bite out of the $50 monster they helped create.
That's not all..
among other observations seen since, the Washington Free Beacon article 14th March by Bill McMorris is of particular interest
"Obama's Dim Bulbs", extracts:
The department [of Energy] has gone from judge to partner to help Philips sell the product. It is now trying to coax utility companies to grant discounts and rebates to customers in order to create demand for the light bulb.
“We are actively working with (utilities) to hammer out deals to introduce the product to their region,” said an official familiar with the L-Prize. “DOE’s mission is energy savings and in order to get that there needs to be widespread market adoption.”
Thirty-one utility companies have partnered with the department and Philips to grant rebates to customers who purchase bulbs, the highest being a $25 rebate from Efficiency Vermont.
Philips Lighting USA has splashed references to the L-Prize bulb—a name assigned to the product by the federal government—and is doing its best to market the product to businesses before launching residential sales next month.
“I know everyone is looking at the $50 price tag, but Philips has been actively working to get those rebates,” company spokeswoman Silvie Casanova said. “The price reflects that it’s harder to make this bulb than existing 60 watt LEDs.”
That technology is also constructed at more expensive plants in Wisconsin and San Jose, rather than the Chinese factories that churn out the company’s existing line of energy efficient bulbs.
Other officials familiar with the project told the Washington Free Beacon that there is little the department or Philips can do to lower the price in the short-term except wait for consumers to adapt the new bulb, as traditional incandescents are phased out.
The steep price tag is not the competition’s first brush with controversy.
A House Appropriations Committee report (pdf) issued in June slammed the department for announcing the $10 million prize without prior approval from Congress.
“The Committee strongly opposes the Department announcing funding opportunities when those funds have not yet been made available by Congress,” the report reads. “In the case of the L Prize, the Department risks damaging its credibility.”
The warning was enough to worry higher-ups at Philips, which spent nearly $1.8 million lobbying Congress to fund the program.
The committee granted the award money to spare the department embarrassment, but changed its rules to prohibit “announcements in advance of appropriations.”
Philips received about $5.6 million from the federal stimulus to advance its LED lighting technology.
It spent nearly as much—$4.5 million since 2008—lobbying Congress and the Obama administration for bills friendly to lighting appropriations.
Casanova refused to “talk to the lobbying spending,” but emphasized that the bulb maker did not use any stimulus dollars for researching the bulb.
“We didn’t get any money to develop this bulb,” she said.
Department officials are backing away from the contest’s initial call to draft an affordable bulb that could come to market at $22 and drop to $8 per bulb by its third year.
“The idea of that light bulb contest was to provide for a goal going further down to get a light bulb that eventually, Americans can afford,” Secretary of Energy Steven Chu told Congress on Tuesday.
Energy officials remain optimistic about the expensive competition and its initial results.
Department lab tests found that the bulbs will last up to 25,000 hours, which would save consumers about $160 over the lifetime of the bulb, according to department estimates.
The department plans to continue with the program, announcing a second competition in March.
The Washington Beacon (see above) in a further article in April by Bill McMorris, had more on this and other mentioned issues. Notice that they also point out how the prize testing lab names were rubbed out (more on this below, also see the technical review copy at the end). My highlighting again:
The Department of Energy awarded lighting giant Philips the $10 million L Prize despite the fact that the winning energy-efficient bulb failed to meet several contest criteria requirements, according to documents obtained by the Washington Free Beacon.
Philips raised eyebrows when it debuted the winning bulb with a $50 price tag. That is far beyond the $22 cost recommended by the department, which is now working with utility companies to cut back on the upfront cost through rebates.
Department documents, however, cast doubt on whether the expensive LED bulb was even worthy of the prize.
Contest rules outlined by the 2007 Energy Independence and Security Act required the winning L Prize bulb to shine at 900 lumens. A department report on 200 bulbs tested at two different facilities showed that nearly 70 bulbs failed to meet that standard, including more than 60 percent of the bulbs tested at one of the labs.
“The integrating sphere test from the [lab name redacted] shows that only 5 of 100 samples tested were below 900 lumens, but the [lab name redacted] integrating sphere testing shows 38 samples that were over 900lm and 62 were under,” the report reads.
Despite Philips’ poor showing at the DOE lab tests, the department passed the bulb after receiving reassurance from the Dutch company.
“Philips data shows all tested lamps (2000) were above 900 lumens. Philips test and modeling data indicate…this criterion will be met in the production lamp,” the report continued.
[More such acceptances of Philips own lab results and promise for production lamp compliance can as said be seen directly on the Test Committee Review comments on the right side of their document report (click on it to enlarge)]
A department spokeswoman insisted that the bulbs met the requirements.
“The minimum output measured in this sample of 200 lamps was 873 lumens and the maximum was 967 lumens, a range consistent with normal manufacturing tolerances,” the spokeswoman said. “The average light output of the 200 samples tested was 910 lumens.”
One lighting expert, however, said the average is not a good indicator of LED performance.
“You have to be very careful in choosing LEDs because there is difficulty in uniformity,” the expert said. “Having that many bulbs fail is suspect, especially if you plan on taking these bulbs to the market.”
Philips spokeswoman Silvie Casanova said the L Prize bulb that will hit store shelves later this spring fulfills every L Prize requirement.
“I’m sure that in the test run, there might have been some that had some performance issues, but I’m sure the department is looking at a baseline of the bulbs overall performance,” she said. “It does meet the requirements; we’re going through Energy Star testing right now” that will verify the company data.
Contest rules mandated that an entrant that failed to meet basic standards would be “terminated” and forced to return to square one of the competition.
There is no indication that Philips’ entry was disqualified, however.
Scientists who developed rival bulbs were outraged when they heard that the department allowed Philips to move forward.
“We treated the standards as Gospel: you had to have 900 lumens, you had to have the right color, the right temperature, the right (light distribution),” said one engineer who worked on the Lighting Sciences Group’s L Prize design.
“We went through revision after revision because if you change the (brightness), the color could be wrong and we’d start over. If we had known we could have fudged the (brightness) then everything else becomes easy,” the engineer said.
In 2009, when other lighting companies were still at the design phase of the process, Philips submitted a 2,000-bulb sample to the department. The quick submission intimidated many others vying for the L Prize, according to multiple industry insiders.
“Not once did the DOE ever let anyone know about the testing results; there was no transparency,” another lighting expert said. “If they had made it known in 2010 that Philips didn’t pass the test, then other competitors would have proceeded forward. The inference was that they passed.”
The department closed the competition and awarded Philips the $10 million prize in August 2011.
The brightness test was not the only requirement that Philips may not have reached. Department notes also indicate that reviewers changed the light distribution criteria to Philips’ favor.
“Testing and modeling of prototype production lamps show the luminous intensity distribution falling below 10 percent from the mean near 150 degrees,” the report said. “However, the TSC finds the use of the 0-135 degree zone acceptable … this is different than the 0-150 zone specified.”
“The department cannot just change the rules on how they are going to test, especially if they don’t tell other competitors about the rule change,” said a second lighting insider. “Only Philips benefited from the criteria change.”
The contest has been marred by several controversies since it opened in 2008.
A House Appropriations Committee report issued in June slammed the department for announcing the $10 million prize without prior approval from Congress.
“The Committee strongly opposes the Department announcing funding opportunities when those funds have not yet been made available by Congress,” the report said. “In the case of the L Prize, the Department risks damaging its credibility.”
The warning was enough to worry higher-ups at Philips, which spent nearly $1.8 million lobbying Congress to fund the program.
The bulb’s $50 price tag also produced sticker shock among industry insiders. It is about double the cost of existing LED bulbs and about fifty times higher than the 60-watt incandescent bulb it was designed to replace.
“I’m impressed with the technology, you’d be hard-pressed to find someone who’s not,” the former LSG engineer said. “But we were going for a $22 bulb, forget rebates, and Philips missed it by a mile.”
The L Prize winner is expected to last 25,000 hours and save consumers $160 over the lifetime of the bulb compared to 60-watt incandescent bulbs, which were outlawed by the 2007 Energy Independence and Security Act (EISA).
Secretary of Energy Steven Chu said the competition helped move LED technology forward by providing companies with incentives to make energy efficient bulbs.
“The idea of that light bulb contest was to provide for a goal going further down to get a light bulb that eventually, Americans can afford,” he told Congress in March.
The former LSG executive is not convinced.
“Letting (the bulb) come out that expensive, I think it set the market back … people are looking for a return on investment and this just tells them they can’t afford any LED bulbs,” he said. “I can’t blame the U.S. citizens for saying, ‘my God, the government is wasting our money.’”
In March, DOE opened the second round of the L Prize competition, which will aim to replace the existing halogen floodlight.
And there is more...
Another angle, from a comment originally by Philip Premysler on Triple Pundit, since updated by him.
It includes relevant documentation links (author's own emphasis in capital letters as well as my bold text highlights):
There are greater troubling issues beyond the price.
The problem is that the L-Prize contest which was supposed to foster U.S. green technology competitiveness was RIGGED.
As a foreign based (headquartered) corporation Philips was excluded from eligibility according to the law that established the L-Prize, in particular public law 110-140 section 655(f)(1).
Under U.S. federal law the term “a primary place of business” used in the statute refers to the single headquarters location, which in the case of Philips is Amsterdam, Netherlands.
Philips, of course, would have known that they were ineligible, so they put out PR flak alleging that the bulb was the result of a global effort. The truth, as evidenced in Philips patent on the bulb, is otherwise.
See Philips L-Bulb Patent.
The bulb was developed in the Netherlands: The patent application which was, originally filed in Europe in 2008, but published in the U.S. two months after the Philips executive made his misrepresentations, lists only Dutch inventors, no U.S. inventors and assignes the patent to the Dutch Philips entity, not to a U.S. entity.
When this issue arose after the announcement of Philips as the L-Prize "winner",
the CEO of Philips Lighting North America Zia Eftekhar went on record falsely stating that the L-Prize bulb was "conceived" and had its "origins" in the U.S.
See EE Times article
[Quoting the article:
"But what about the development of the bulb, and where will it be manufactured?
Zia Eftekhar, CEO of Philips Lighting North America, wanted to set the record straight:
He told me the L Prize bulb “..was conceived, designed, and will be manufactured in the United States.... He repeated this for emphasis: “The origins and development of this product, as well as its future manufacturing are all in the United States."]
These were falsehoods.
In fact Philips' L-Prize entry was invented by three dutch inventors and assigned to Philips of the Netherlands. [As from patent document previously mentioned]
Philips also spent $1.79 Million lobbying for appropriation for the L-PRIZE,
(as referenced, including from Senate Office Of Public Records, Lobbying Disclosure Forms).
Moreover, "A House Appropriations Committee report issued in June slammed the department for announcing the $10 million prize without prior approval from Congress." (Washington Beacon article by Bill McMorris)
The L-Prize entry also failed to meet key technical requirements of the contest. The Philips entry does not meet the stated uniformity requirement of the contest. This is admitted in a document [in its review comments] obtained under the Freedom of Information Act, see http://tinyurl.com/43ECMQM
[alt link to the document source here, easier magnifiable document copy here (click on it to enlarge)].
The curt justification asserted in that document based on comparing uniformity to a standard incandescent lamp is factually (quantifiably) false. The putative L-Prize winner is actually less uniform.
The Philips entry also failed to produce the required amount of light.
In one test 62 out of 100 bulbs failed (see the above linked document).
Whether the commercialized version will consistently produce the required amount of light is an open question [ed- unlikely given that the commercial version is not as good see above]. HOWEVER the stated procedure for the contest was that if the entry failed a required test, the entry would fail.
What happened is that Philips wanted prematurely to claim the prize
(as in Reason.com article) and the Department of Energy did not want to follow the rules and fail them, rather they embarked on RIGGING the contest. They kept the failure secret and proceeded with other tests.
[ed- more on the testing debacle below, also see the comments below to this post]
The result is that a bulb developed by Dutch inventors, built with some (possibly most) of its parts made in Shenzhen China (see http://www.dailytech.com/Philips..) has been given a great initial advantage which may allow it to dominate U.S. competitors, even though the contest is RIGGED.
We may wind up with Dutch citizens enjoying social welfare benefits such as vacations for the unemployed, supported by Chinese workers working 12 hours a day and American consumers squeezed by $50 light bulb prices whether they pay that amount at the check out counter or indirectly pay for subsidies through their electric bill [ed- including the currently planned taxpayer subsidies passed on to stores for price reductions at point of sale].
Philip Premysler's comments regarding the dubious testing were perhaps not as clear as they could have been - and the point was understandably made, in a comment below,
that the bulb after all was passed in all respects by the prize testing committee.
But in looking at the Test Review Comments themselves on the right hand side of the document (click on it to enlarge - or see copy below), the discrepancies start to show up.
While the bulb obviously passes the tests (or of course the prize could not be awarded!), it therefore does so with a lot of provisos, such that Philips own prototype testing are accepted when prize testing lab results show otherwise, and Philips promises about "criterions will be met in production lamp" are also accepted.
Notice also that prize testing lab names whose results conflict are rubbed out (at least 2 labs involved, possibly run by the DOE, judging by the article below).
Why not test results of publicly named labs, in a publicly awarded prize with public money?
As seen in other parts of the assessment the testing by a certain PNNL is not rubbed out. (Pacific Northwest National Laboratory (PNNL) is one of the United States Department of Energy National Laboratories).
In one part, additional to the other criticism mentioned: "Testing conducted by PNNL with a wide variety of dimmers showed several issues with the submitted lamps".
The mentioned test review document copy
(obtained under Freedom of Information legislation)
The US Dept of Energy official site (lightingprize.org) - has a lot more about the evaluation procedure - including their video about the bulb testing:
The just released (April 2012) stress test report follows below.
Alternative link to this PDF document.
As seen, the lab involved was the Pacific Northwest National Laboratory, as mentioned above.
Some recent relevant comments on different posts relating to the testing, extra highlighting (capital letters in original) and direct linking added:
To address the points above as to whether the contest was rigged. If the L-Prize bulb clearly FAILED a technical test where there is a clear cut pass or fail outcome that any freshman engineering student can judge, but the technical review committee writes in PASS and explains, in SECRET, without publishing a rules update, that they are lowering the standard so that they can write in PASS, this is clear cut CORRUPTION.
The technical review committee sought to justify secretly altering the uniformity standard stating
“..however, independent data verifies that this distribution is actually much more uniform than a standard incandescent lamp …“
While there can be no justification for secretly lowering the standard to rigg the contest, astoundingly (or not) this statement is false.
Calculating the standard deviation for the L-Prize bulb tested by the DoE and a standard incandescent lamp, using data provided by the Department of Energy shows that L-Prize lamp tested by the DoE was actually less uniform.
See Light Distribution Analysis (alt link)
The production version of the L-Prize (which by the way appears to be a Chinese product) also does not meet the published L-Prize uniformity criteria of +/-10% of average in the zone 0 to 150 degrees.
See data on page 41 of usa.lighting.philips.com document
Also see: Lab plots of light distribution of Philips bulb (alt link)
The stated procedure for the contest was that if the entry failed a required test the entry would fail.
See flowchart on page 15 of L-Prize competition rules.
Southern California Edison (SCE) which was involved in field testing Philips L-Prize entry, decided to lab test 16 of the bulbs.
It turns out 1 of the 16 exhibited a failure mode in which the light turned red by the time it had 1502 hours of run time. This early failure casts doubt on the 20,000 hour (with 95% confidence) lifetime touted by the Department of Energy.
See link on (Emerging Technologies Coordinating Council) web page http://www.etcc-ca.com/component/content/article/48-Commercial/3044-l-prize-lab-evaluation which has link to report
Quoting from the mentioned Emerging Technologies Coordinating Council (ETCC) webpage
This independent lab assessment was initiated in support of both SCE’s L Prize field testing efforts, as well as its energy efficiency incentive/rebate programs.
SCE’s lab testing capabilities present an enormous resource in understanding and developing confidence in the performance of these units. A winning product stands to undergo considerable mileage in terms of usage/acceptance across the United States. As leaders in energy efficiency, it is important that California utilities stay active in monitoring/assessing such technologies.
Regarding the SCE report about the bulb (long pdf document), from the summary:
The technology shows promise in terms of meeting the efficiency and performance criteria set forth in the L Prize.
However, to better assess feasible implementation into incentive
programs, more investigation is recommended in three key areas:
- Lifetime Testing
o The variation of savings realized with these products throughout their lifetime is not well understood at this point.
Long lifetimes are one of the significant advantages of SSL technology, and should be better understood with this product application.
- Dimming capabilities/issues
o It is not currently known how these products perform when used with other dimmers.
o Their observed inability to toggle off with the selected ELV dimmer presents a large barrier, which needs to be overcome for successful implementation.
(When the ON/OFF function was toggled on the dimmer paired with this product, the product was not able to shut off. It encountered visible flickering at a dimly lit state in the OFF position.)
o The issue of green color shift at low dimming is a barrier to investigate/address for successful implementation
- Thermal effects on product performance
o These lamps are specified to use in dry locations, and not within totally enclosed fixtures. The effects of ambient temperatures/humidities on this technology’s performance and lifetime are not well understood at this point.
The conditions these lamps were subjected to in this lab assessment are within a narrow range, when taking into consideration the various climate zones/applications these general-purpose devices may see.
These key areas represent significant barriers,
to acceptance of this technology when compared with baseline CFLs and incandescents.
Further efforts are recommended to fully understand the benefits of SSL technology in this application, and ensure that product utility is not significantly impacted when encouraging customers to purchase products that are more efficient.
It is recommended that the results of the DOE’s evaluation of the first entry to the “60 Watt incandescent” category be closely monitored;
further understanding of this technology may be achieved through more collaboration with DOE testing, as DOE efforts are initiated/completed.
Regarding this bulb,
dimming is also criticized along with other issues in the committee technical review, above.
Regarding LED technology in general,
as this report also takes up, there are indeed several questionable issues relating to lifespan, enduring brightness, ambient temperature effects etc - apart from the light quality itself:
See the Ceolas website referenced rundown.
The "save energy/money in usage" push should not ignore such factors,
or for that matter the life cycle environmental impact, in terms of components in manufacture (more), energy/emissions in production and (overseas) transport, and environmental dumping when not recycled.