Why cheap oil is great news for LED lighting

LED lighting is getting a boost in the Middle East from the low price of oil, as governments in the region rewrite their energy policies to try and reduce their own consumption.

The price of oil recently hit a 12-year low of $30 a barrel. In response, oil-producing countries including Saudi Arabia, the United Arab Emirates, Iran and Kuwait – whose domestic energy demand has been increasing 5 per cent a year over the last decade and a half – are trying to reduce the amount of oil they use to generate electricity at home, so they have more left to export. That means cutting electricity subsidies and encouraging energy-efficiency measures such as solar panels and LED lighting.

Karim Boutaour, regional marketing leader for lighting manufacturer Schréder Group, told Lux: ‘The combination of the low oil price, diminishing subsidies and appealing financing models in the GCC countries has triggered LED lighting opportunities. Reducing electricity cost and converting to efficient systems makes economic and environmental sense.’

Gerald Strickland, director of the Middle East Lighting Association, said: ‘It’s a big plus for the lighting industry that governments in the region are intensifying their efforts to promote energy efficiency. Lighting products and systems offered by today’s reputable manufacturers represented by the Middle East Lighting Association provide the “low-hanging fruit” in terms of the opportunity to make quick and effective energy savings.’

The global oil price has been falling since 2014 amid weak demand and oversupply. On top of this, oil cartel Opec has responded by maintaining production levels, rather than cutting back to limit supply. The rock-bottom price and uncertain outlook has put the stops on new oil extraction projects – investors controlling more than three trillion dollars in assets have pledged to cut their holdings in fossil fuels, according to campaigners.

Instead, attention is turning to ways to reduce dependency on oil – which is where low-energy lighting comes in. In April, industry leaders will be coming together at the LuxLive Middle East exhibition in Abu Dhabi, to discuss lighting’s role in reducing demand in the region, and to showcase the latest technology. Many countries in the region have already taken steps to make lighting more efficient – including banning incandescent bulbs and switching streetlights to LED.

The UAE, which uses a quarter of the oil it produces for domestic energy, has scrapped subsidies for electricity generation and upped prices for consumers. Energy minister Suhail Al Mazrouei told the recent World Economic Forum in Davos: ‘We need to think about major reforms to make the budget less dependent on the oil price.’

The Abu Dhabi Distribution Company said of its recent price increases: ‘The main objective of these changes is to encourage our valued customers to reconsider their consumption behaviour and contribute to the environment protection efforts for the benefit of posterity.’

Saudi Arabia is also raising electricity prices in a bid to cut demand by eight per cent by 2021, while Kuwait is aiming to make its buildings 10 per cent more efficient.

  • To learn more about what low-energy lighting can do for you, don’t miss LuxLive Middle East at the Abu Dhabi National Exhibition Centre on Wednesday 13 April and Thursday 14 April 2016. Exhibitors include Schréder, Erco, Trilux, iGuzzini and Opple. Entry is FREE if you register here.