900000

Lighting Products

have been installed by EFOI across the US Navy fleet since 2007, saving more than 5 million gallons of fuel

80%

Coverage

EFOI's products cover 80% of indoor lighting needs for commercial & industrial buildings

32.5%

Growth

in EFOI's Net sales in 2020 compared to 2019

View Our Analysis

The Path to Drawdown: LEDs

Light-emitting diodes (LEDs) were invented as high-brightness, highly efficient light bulbs in 1994. LEDs work like solar panels in reverse, converting electrons to photons instead of the other way around. They use 90% less energy than incandescent bulbs, and half as much as compact fluorescents for the same amount of light. While other lighting technologies convert energy into heat (and wasting most of it), LEDs convert 80% of energy into creating light.

LEDs have many environmental advantages. Their efficiency in converting energy into light, rather than heat, helps reduce electricity consumption and air-conditioning needs. For people without access to ample energy, LEDs can be powered with small solar cells and can replace expensive kerosene lamps and their noxious fumes and emissions. When LEDs are used in streetlights, they can save up to 70% of energy and significantly reduce maintenance costs.

According to Project Drawdown’s models, if LEDs become ubiquitous in both the residential and commercial lighting market, they can help avoid between 10.2 - 10.8 gigatons of CO2 emissions in residences, and between 5.9 - 6.7 gigatons in commercial buildings. But to get there, the global market share of LEDs needs to scale rapidly:

  • <::marker> In 2018, LED lights comprised 3% of the total commercial lighting market and 2% of the residential lighting market
  • <::marker> By 2050, LEDs should account for 95% and 90% of the residential and commercial markets, respectively
  • <::marker> That’s 12.82% CAGR for residential LED, and 11.21% CAGR for commercial LED lighting between 2018 and 2050.

What We Want to See Improve

Sustainability Reports

We agree with Energy Focus that their LED products enhance energy efficiency and help their customers reach sustainability. But we need to see how Energy Focus’s own production, operation and distribution are impacting the environment and climate. For that, we urge them to publish ESG reports on an annual basis, and include key metrics like scope 1, 2 and 3 emissions and the amount of GHG emissions avoided.

Achieve Profitability

Energy Focus underwent (p. 4) several years of restructuring, organizational consolidation and streamlining, and during this time they experienced challenges from long and unpredictable sales cycles, delays in customer retrofit budgets and project starts, etc. Energy Focus is still incurring substantial losses (p. 13). We are eager for them to significantly expand sales and achieve profitability in the near future.

Diversify Customers

Energy Focus’s customer base is highly concentrated. Sales to their primary distributor for the US Navy and sales to shipbuilders for the US Navy account for 53% of Energy Focus’s total net sales. We’re concerned about the precarity of this situation, as decline in sales to the US Navy can severely impact Energy Focus’s viability, like it did in 2016-2017. We encourage them to diversify their customer base, both across industry verticals and across geographies.

Related LED Lights Stocks in the Climate Index

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Allocated Company Description

5.00%

Applied Materials (AMAT)

Applied Materials supplies equipment, services and software for LED manufacturing. LEDs help conserve energy and cut emissions

0.56%

Universal Display (OLED)

Universal Display makes organic LEDs, replacing fluorescent and incandescent lighting and improving building energy efficiency

0.47%

Acuity Brands (AYI)

Acuity makes LEDs, smart lighting and building technology solutions that can improve energy efficiency and emissions from buildings

0.40%

Power Integrations, Inc. (POWI)

POWI makes energy-efficiency products like AC-DC power converters and LED drivers. These solutions help buildings conserve energy and cut emissions

0.28%

Diodes Incorporated (DIOD)

Diodes makes a range of semiconductor products for LCD display, LED monitors and lighting. LED lighting is a key solution for cutting building emissions

0.07%

Veeco Instruments Inc. (VECO)

Veeco makes equipment and processing systems used in making high-tech LEDs. Energy-efficient LEDs help buildings cut energy use and emissions

0.05%

Magnachip Semiconductor Corp. (MX)

Magnachip Semiconductor derives its revenue in part from the promotion of LEDs and solar PVs, through the sale of LED products and products used with solar PVs. It creates no products specifically for the fossil fuel industry.

0.02%

Agrify Corporation (AGFY)

Agrify provides LED lighting and other products for high-yield indoor agriculture. Efficient LEDs are an energy-saving alternative to conventional lights

0.02%

Amtech Systems, Inc. (ASYS)

Amtech Systems makes semiconductor equipment for LED and power device applications. LED lighting helps buildings cut emissions

0.02%

AXT, Inc. (AXTI)

AXT sells semiconductor substrates used in LEDs, thermal imaging, and autonomous vehicles. It makes no products specifically for the fossil fuel industry, thus passing our revenue filter.

0.02%

Energy Focus (EFOI)

Energy Focus makes LEDs for the Navy, federal, state and local governments, and big organizations, helping them save energy and cut building emissions

0.02%

Highway Holdings Limited (HIHO)

HIHO makes electronic components, some of which are used in making LEDs. LEDs are energy-efficient lighting that can cut emissions from buildings

0.02%

SemiLEDs Corporation (LEDS)

SemiLEDs makes LED components for lighting and other applications. LEDs are an energy-efficient lighting alternative that can cut building emissions

0.02%

LSI Industries Inc. (LYTS)

LSI Industries makes LEDs for automotive, restaurant, retail and grocery store customers. Energy-efficient LEDs help buildings cut emissions

0.02%

Orion Energy Systems, Inc (OESX)

Orion offers LED lighting and custom-made energy management systems for big organizations - a solution that cuts energy use and emissions from buildings

0.02%

O2Micro International Limited (OIIM)

O2Micro International makes LED products and lighting. LEDs are an energy-efficient lighting alternative that can cut emissions

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