have been installed by EFOI across the US Navy fleet since 2007, saving more than 5 million gallons of fuel
EFOI's products cover 80% of indoor lighting needs for commercial & industrial buildings
in EFOI's Net sales in 2020 compared to 2019
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:
- In 2018, LED lights comprised 3% of the total commercial lighting market and 2% of the residential lighting market
- By 2050, LEDs should account for 95% and 90% of the residential and commercial markets, respectively
- That’s 12.82% CAGR for residential LED, and 11.21% CAGR for commercial LED lighting between 2018 and 2050.
Energy Focus (stock ticker: EFOI) manufactures energy-efficient LED lighting solutions. Headquartered in Solon, Ohio, their customers include US and foreign navies, US federal, state, and local governments, healthcare and educational institutions, as well as Fortune 500 companies.
EFOI's Role in Drawdown
All of Energy Focus’ revenue comes from LED lighting and related lighting products. Although their total annual sales have seen a decline in recent years (11.5% year-on-year decrease between 2016 and 2020), they have a track record of constant product innovation.
Energy Focus launched (p. 27) their commercial tubular LEDs that’s flicker-free in 2010 and introduced their lighting products for the military in 2011. More recently, they developed an emergency backup battery integrated TLED and a new dimmable and color-tunable lighting and control platform, as well as UV-C disinfection devices that affordably continuously disinfect interior surfaces.
EFOI: What We Like
We commend Energy Focus for their willingness to commit to fundamental organizational and management restructuring (p. 27) starting in 2019 in the face of continuing decline in sales. After welcoming a new CEO and Chairman, they replaced the entire senior management team, significantly reduced non-critical expenses, minimized the amount of inventory that they were purchasing, dramatically changed the composition of their board of directors, and selectively added to the executive team and departmental leadership.
These efforts seem to have paid off. Between 2019 and 2020, Energy Focus’s total net sales have grown by 32.5%, in addition to mitigating losses and redundant expenses.