Taiwan's Ministry of Economic Affairs (MOEA) recently announced plans to subsidize household LED light bulbs, but, there are no unified standards that measure the energy-saving qualities of LED light bulbs. Providing incentives under these conditions may stir up problems in the market.
According to the MOEA, the government hopes that by subsidizing LED light bulbs, the price gap between LED and traditional energy-saving light bulbs can narrow to NT$100/unit (US$3.42/unit). The government will provide NT$1 billion to subsidize up to NT$200 per LED bulb. Using households as a unit, every household will receive a subsidy equivalent to 5-10 units of LED light bulbs. The program will begin at the end of 2012. Nevertheless, details of the program or implementation plans have yet to be announced.
In 2012, LED lighting has been seeing growing demand due to the rising price of electricity. LED lighting has been replacing traditional lighting but the market continues to see price competition and lack of standards. Currently, there are around 40-50 firms in the LED light bulb market without effective controls over the efficiency and quality of products.
Previous government subsidy programs for home appliances such as TVs used energy-saving stamps as the standard. However, LED lighting products have yet to be included in the Chinese National Standards (CNS). Consumers have no way of knowing the quality of the light bulbs until the product has been put to use. If consumers buy low-quality light bulbs, it may put them off trying LED products again.
An energy-saving stamp for LED lighting is currently underway but it will not be until around the end of first-quarter to the beginning of second-quarter 2013 that the first batch of LED light bulbs pass the tests for brightness efficiency, lamp lumen maintenance factor, color-rendering and safety.
Strong government support is going to help LED lighting commercialization in Taiwan and provide distribution channels for upstream and downstream firms. Nevertheless, Taiwan-based LED firms have to expand to international markets to continue operating in the long run. Taiwan-based firms will have to compete with China- and South Korea-based LED firms that have been heavily funded by their governments. The Taiwan government needs to come up with a long-term strategy to help Taiwan's domestic industry other than providing short-term subsidies.
