The Ministry of Economic Affairs is studying the feasibility of subsidizing households which replace fluorescent lighting and incandescent lights with energy-efficient and higher-priced LED light bulbs, Vice Minister of Economic Affairs Francis Liang told reporters yesterday.
Liang made the remark on the sidelines of an investment forum in Taipei, after local media reported earlier yesterday that the ministry is planning to spend about NT$1 billion (US$34 million) on a new green energy subsidy program, citing Minister of Economic Affairs Shih Yen-shiang.
Liang did not elaborate on the details of the subsidy program.
On Thursday, Shih said that the ministry is planning the subsidy program in a bid to encourage consumers to buy LED bulbs.
The ministry is expected to release details about the subsidy program within two weeks, including subsidizing consumers by offering half the cost of each LED bulb purchase, Chinese-language Liberty Times (the Taipei Times' sister paper) quoted Shih as saying.
In retail stores, LED bulbs cost around NT$400 to NT$500 each, much more than other energy-saving light bulbs. With the ministry's subsidy, consumers would pay half as much for LED bulbs.
"The subsidy program should accelerate the growth of LED lighting in the residential market, which has a low single-digit penetration rate now," Primasia Securities Co analyst Filia Lin said in a note yesterday.
In Japan, the Eco-Point program has successfully boosted the penetration ratio of LED lighting in that country to double-digits, local media reported.
While consumers may delay the purchase of LED bulbs until the ministry launches the subsidy program, analysts said in the long run the more affordable products would help local LED lighting makers to gain a bigger market share.
"This is a positive move for Taiwanese LED companies, especially Delta Electronics Inc and Everlight Electronics Co which have their own-brands and which should witness significant growth in the retail market," Lin said.
Shares of most LED bulb makers rose yesterday on the ministry's subsidy plan, with Delta increasing 2.25 percent to NT$113.50, Everlight closing up 1.71 percent at NT$47.45, and China Electric Manufacturing Co rising by the daily maximum of 7 percent to NT$21.1.
Companies that manufactured LED components also attracted buying on the back of the government subsidy plan, with shares of Formosa Epitaxy Inc rising 1.90 percent to NT$21.40 and Edison Opto Corp finishing 0.98 percent higher at NT$46.40.
Nonetheless, Lin said a subsidy program would also heat up competition in both pricing and quality, leaving players with stronger channel distributions and product quality able to stand out from the crowd.
"Such changes should help avoid the problem of small companies selling poor-quality products, which lowers consumer confidence and interest," he said.
