FREMONT, Calif. – Ask Soraa executive Sudhir Chopra what’s so different about the California company’s LED lights, and he’ll hand you a thin cardboard tube.
Inside the tube is a lens that breaks down light into its individual colors. Aim it toward an ordinary fluorescent light, and the image you see is an array of colors separated by narrow black bars.
Those black bars represent portions of the light spectrum that aren’t reproduced by the fluorescent lights.
Aim that same tube toward one of the LED lights made by Soraa – one of the California companies that are the centerpiece of the new clean energy hub the state is building in South Buffalo – and the black bars are gone. Soraa executives say that’s the product of a bulb that is able to more closely reproduce the full spectrum of natural light, so whites appear whiter and colors look sharper.
It’s that ability to produce a more natural light with a high-efficiency bulb that Soraa is building its business around. And it’s that technology that convinced state officials to make Soraa one of the keystones in the $225 million RiverBend clean energy and technology hub that is a main part of Gov. Andrew M. Cuomo’s Buffalo Billion economic development plan.
“It could have a true breakthrough technology in an otherwise maturing LED industry,” said Jonathan Dorsheimer, an LED lighting industry analyst for investment firm Canaccord Genuity.
That’s important because Soraa is one of the centerpieces in Cuomo’s efforts to remake the Buffalo Niagara economy, seeding it with companies whose businesses are built around products of the future, not industries of the past. For that vision to succeed, companies like Soraa and its future neighbor in the RiverBend clean energy and technology hub, solar panel manufacturer Silevo, will have to take root here, grow and help attract other 21st-century businesses built around similar cutting-edge technology to move in around them.
Light to match the sun
Conventional incandescent bulbs do a good job of duplicating natural light conditions, but those bulbs are being phased out under a 2007 federal law aimed at reducing electricity consumption. Many consumers grumble about the squiggly, compact fluorescent bulbs that offer much better energy efficiency but take longer to turn on and produce a light that isn’t as true-to-nature.
LED lights are rapidly emerging as an alternative to fluorescents, but many have the same problem as compact fluorescents, said Chopra, Soraa’s vice president of operations. Soraa executives claim their technology enables them to produce LED bulbs that emit a high-quality light that more closely matches the light that comes from the sun.
“It is unlike pretty much anything on the planet,” said James Benya, a Davis, Calif., lighting designer.
“Soraa really doesn’t have any competition yet,” Benya said. “It’s the first technology that generates a great deal of light in a small area so it can be concentrated into a powerful beam. That is what is fundamentally and significantly different about Soraa from virtually every other invention involving LED.”
At this point, though, Soraa is far from a big player in the LED lighting industry. Soraa executives declined to discuss the company’s finances, although they concede that the business is losing money, as most early-stage companies do as they make investments to develop their products and ramp up sales. The RiverBend factory will increase Soraa’s production capacity by seven to 10 times its current level, compared with its current facility in California, which employs 210 people.
“We’re a private company. We don’t talk about our finances,” said Thomas Caufield, a Soraa director and adviser who played a key role in the company’s decision to be part of the RiverBend project. “By the time we come to New York at the end of 2015, early 2016, we will have the economies of scale and be a profitable company. That’s our business plan.”
Targeting upscale retailers
You won’t find Soraa bulbs in the light bulb section of home improvement stores. Soraa’s price – $25 to $34 per bulb – is more than most consumers are willing to pay. But they are used in places like the Grand Californian hotel in Disneyland and Grand Floridian hotel in Disney World. Verizon is adding them to its kiosks. The Sands Hotel in Las Vegas uses them. Apple Computer’s flagship store in the Silicon Valley installed Soraa lights earlier this year.
Soraa’s target is the high-end – retailers, restaurants and museums that are willing to pay a higher price for energy-efficient lights that can be precisely focused and provide high-quality light. “They can get a lot of light out of a very tiny light bulb,” said Benya, the California lighting designer. “It’s very hard to make one that competes with the halogen bulb that we’ve been using for the last 40 years.”
In higher-end commercial markets, the competition isn’t as intense as it is in the residential market. A consumer-focused LED lighting company, Cree, recently introduced the first mass market LED light that sells for less than $10.
“You’re always better to start higher on the pyramid and working down,” said Caufield, the Soraa director. “Right now, that market for people who really care about light isn’t ready for us right now. We’d probably be too high-priced for what we’d want to do. Over time, we think they’ll convert as we get economies of scale to bring our costs down and people get a little more sophisticated in how they want to deploy light.”
Earlier this month, Soraa launched a second line of larger LED lamps that targets the same market in Europe and Asia.
“We want to play in the area where people care about the quality of their light, so you get more value for your technology and you don’t just become a commodity light source,” Caufield said. “In the beginning, we’re going to play where it’s professional revenues, where people will pay for more value than a homeowner who goes to a showroom and says show me the cheapest one.”
Rapid growth expected
The LED lighting market is expected to grow rapidly over the next decade. Energy-efficient lighting got a boost seven years ago when Congress passed a law that gradually phases out the sale of incandescent light bulbs as a way to reduce energy consumption and greenhouse gas pollution. Europe began implementing a similar ban in 2009. China and Japan also are phasing out incandescent bulbs.
Lux Research analyst Christopher Hwang said he expects total sales in the LED market to grow at a 25 percent annual pace through the next decade as consumers steadily make the switch to higher-efficiency lighting. By 2023, the LED lighting market could be as big as $25 billion – about 10 times bigger than it is today.
LED prices already have dropped dramatically and have become more energy efficient over the past four years, according to a Department of Energy report. But the quality of the light emitted by LEDs hasn’t improved much, and remains about on par with compact fluorescent bulbs.
“We had a bad experience with compact fluorescents,” Benya said. “People hate them and one of the primary reasons we hate them is the color.”
The light quality gap
Soraa executives said their LED bulbs – built using technology that is based on more than 300 patents that have been either granted or are pending worldwide – have bridged the light quality gap.
At the heart of Soraa’s technology is a process that allows it to base its lamps on a single material – gallium nitride. Most other LED manufacturers pair gallium nitride with a different, less expensive, material, such as sapphire or silicon carbide.
It is more challenging to make LED using a gallium nitride substrate, but using the same material for both parts means fewer defects, allowing it to handle higher levels of electrical power. Because the LEDs can be run at higher power, they can produce more light from a smaller surface area.
Soraa’s bulbs also are different because they start with a violet LED and combine that with three phosphors to create its light. That more closely duplicates the natural light spectrum. Most LEDs are built around a blue LED that excites phosphors to produce white light, Soraa executives said.
“Because we have violet light in our spectrum, we can make natural white light,” Caufield said. “Our real advantage is that, not only do we have a high quality of light but we have the tiniest light source. You can’t take a broad light source and make it pointed. It just doesn’t work. So the person who has the tiniest light source can do the most manipulation of the beam.”
The disadvantage of Soraa’s technology is that it started out about 20 percent less efficient than other LED technologies. But Soraa executives say they have closed that gap with the company’s third-generation lamps, launched earlier this month. Soraa said the new lamps will outperform competing bulbs by 20 percent.
Jeff Parker, Soraa’s chief executive officer, said the efficiency of the new lamps is “a truly disruptive innovation” that is 30 percent more efficient than its second-generation bulbs. “What’s amazing is that we expect to repeat these significant, year-over-year performance gains in the future.”
Soraa executives said the RiverBend project will help the company expand its production from its small-scale factory in a Silicon Valley office park. A more efficient high-volume plant in Buffalo should help drive down the cost of its bulbs and make it more competitive.
“We believe, with scale, not only will we be the efficiency leader, in lumens per watt, we also will be the low-cost leader,” Caufield said.
Benya, the California lighting designer, is optimistic that Soraa will succeed.
“Its core technology does what others can’t do,” he said. “It’s going to make a big difference, particularly as they increase their manufacturing capacity and their ability to distribute more light sources. I think it’s going to be a really fantastic business.”