Cree introduces brighter street lights

The new LEDs add to a compelling case for long-term efficiency.

By TheStockAdvisors Apr 11, 2012 3:45PM
Image: Providence, Rhode Island (© Kenneth C. Zirkel/Photodisc/Getty Images)By Geoffrey Seiler,

Shares of Cree (CREE) got a nice boost after the LED company introduced a street light that uses less energy and produces more light.

The XSP Series LED street lights use nearly 50% less energy and are designed to last more than three times longer than high-pressure sodium street lighting. More importantly, when bought in volume, the new lights will cost around $200 per light, which, when maintenance and energy costs are included, will be on par with the high-pressure sodium street lights.

Traditional street lights cost only $10 a bulb, but it costs about $200 to install them, former Anchorage, Alaska, street-light official Michael Barber told The Wall Street Journal.

The new Cree lights use half the number of LEDs as older models but produce double the amount of light, as measured in lumens, for the same price. Cree ascribed the better performance to improvements in its proprietary silicon carbide technology.

"Everybody knew that the time will come, and it looks like that time has come," Nadarajah Narendran, the director of the Lighting Research Center at Rensselaer Polytechnic Institute in New York, told the Journal. "That will further accelerate market adoption for LED street lights."

Reaching the point where the overall cost to install LEDs is nearly on par with that of traditional lighting is a major milestone.

Steet lights, while making up only about 1% of U.S. electricity use, are still a very big market. This type of inflection point should really start to drive LED adoption.

While the latest announcement is only for street lights, we would expect the industry to start to see similar inflection points for other applications as LED prices continue to come down.

Overall, we believe the LED lighting industry is in the very early innings of what is likely be a 10-to-15-year secular growth story. Cree is a clear price and technological leader, and it is the best-positioned company to benefit from this upcoming secular trend.

While the company is still likely experiencing some of the after-effects of the LED industry glut, which could show up in its first-quarter earnings report, we continue to think Cree's long-term prospects remain very bright.

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