North Carolina Utility Savings Initiative. LED Overview July 10, 2007
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1 North Carolina Utility Savings Initiative LED Overview July 10, 2007
2 Cree Corporate Overview Copyright 2007, Cree, Inc. pg. 2
3 Cree Heritage Founded in 1987 to commercialize silicon carbide (SiC) semiconductors Introduced first blue LED in 1989 Publicly traded on NASDAQ since 1993 (Symbol: CREE) Market capitalization $ 2 B USD Revenue (Millions US $) $450 $400 $350 $300 $250 $200 $150 $100 $50 $- $423 $389 $307 $230 $ Fiscal Year Copyright 2007, Cree, Inc. pg. 3
4 Cree Around the World Headquarters: Durham, NC, USA Global Locations: Santa Barbara, CA, USA Dulles, VA, USA Vienna, Austria Huizhou, China Tokyo, Japan Hong Kong Taipei, Taiwan Seoul, Korea Penang, Malaysia ~ 2,400 Employees * (* includes COTCO) Copyright 2007, Cree, Inc. pg. 4
5 Cree Solid State Lighting History Cree started packaged LED development in 2003 with the charter of creating an LED lighting revolution. Product Development XLamp packaged LEDs shipped in July Currently providing full portfolio of LED lamps in color and white with currents up to 1000 ma. All package design, engineering, and reliability testing are done in house. Cree has an extensive library of patents & IP. Copyright 2007, Cree, Inc. pg. 5
6 The LED Lighting Revolution Copyright 2007, Cree, Inc. pg. 6
7 A Brief History of Lighting 1879 Edison Light Bulb 1901 Fluorescent Tube 1919 Sodium Vapor Lamp 1970s First Red LED ~1990 High Brightness Red, Orange, Yellow, & Green LEDs 1995 High Brightness Blue, Green LEDs 2000 White LED Lamp demonstrates Incandescent Efficacy (17 lm/w) 2005 White LED Lamp demonstrates Fluorescent Efficacy (70 lm/w) U.S. 223,898 Current lighting technology is about 100 years old! LEDs began as just indicators, but are now poised to become the most efficient light source ever created we call this the Lighting Revolution! Copyright 2007, Cree, Inc. pg. 7
8 A Long History of Success for Solid State Vacuum Tubes 1940s 1950s Transistors VHS CRT TV 1980s 1990s 1990s 2000s DVD Flat Panel TV and Displays Film Light Bulbs/ Fluorescent Tubes 1990s 2000s 2000s Flash Memory Solid State Lighting Copyright 2007, Cree, Inc. pg. 8
9 Market Opportunity 80 Color White (Today) White (Emerging) Backlighting Office/Home Potential TAM = $50 Billion* Existing LED Applications *Source: Morgan Stanley Research Emerging applications Time Drivers - Maintenance Benefit - Energy Savings - Battery Life - New Feature/Capability Copyright 2007, Cree, Inc. pg. 9
10 Why Now? Latest generation of High Power LED technology The brightest production devices available today are 300% brighter than just 18 months ago, also 30% cheaper Economics are starting to make sense Every time they get brighter and cheaper, the economics begin to work on more and more lighting applications Combined with.. Energy prices and volatility world politics, oil prices Regulatory Energy Star, light bulb bans Copyright 2007, Cree, Inc. pg. 10
11 LED Technology Is Accelerating Light Source Efficacy Trends Efficacy (lumens/watt) Best Announced LED R&D Capability High Volume LED Production Best Incandescent CFL Metal Halide Fluorescent Cool White 1W Power LED* * US Department of Energy Projections, March 2007 Copyright 2007, Cree, Inc. pg. 11
12 Cree XLamp Technology OCT 2006 XLamp XR-E 80.6 lm Lighting Class LEDs Today 25% brighter & 11% better efficacy XLamp XR-E 100 lm Second Generation Power LEDs 7090 XR FEB % brighter & 50% better efficacy First Generation Power LEDs Copyright 2007, Cree, Inc. pg. 12
13 Basic Concepts of LED Light Copyright 2007, Cree, Inc. pg. 13
14 Light Emitting Diode (LED): How it works PN junction semiconductor diode that emits a monochromatic (single color) light when operated in a forward biased direction. LEDs consist of several layers of semiconductor material Light is generated in the active layer when a current is applied Unlike an ordinary light bulb which emits a continuous spectrum of light, the LED light is monochromatic or a single color The color of light from the LED depends on the materials used There are two material systems (AlInGaP and InGaN) use to produce LEDs in all colors from blue to red Copyright 2007, Cree, Inc. pg. 14
15 XLamp Packaged LEDs Lens Substrate Reflector ESD protection LED die Wire bond Copyright 2007, Cree, Inc. pg. 15
16 Color LEDs: Monochromatic Light Output Copyright 2007, Cree, Inc. pg. 16
17 Producing White Light Two methods: RGB and Blue + Phosphor RGB: Higher quality, but higher price and power B+P: Lower quality (improving), lower price and power Most apps focused on Blue + Phosphor Copyright 2007, Cree, Inc. pg. 17
18 LED Advantages Copyright 2007, Cree, Inc. pg. 18
19 Basic Advantages of LED Light Are very energy efficient >80LPW (still improving ) Are directional No wasted light, any pattern possible Have very long lifetime >50,000 hours to 70% LM Are inherently rugged No filament to break Start instantly nanoseconds vs. > 10 min (HID) Are environmentally sound no Hg, Pb, heavy metals Are infinitely dimmable, controllable New lighting features, power savings Love cold temperatures No cold starting issues LEDs can technically replace ANY incumbent lighting technology. Lum/$ remains a barrier for some applications, but is improving Copyright 2007, Cree, Inc. pg. 19
20 The Promise Energy Usage Comparison Best White LED and Compact Fluorescent vs. 60Watt Light Bulb Comparison 60 Power Used (Watts) W Bulb Compact Fluor. LED 0 Light Source XLamp LED Copyright 2007, Cree, Inc. pg. 20
21 The LED Directional Advantage Reflector Conventional Lighting Conventional lighting is inherently omnidirectional Lower fixture efficiency or usable lumens XLamp LED ~90 view angle LED Light is inherently directional Higher fixture efficiency or usable lumens Copyright 2007, Cree, Inc. pg. 21
22 Lighting System Efficiency Luminaire Type Lumens Per Watt Fixture Efficiency Usable Lumens Per Watt Incandescent 10 70% 7 Compact Fluorescent 45 33% W HID w/glass Housing (MH) 70 54% W Cobra Head Type II Streetlight (HPS) 91 50% 46 T8 Fluorescent Tube 80 77% 62 Copyright 2007, Cree, Inc. pg. 22
23 Directional LED Light = Better Fixture Efficacy CFL 65 lm/w Coefficient of Utilization x = 58% Fixture Efficacy 32 lm/w Previous LEDs x x Coefficient of Utilization 77% Loss for thermal 90%* 46 lm/w = Fixture Efficacy 32 lm/w XLamp XR-E 56 lm/w x Coefficient of Utilization 77% Loss for thermal 90%* x = Fixture Efficacy 39 lm/w * Including loss for thermal Tj = 65 C Copyright 2007, Cree, Inc. pg. 23
24 LED Lifetime and Lumen Maintenance 110% 100% Lumen Output (%) 90% 80% 70% 60% 100 W Incandescent 5mm LED 42W CFL 50 W Tungsten Halide 400 W Metal Halide 25 W T8 Fluorescent Cree XLamp 50% 40% Operating Time (k hrs) Operating under reasonable design conditions LEDS have a projected lifetime of 50,000 hours at 70% lumen maintenance LEDs inherently fail gracefully no burn out, catastrophic failure Up to 100,000 hours (>11 years continuous life) can be projected Copyright 2007, Cree, Inc. pg. 24
25 Light Source Comparison Light Type Data Sheet lm/w Usable* lm/w Lifetime (hrs) Incandescent k Halogen k Cree XLamp XR > 50k T12 fluorescent k Metal halide 70 <40 5k-15k Cree XLamp XR-E > 50k T8 fluorescent k High-pressure sodium 91 < k T5 fluorescent k Low-pressure sodium k * Typical expected performance in real-life applications Copyright 2007, Cree, Inc. pg. 25
26 Mercury Emission by Light Source Milligrams of Mercury Hg in CFL Hg in Emissions from Coal Plant 60W Bulb CFL LED CFL Source: U.S. EPA Fact Sheet: LED Source: UCSB SSLDC estimate for 150lm/watt White LED Copyright 2007, Cree, Inc. pg. 26
27 No Perfect Artificial Light Source Exists (yet) Incandescent High Intensity Discharge Fluorescent Pros: Cheap, efficient Cons: Poor color, long restart, short lifetime Pros: Very cheap, great color Cons: Very short lifetime, poor energy efficiency Pros: Cheap, energy efficient Cons: Can not run in cold temp; difficult/costly to dim, control, Hg Compact Fluorescent Halogen Pros: Energy efficient Cons: Poor color quality, Can not run in cold, High cost vs. Incand, Hg Pros: Great color, focused light Cons: Very short lifetime, poor energy efficiency Copyright 2007, Cree, Inc. pg. 27
28 Tipping Point is Close On All The Major Apps Number of 1W LEDs Needed Expected Lumens per 1W LED 150W Roadway 400W HID Met 4x T5 FL Troffer Lumens/1W LED Copyright 2007, Cree, Inc. pg. 28
29 LED Value Proposition & Applications Copyright 2007, Cree, Inc. pg. 29
30 Increasing the Adoption of LED Light Color Specialty White Specialty Outdoor Light Indoor Directional Indoor General Market for LED General Illumination XLamp Cool White Time XLamp Warm White Copyright 2007, Cree, Inc. pg. 30
31 Making the Business Case Work Copyright 2007, Cree, Inc. pg. 31 Initial applications will be driven by maintenance avoidance & energy savings Street & Parking lot lighting Parking garages Atrium Tunnels Hazardous work areas
32 2-3 Year Payback For End Customer Street Light Comparison Example Light Source Comparison $1,200 $1,000 HID Cumulative Cost LED Cumulative Cost $800 Cumulative Value Created $600 $400 $200 $ Conclusion: LEDs are now both bright enough and economical enough to work in outdoor lighting Copyright 2007, Cree, Inc. pg. 32
33 Attractive Financial Proposition For Fixture Co. 10-year Cost of Ownership* Type II Cobra Head Roadway Light $400 Labor Total Fixture CoO* $300 $200 $100 $0 Bulb Labor Bulb Labor Bulb Labor Bulb Metal Halide Fixture Conventional HID Fixture Maintenance Events Initial Fixture Sale 35 45% GM Labor Labor Labor LED Fixture LED Fixture Maintenance Events Initial Fixture Sale 50% GM * NOT including power or initial installation labor Copyright 2007, Cree, Inc. pg. 33
34 Cree LEDs in Emerging LED Markets Portable Lighting Outdoor Lighting Indoor Directional Lighting Copyright 2007, Cree, Inc. pg. 34
35 Refrigeration Display Wal-Mart announced last fall that it would retrofit refrigerator cases in more than 500 of its stores with LED lighting systems Wal-mart Operating Expenses by Category Wal-mart estimates that this move alone will save $3.8 million a year and reduce carbon dioxide emissions by 65 million pounds Reduction in energy of 10% for Wal-mart EQUALS the entire cost of transportation 950 million miles last year Copyright 2007, Cree, Inc. pg. 35
36 Copyright 2007, Cree, Inc. pg. 36
37 Summary LED light offers significant advantages over traditional light sources Long lifetime & rugged Efficient, directional light LED advantages create real value through: Maintenance avoidance Energy savings Brighter LEDs = More LED lighting applications Outdoor LED light revolution happening now! Indoor directional LED light revolution coming soon Need for efficient, long-lifetime light sources will help increase LED light adoption LED City initiative CA Title 24, Australia, European Union, U.S. DOE Copyright 2007, Cree, Inc. pg. 37
38 LED City Initiative Overview Joint initiative between Cree & City of Raleigh, NC Launched February 12, 2007 Broad commitment to LED lighting across the entire Raleigh city infrastructure Funding and resources Multiple target applications Parking garages, Parking lots, Street lights, Pedestrian lights, Portable lighting, Outside buildings LED City website will act as a hub of information Community of LED Cities sharing information Joint testing, deployment and promotion of LED lighting Copyright 2007, Cree, Inc. pg. 38
39 One Tangible Example of Outdoor LED Light Raleigh, NC, USA LED City Parking Garage XLamp LEDs in commercially available fixtures Delivering >40% total power savings Can deliver <5 year payback TODAY 100W HPS 75W White LED Copyright 2007, Cree, Inc. pg. 39
40
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