TV brands and market prices
While the Indian CRT TV market has been dominated by two India-based (Videocon and Onida) and two Korea-based (Samsung and LG) manufacturers, three Japanese TV manufacturers (Sony, Panasonic and Toshiba) account for about one third of the Indian flat-panel display (FPD) TV market which is rapidly growing (see Fig. 2). In fact, the growing FPD TV market in India is concentrated on fewer key players, compared to the US market. The five “global” manufacturers—Samsung, Sony, LG, Panasonic, and Toshiba—accounted for about 68 % in India and 51 % in North America (DisplaySearch 2011a; 2012a). These major brands distribute similarly designed TVs with similar energy consumption characteristics across many regions.
Although TV manufacturing is highly globalized, market prices of similar TV models produced by one manufacturer vary by region since local market prices are affected by many variables such as import duty, tax, labor, logistics, and brand and reseller margins. Table 4 shows an example of the different market prices of Samsung EH4000 26-in. models which won the small-size category of the 2012 SEAD Global Efficiency Medals.
Table 4 Example of market prices of Samsung EH4000 (26 in.)
Most global TV manufacturers who sell their products in India and the US import LCD panelsFootnote 8 from their factories based in their home countries and assemble those LCD panels with other components in the nearest facilities to the market, e.g., Mexico for the US, and Noida, Pune, or Chennai in India, to produce finished TV sets. Accordingly, it is reasonable to say that the manufacturing costs on LCD panels are nearly same regardless of region. India has imposed an import duty of 10 % on finished TV sets (DisplaySearch 2012d; Ghosh 2009). While the import duty on LCD panels was 10 % and has recently been determined to be zero, the weak rupee to dollar is another factor that influences local pricing (Ghosh 2012a; b). Most TVs imported to the US are produced and assembled in Mexico. The duty for NAFTAFootnote 9 regions is zero on TV sets finished in the region, while the duty on finished LCD TVs imported to the US from other regions, like China, is 5 % (DisplaySearch 2012d).
To estimate markups due to the supply chain for TVs sold in India, it is useful to compare market prices of similar models between two regions. We selected US and India LED-LCD TV models available from 22–24 and 30–34-in. groups of the top five manufacturers (Samsung, Sony, LG, Panasonic, and Toshiba) who accounted for about 68 % of the Indian FPD TV market. The selected product groups are also expected to account for about 75 % of the India TV market by 2015. In general, TV market price consists of three parts; direct manufacturing costs (e.g., material costs), indirect manufacturing costs (e.g., labor, overhead, freight, etc.), and brand/retailer margins. Direct manufacturing cost is estimated to account for about 70–80 % of the average market price in the US market. Fig. 3 shows a simplified version of the DisplaySearch-modeled cost structure of 22- and 32-in. LED-LCD TVs to be sold in 2013 Q1 in the US market (DisplaySearch 2011b).
Specification assumptions applied to the DisplaySearch’s TV cost model may not be consistent for all brands and all models, but the cost model provides an illustrative guide for determining markups. As discussed earlier, manufacturing costs for LCD panels are nearly the same regardless of region; hence, we assumed TVs with the same brands and specifications in the US and India share the same direct manufacturing cost (i.e., [A] defined in Fig. 3). Table 5 shows an estimated range of markups of 32-in. LED-LCD TVs sold in the US and India.
Table 5 Estimated Range of Markups of 32-in. LED-LCD TVs
Cost of conserved electricity
Cost of conserved electricity (CCE) is a metric used to assess the cost-effectiveness of energy efficiency policies. Estimating CCE for a policy option involves calculating the cost of saving electricity which can then be compared to the cost of providing electricity, to the utility or consumer.Footnote 10 We calculate CCE from two perspectives: First, considering the incremental cost to the manufacturer, which we label CCEm and second, the incremental cost to the consumer which includes markups on the incremental manufacturing cost, which we label CCEp. The former estimate can be used for assessing the cost-effectiveness of upstream incentive programs (e.g., manufacturer incentives), whereas the latter can be used to assess that of downstream incentive (e.g., consumer incentives) or minimum energy performance standards (MEPS) programs (Park et al. 2013).
CCE is estimated by dividing the annualized incremental cost (IC) that is required to add the efficiency option by annual energy savings due to the efficiency option. Product categories are defined by screen size and backlight type (e.g., 32-in. LED-LCD TV). The CCE for the i
th product category is calculated using annualized IC for the i
th product category (IC
i
) and energy savings for the i
th product category (Energy Savings
i
), as follows:
$$ CC{E}_i=\frac{ annualized\;I{C}_i}{ energy\; saving{s}_i} $$
(1)
where
$$ annualized\;I{C}_i=I{C}_i\left[\frac{ discount\; rate}{1-{\left(1+ discount\; rate\right)}^{- lifetim{e}_i}}\right] $$
(2)
$$ Energy\; Saving{s}_i\left(\frac{ kWh}{ year}\right)= Power\; reduced\left(\frac{ watts}{ unit}\right)\times daily\; usage\left(\frac{ hours}{ day}\right)\times \frac{365\; days}{ year}\times \frac{1\; kilowatts}{1000\; watts} $$
(3)
where lifetime
i
is the TV economic lifetime, i.e., replacement cycle and discount rate of the end user.
All TVs in the i
th product category are assumed homogeneous. Thus, total annual energy savings from the i
th product category will be calculated by Energy Savings
i
times the annual sales of the i
th product category, e.g., annual sales represented by annual shipment of a product category, such as 32-in. LED-LCD TVs.
Energy savings
Indian Star Rating is a voluntary labeling program. Star rated TVs (blended with flat-panel TVs and CRT TVs) account for about 20 % of the Indian TV market (Park 2013). We estimate energy savings based on the percentage reduction due to efficiency improvements to the baseline LCD TV energy consumption which is based on TVs registered in the US ENERGY STAR database listed on February 2013 (ENERGY STAR 2013). The on-mode power test methodFootnote 11 is based on the international standard IEC 62087.Footnote 12 As discussed above, for a given size, display technology, e.g., a 32-in. LED-LCD TV with 1920 × 1080 resolution and 60 Hz frame rate provided by a manufacturer, TVs sold in different regions of the world are similar in terms of the technology and corresponding energy efficiency improvement potential, although there are variations within such a product category. As a result, the information represented by ENERGY STAR registered TVs is applicable to India in terms of illustrating the efficiency improvement potential possible.
Economic lifetime
The TV replacement cycle on a global scale has decreased from 8.4 to 6.9 years based on the 2011 and 2012 surveys. The average age of the primary TV in householdsFootnote 13 ranges between 4 and 7 years, with India as the highest at 6.7 years and China-urban the lowest at 3.5 years (DisplaySearch 2012f). In this analysis, the average lifetime of primary TVs in India was assumed to be 7 years. We also perform a sensitivity analysis in the range of 5 to 10 years, to indicate the range encountered in more specific circumstances.
Average usage
TV usage patterns vary by region, sector of use, consumer lifestyle, and power management scheme applied to the system. Average daily usage of TVs is estimated to range from 3.5 to 6.5 h (Park et al. 2013). The average on-mode daily usage of TVs in India was assumed to be 6 h based on the guideline for BEE Star-labeled TVs. We also perform a sensitivity analysis in the range of 4 to 8 h, to indicate the range encountered in more specific circumstances.
Discount rate
Residential and commercial sectors may use various methods to finance the purchase of appliances. In this analysis, we assumed an average discount rate of 15 % for the residential sector based on McNeil et al. 2008 and performed a sensitivity analysis in the range of 5 to 15 % to indicate the range encountered in more specific circumstances.Footnote 14
Estimates of markups
In this analysis, we used the DisplaySearch TV cost model data (DisplaySearch 2011b) as a baseline for the given set of configurations (i.e., for a 32-in. LED-LCD TV set). We collected Indian retail pricing data online and found that it matches the configuration we derived from the cost model. For this analysis, we assumed a flat 110 % markups based on the results in Table 5.
Residential electricity prices
Indian electricity tariffs generally use a block structure under which the marginal cost increases with consumption (McNeil et al. 2008). For example, the residential tariffs with 1 kW capacity and 100 kWh used per month of Andhra Pradesh, Maharashtra, and Karnataka was estimated in 2008 to be in the range of 2.39 to 2.92 Rs per kWh (Abhyankar and Phadke 2012). This analysis is based on the average rate by state based on Indian Power Market 2012.
Product categories analyzed
Although we assess several efficiency improvement options and analyze their impact on TV electricity consumption, we limit our analysis of cost-effectiveness to those options which are unlikely to be adopted in the absence of policy intervention. For example, as low-cost LED-direct LCD TVs discussed earlier are energy efficient and affordable, the adoption of those products is likely to occur under a business-as-usual (BAU) case. However, even those TVs can be further improved in efficiency with additional options such as advanced optical films or backlight dimming.
To estimate cost-effectiveness, we selected a product group with nominal screen size of 30–34 in. (typical nominal size of 32 in.), representing about 38–40 % of the India LCD TV market, the majority of which are expected to be manufactured without reflective polarizers or backlight dimming in the absence of a policy intervention. These options are currently used primarily for some high-end models with screens larger than 40 in. The results of our analysis for the selected screen size also hold for other screen size categories since the costs and benefits of adopting the selected efficiency improvement options are generally proportional to screen area, and thus any size variation does not largely affect cost-effectiveness. Although those options can also be applied to CCFL-LCD TVs, we here focus on LED-LCD TVs as the share of CCFL backlights are expected to significantly decrease by 2015 as shown in Table 6.
Table 6 Share of selected product group in the India LCD TV market
Three options: reflective polarizers, backlight dimming, and ambient light sensors
As discussed in Park et al. 2011 and 2013, a reflective polarizer improves TV efficiency by 20–30 % regardless of backlight source. Backlight dimming can reduce LCD TV power consumption by 10–60 %, depending on input images and dimming methods.Footnote 15 For example, local dimming (or 2D dimming) is possible for earlier discussed low-cost LED-direct backlights, and the efficiency improvement potential is estimated to be up to 50–60 % (Park et al. 2011). Ambient light sensors are commercially available, and their material cost does not vary with screen size or resolution, implying that cost-effectiveness of this option increases with screen size. While backlight dimming in relation to ambient light conditions, i.e., auto-brightness control (ABC), can be generally regarded as part of backlight dimming, more research is needed to estimate the precise effect of these options on household TV energy consumption. As discussed in Park et al. 2013, the material cost of an ambient light sensor was in a range of 0.6 and $1.0 per unit as of 2012. The total incremental cost of ABC for a TV unit with backlight dimming option is estimated to be less than the cost that is required for backlight dimming discussed above.
In this analysis, the product group (i.e., 32-in. LED-LCDs) selected is estimated to have a CCEm with a range of $0.037 (1.1 Rs) per kWh and $0.100 (5.4 Rs) and a CCEp with a range of $0.079 (4.3 Rs) per kWh and $0.207 (11.2 Rs) for the year 2015, with assumptions of 15 % discount rate, 7 years economic lifetime, and 6 h of daily usage (see Table 7). For reflective polarizers and backlight dimming, Figs. 4, 5, and 6 show CCEm for LED-LCDs vs. lifetime at various combinations of discount rates and efficiency improvement potential.
Table 7 Cost of conserved electricity (CCE)a for selected options with a 32-in. LED-LCD TV (base year 2015)
Fig. 7 shows the CCEs for the three technical options compared to residential electricity prices of many states in India. The results of our sensitivity analyses indicate that this result would also hold under cases where average residential prices (tariffs) are lower than the marginal residential tariffs (tariff for the last unit consumed which is equivalent to the reduction in consumer bill if one unit of electricity is saved), or vice versa. Thus, TV efficiency can be cost-effectively improved beyond the BAU trajectory using these, or equivalent efficiency improvement options.