Industry, manufacturing | Technology & innovation

Optogan lights up Russia’s ‘LED revolution’

1 Dec '10
Oleg Kouzbit, Online News Managing Editor

With the launch of its $13m St. Petersburg factory, Optogan hopes to create Russia’s ‘LED revolution’. Its main investors, Mikhail Prokhorov’s Onexim and the RF’s Rusnano, have pledged to put up another $112m over the next four years. But with Russia accounting for less than 1% of the global market for LED lighting, Optogan will be an export-only business for years to come.

Backed by Mikhail Prokhorov’s Onexim and the RF’s Rusnano, St. Petersburg-based Optogan has launched its new $13m high-brightness LED factory—part of its broader $112m effort to develop high-quality Russian-based LED production across the country.

One of the most ‘tangible’ investments since Rusnano’s creation three years ago, the new facility is expected to start by churning out about 30 million 120+lm/W LEDs a month (capable of lighting up 375,000 sq. m of residential or office space) using Optogan’s patented technology. By the end of next year Optogan estimates its LED sales to hit $27m.

Set up on the premises of a closed factory in the Neudorf special economic zone (SEZ) just outside St. Pete, the plant hopes to boost monthly production by late 2011 to a reported 100 million. If it reaches this capacity Optogan says it will become Eastern Europe’s largest LED maker.

Only LEDs will be produced at the new St. Pete site. LED-based lamps and other lighting devices will be reportedly assembled at other Russian factories.

Lighting up the future

The project owner is a one-year-old Russian subsidiary of Optogan Oy, set up six years ago in Finland by a group of Russian scientists, followers of Nobel Prize winner Jores Alfyorov. Currently, Optogan’s German HQ is the sole supplier of nanostructured LED chips to its foreign subsidiaries. By 2012 Optogan says chip production will be localized in St. Pete.

Although Optogan Russia sales since March have only been $3m, the firm has set an eye-popping sales goal of $200m by 2013. To reach it, the company is pinning its hopes not only on increasing its St. Petersburg plant’s output but also launching another five-to-six production facilities across Russia (where those will be located Optogan has yet to specify; one is believed to be planned for Yakutia).

While Rusnano is the main mover behind Optogan’s Russian production development, it is not the largest shareholder. Rusnano only owns 17%, with 50% plus one share possessed by Mikhail Prokhorov’s Onexim Group and the Optogan management and another 33% minus one share stake held by Yakutia’s Republican Investment Co.

Europe and Asia to begin with

With Russia’s LED components market still emerging (less than 2% of global consumption and worth about $65m a year), Optogan’s focus will be export-only for the next three years, said Alexei Kovsh, an Optogan vice-president.

Primary markets for the firm’s backlighting and household electronics components are Europe, South-East Asia and, longer term, the United States, Mr. Kovsh added.

By 2013-2014, however, the firm has plans to start supply of street, office and housing lighting and LED components to the Russian government’s infrastructure projects as well as to the commercial and private housing sector.

Compared to incandescents, LEDs are seven times more efficient and can work for up to 50,000 hours. They could save a Russian household, industry or municipality up to 80% in energy expenses, while appreciably reducing carbon dioxide emissions. Nonetheless, at the moment, energy-saving lamps account for an anemic 4% of Russia’s all lighting consumption.

Deep pockets

Rusnano and its partner, Onexim, have pledged a total of $112m worth of support for Optogan. The nanotech corporation says it will aid the LED company in entering international markets and co-invest in other production sites the firm is eyeing throughout Russia.

Unlike many other Rusnano-financed programs, which are mostly still in the development stage, Optogan is a perceptible landmark on the corporation’s path to achieving $30bn in Russian nanoproduct sales by 2015, or 3% of the global nanotech market, that Rusnano CEO Anatoly Chubais promised last year. Today Russia hardly accounts for 1% of the international market.

Bullish overseas, bearish at home

The global LED market has been growing at a robust 30% annual rate, and even most pessimistic forecasters predict its further expansion by 17-22% a year, RBC reports. By 2011, Rusnano says the international LED market will be worth as much as $9bn—a considerable increase from 2007’s $4.2bn.

LEDs will reportedly account for at least 30% of all lighting consumption in the developed world within five years.

While easily expecting a booming export business Optogan will obviously face difficulties recalibrating its strategies to the domestic market.

Russia has unveiled plans to start gradually phasing out production and sale of incandescent lamps after January 1, 2011, with full transition to LEDs by 2014 (as much as $640m was pledged in May by the RF to achieve this). Analysts unanimously say the latter is too optimistic a target. Finam.Ru’s 2009 poll revealed that less than 13% of the Russians had fully chosen energy-saving lamps to light their homes, while more than 28% were refusing point blank to use them.

Leading a horse to water

To make its ambitious LED-centered program realistic and Optogan’s Russian sales profitable, Russia needs to convince prospective consumers that the higher initial investment in LEDs will more than pay off over the long haul.

Until just two or three years ago, electric rates in Russia were dirt cheap, so getting wary Russian consumers to pay even more now to save more later will be a tough sell.
Publish in Twitter
Write to Facebook
Google Buzz
Write to LiveJournal
Show in MM
Share MK
COMMENT ON THIS STORY
Find Related Content

Locations: St. Petersburg

Latest News: Feature stories
21 Jul '22 | Technology & innovation | Industry, manufacturing
25 May '22 | Industry, manufacturing | Technology & innovation
29 Apr '22 | Technology & innovation
 

Feature stories

5 Sep '22
Scientists at the Moscow Lomonosov State University...
21 Jul '22
Researchers in Perm, in the West Urals, are reported...
25 May '22
From enhancing the properties of existing materials...
Search (News archive - 22997)
Technology Scouting Solutions For Industry
NATT
Advertising
Marchmont News

Latest News

26 Sep '22
A Russian-led international research team has...
22 Sep '22
Siberian scientists have developed new hybrid...
21 Sep '22
Scientists in St. Petersburg applied a new version of...

Most read stories from last week

26 Sep '22
A Russian-led international research team has...