As we have reported before, a TV war is coming to California according to some local radio and TV stations in the state. As a short reminder, the California Energy Commission (CEC) is proposing a MANDATORY energy restriction on all TVs sold in California. In the latest news of this week, the CEC has released a draft, updated proposal and has scheduled the first public hearing for October 13, 2009 in Sacramento, CA. The second public hearing date is scheduled for November 4, 2009, which is also the proposed adoption date. If accepted this proposal will effect all TVs manufactured after January 1, 2011 and sold in California. On January 1, 2013 the allowed power consumption is again lowered by over 30%.

Norbert Hildebrand
Insight Media Analyst

The CEC claims that TVs are accounting for 10% of the residential energy use or 2% of the gross electrical use in California, a non-trivial number. The CEC expects this number to increase, as larger and larger TVs are being sold worldwide. In an effort to support the overall energy savings goals of California and therefore reduce or limit the CO2 emissions they are proposing to limit the power consumption of TVs sold in California. While the proposal is similar to Energy Star 3.0 for TVs there also some differences that are very important.
· This is a mandatory requirement unlike the Energy Star program, which is a free participation program
· Displays not fulfilling the proposed requirements are not allowed for sale in California
· Larger size TVs (above 57") are currently not included in the proposal text and have no restriction

Many industry groups in the CE space have argued that this measure has a severe impact on the Californian economy through lost sales and ultimately, lost jobs. CEA has stated during the first hearing in December 2008 that this legislation will lead to a job loss of 5,300 to 15,800 jobs depending on how many TVs have to be taken off the market (they assumed 10%-30%). From the retail perspective this translates into revenue loss of 44 million to 130 million annually. CEC counters this argument by saying that the proposed requirements can be fulfilled by the TV manufacturers, as outlined below. In addition, they believe that the rest of the US will adopt similar legislation making sales from outside of the state irrelevant.

During the first proposal period in 2008 the CEC claimed that at that time, TVs (LED-based LCDs) already existed that fulfilled even the more stringent (Tier 2) standard required for 2013. No PDP display at that time even came close to any of the CEC requirements.

To better understand the impact of this legislation, we conducted a short Internet search to look at the current status of TV power usage. The result is shown in the figure. We checked on the published energy consumption by the manufacturers selling TVs in the US and the data supplied by EPA Energy Star. According to these results some LCD TVs are actually fulfilling the Tier 2 requirement, while the PDP displays are just at or below the Tier 1 requirements. But PDP manufacturers have publicly announced that they will be able to fulfill the Tier 2 CEC requirements by the proposed deadline.

Many of these issues will be discussed in our upcoming Green Display Expo in Washington DC. Don’t forget to sign up at www.greendisplayexpo.com.

For newer technologies like OLED, 3D TV and Internet TV, these requirements have to be analyzed in more detail. For OLED, the requirements have to be fulfilled completely, but this should not cause any concern as more efficient products and larger sizes are expected to enter the market in years to come. For the other technologies, any additional electronics can be disabled and the measurements performed in 2D mode only. This could change however, after the IEC releases energy measurement guidelines for 3D TVs.

From a market perspective this kind of legislative requirement has been proven and proven again to strongly increase development cycles of products in all kind of markets. I would also imagine that this could accelerate the overall energy efficiency of TVs in the mid term. As we all know, newer technologies typically sell for more money than older ones. This could potentially make up for revenue loss if the guidelines go into effect and some TVs are banned from the Californian market. Will this mean that the Californian TV revenue will increase based on a higher sales price? We aren’t sure in what direction this is going, but we will be following the further development. And if CEA is correct in their prediction that many Californians will actually start buying their TVs out of state, Las Vegas might soon home to the largest Best Buy in the whole US.