Drivers of market transformation: analysis of the Hungarian lighting success story

Abstract

Over the past 5 years, Hungary has experienced one of the most remarkable market successes in a key energy-efficiency technology: compact fluorescent lighting. While market shares of compact fluorescent lamps (CFLs) were negligible half a decade ago, today residential CFL market penetration exceeds that in many industrialised economies, ranking Hungary among the eight countries in Europe with the highest penetration rates. Since substantial efforts have been invested internationally to promote the proliferation of CFLs often with limited results, the understanding of the Hungarian success can bring us closer to an effective planning of programmes and policies designed to transform the markets of energy-efficient technologies around the world. Therefore, this paper's goal is to provide an insight into the driving forces which have contributed to this outstanding market success, and to investigate how the findings can apply in designing market transformation programmes aimed at increasing the penetration of cost-effective energy-efficient technologies internationally. The paper presents the results of nationally representative residential surveys and a large number of in-depth interviews with households, industry and other market participants. The market success is analysed in detail and differences in CFL penetration among the market segments provide an important clue for understanding which market barriers are the key in hampering market transformation, and which factors contributed to the overcoming of these barriers. The research suggests that the described market transformation occurred autonomously and rapidly. In the absence of major external influences, we attribute this market success to the combination of two key factors, among other contributing factors. First, the fierce market competition among CFL suppliers in Hungary has resulted in decreased prices and strong marketing campaigns, raising awareness substantially. This high awareness provided a fertile ground for an increase in CFL sales after drastic nominal electricity price hikes pressed consumers to start to care about cutting utility bills. Based on the findings about the various drivers of the market success the authors draw lessons for the design of effective market transformation programmes. In addition, we recommend an amendment to the commonly used taxonomy of market barriers prevailing in energy-efficient product markets.