When it comes to lighting, it's hard to beat the good old-fashioned incandescent bulb, which is still pretty much the same as it was when Thomas Edison invented the thing. The light is warm, you can actually see most things in their true color, and they are cheap and easy to replace.

ILLUMINATING INNOVATION: Shown here, an exploded view of the Cree LR4 LED, one of three LED down lights offered by Morrisville, N.C.-based Cree Inc. Photo: Courtesy Cree Inc. But with state governments like California mandating energy efficiency standards in new construction–and energy costs soaring–the incandescent bulb has become an expensive luxury. To date, the trend has been to replace them with compact florescent bulbs (CFLs), which are pretty much the same thing as the industrial-strength florescent tubes you find in offices and workshops everywhere.

The trouble with all florescent lights is that they sacrifice a lot in terms of comfort for their energy efficiency. Colors? You can never be sure what color you are seeing under florescent light.

The post-incandescent world of lighting has thus been pinning its hopes on light-emitting diode (LED) technology, the stuff behind that blinking clock display on the DVR. The technology has advanced well beyond its initial use in electronic displays, but until now, it has been held back by two fundamental problems: the amount of light produced and true color rendition.

Cree Inc., based in Morrisville, N.C., appears to have solved these issues and is now marketing LED-based down lights for commercial and residential applications. The secret sauce is in a patented yellow LED that is proprietary to Cree–most LED lights use red, green, and blue to mix color–and in a design that mixes colors and focuses light in such a way that it can deliver 650 lumens from a single fixture. That's roughly equivalent to a 60-watt incandescent bulb, but it uses only 12 watts.

"Our product puts out a lot of light," says Mike Fallon, vice president of sales and marketing for Cree LED Lighting Solutions. "They throw off no heat. And you probably would make an assumption that you were looking at incandescent lights."

This explains why Cree took the top prize in the "Lighting for Tomorrow" competition sponsored by the American Lighting Association, the U.S. Department of Energy, and the Consortium of Energy Efficiency for both 2007 and 2008.

Cree's down lights come in three basic flavors, a two-foot by two-foot panel light (the LR 24) that is best suited for commercial applications and six-inch (LR6) and four-inch (LR4) can lights that can easily be used in residential applications. Since CFLs are not generally appropriate for recessed lighting applications (they generate heat, albeit less than a conventional bulb, which can shorten the life of the CFL, and they are not universally dimmable), these LED lights could easily replace can lights with standard incandescent or halogen bulbs in any room.

The can lights are designed with the LEDs at the top, each LED encased in a "package" (each LED can only render one color). There is a space of an inch-and-a-half below the LEDs, which is the "mixing chamber" where the colors come together, then a lens that focuses the light into a pattern that is less conical than a traditional incandescent.

William Gloede The issue is cost. Compared to a garden variety can light, which with fixture, trim, and bulb will run in the $20 to $25 range, the Cree down lights can be bought by builders for $80 to $85. That's a big premium, but for that, the builder gets to tell home buyers that the bulbs won't need to be replaced for 50,000 hours and that they are the most energy-efficient lights available.

Fallon says that Cree now does about 15 percent of its business in the residential market, but he expects that to figure increase. "You will probably see some sort of bulb from us in 2009." An LED light bulb? Now that's the Holy Grail!