The story behind Nernst's lamp creation has been told by Mendelssohn⁶:

"Apart from the electric arc lamp which is not suitable for indoor illumination, the only form of electric lighting known in the 1890s was the newly invented carbon filament lamp of Edison's, the German patent rights of which had been acquired by the A. E. G. (Allgemeine Elektrizitaets Gesellshaft). Its light was not very bright and the lamp requires a vacuum which, at the time, was difficult to provide. It occurred to Nernst that if a solid electrolyte with a very high melting-point could be found, this would make an excellent bright lamp. After various trials, he was satisfied that a mixture containing cerium oxide would do the job. He first tried to interest Siemens in his invention but it seems that they were too hidebound to experiment with novelties and unwilling to spend money on the development research. After initial tests for which Nernst had come into their Berlin laboratory, Siemens decided not to go ahead with the project. Possibly there was an additional reason for their reluctance. Nernst had immediately taken out a patent on his invention and it is quite possible that the price which he asked for it may have discouraged the firm. He next turned to the A. E. G. who, being a young company, were more adventurous. Moreover, the chairman, Emil Rathenau, was impressed by Nernst's personality and sense of enterprise. This type of professor was a man after his own heart. One of the company's directors, Mamroth, was sent to Goettingen and discussed details with Nernst, including finance. The A. E. G. acquired the patent and took over the development. Nernst got his price, a million marks - a truly staggering sum."

"Walther Hermann Nernst (1864-1941), German physicist, was born in Briesen, West Prussia, June 25, 1864. He studied at Zürich, Berlin, Graz, and Würzburg; was an assistant at the University of Berlin, 1905; director of the Physikalische Technische Reichanstaldt at Charlottenburg; and became director of the Physical Institute at the University of Berlin in 1925. His researches included measurement of specific heat at low temperatures and of vapor densities at very high temperatures; electrolytic dissociation , hydration, and diffusion in solutions; and reversible galvanic cells. He invented the now obsolescent Nernst incandescent lamp. Together with Ostwald and Fischer, Nernst was instrumental in interesting Kaiser Wilhelm II and industrial organizations in founding the Kaiser Wilhelm Institutes, which attracted men of international fame. In 1906 Nernst visited the United States and received various honors. He was awarded the Nobel Prize in chemistry in 1920 for his work in thermochemistry, including the third law of thermodynamics. His Experimental and Theoretical Applications of Thermodynamics to Chemistry was translated into English in 1916. He died near Mushau, Germany, Nov. 18, 1941.

"Elementary diagram of Nernst lamp. The light producing part of this lamp consists of a glower with an insulator of electricity at ordinary temperature and therefore necessitates the employment of some means to raise its temperature up to a point at which it will become a conductor. This is accomplished by means of a heater coil of fine platinum wire wound on a thin porcelain tube and embedded in cement to protect it from the intense heat of the glower when the latter becomes white hot by the passage of the current. The glower and the heater coil are connected in parallel in operation, and when the lamp is thrown into circuit for lighting, the current flows through the heater coil and raises its temperature to such a degree that the latter, in about 20 seconds, heats the glower to the conducting point. The current now passes through the glower and, raising its temperature to a white heat, makes it luminous. At this moment a sufficient amount of current passes through the glower to make it begin to light. The magnet M, which is in series with the glower is energized strongly enough to attract its armature A, thereby breaking contact with the screw S and throwing the heater coil out of circuit while the glower is left in circuit. Whenever the lamp is turned off by opening the circuit, the armature falls back by gravity into the position shown in readiness for action when it is necessary to relight the lamp. Since the resistance of the material of the glower decreases as its temperature increases, it is necessary to provide some means to prevent the resistance falling to a point at which a considerable current would flow and destroy the glower and its connections. This is accomplished by inserting a resistance coil in series with the glower. This resistance called 'ballast' consists of iron wire which increases in resistance as its temperature increases, and thus compensates for the decrease in the resistance of the glower. It is evident that in consequence of the high temperature coefficient of iron, a point is soon reached , in this matter of compensation, at which any increase of current would increase the resistance of the ballast more than it would decrease the resistance of the glower, and since the lamp is invariably used on a constant pressure circuit no increase of current can occur when this condition is reached."

Note: the picture of the Nernst lamp shown above was scanned from Reference 2.

References and Bibliography
1) William J. Hammer, "Important European Electrical and Engineering Developments at the Close of the Nineteenth Century", Transactions of the American Institute of Electrical Engineers, Vol 18, Feb 28, 1901, pp 62-74.
2) International Library of Technology, International Textbook Company, Scranton, 1905, Section 32, pp 37-45.
3) Hawkins Electrical Guide, No 8, Theo Audel & Co., 72 Fifth Ave., New York, 1921, pp 2,501-2,503.
4) Collier's Encyclopedia, Vol 14, P. F. Collier & Son Corp., New York, 1956, pg 473.
5) Fin Stewart, "The Nernst Lamp", TILCA Report, ca 1962, 14 pages.
6) K. Mendelssohn, The World of Walther Nernst - The Rise and Fall of German Science, Macmillan Press, London, 1973.
7) Brian Bowers, Lengthening the Day - A History of Lighting Technology, Oxford Univ. Press, Oxford, 1998, pp 121-124.
8) http://www.nernst.de/lamp/nernstlamp.htm