Market research firm Technavio is forecasting the global market for light-emitting diodes (LEDs) will increase at a compound annual growth rate of more than 18 percent this year on up to 2021. At this rate, the market will go from $18.51 billion in 2016 to $43.18 billion in 2021.
In doing its market analysis, Technavio first divided LED lighting into two major segments: lamps, and fixtures, or luminaires. LED lighting, with its longer lifespan, high luminous efficacy, reduced energy use and decreasing costs have all been factors in switching consumers to LED technology.
Semiconductor Today is reporting that growth in the global LED market can be attributed to four market drivers that include “a favorable policy environment and governmental support; demand for energy-efficient lighting solutions; increasing outreach of energy-efficiency certification programs; and upcoming international events and infrastructure projects.” Let’s look at these drivers in more detail.
A favorable policy environment and governmental support
Not only is the world suffering from a depletion of many of our natural resources, but global warming has created an absolute need for energy conservation and mitigation across the globe. making us attentive to the need for finding alternative energy sources to replace fossil fuels, and the development of more energy efficient lighting applications.
Most of us don’t realize this but in 2016, lighting applications accounted for over 20 percent of global energy consumption. For this reason, governments around the world are focusing on implementing favorable policies promoting the use of energy-efficient lighting products.
According to Chetan Mohan, a lead analyst at Technavio for lighting research, “Governments of established economies like the US and the UK and emerging economies like China and India, are engaging in the promotion of LED lighting products by providing tax incentives and subsidies on these products.”
The demand for energy-efficient lighting solutions
Compared to incandescent lamps, LEDs are technically advanced and efficient in terms of energy consumption, luminous intensity, and efficacy. And this is why governments and other organizations are supporting research and development of more efficient and energy saving lighting solutions and increasing the outreach of energy efficiency certification programs.
“In addition to providing energy-efficient lighting, LED bulbs provide larger product life spans compared to incandescent bulbs, by up to thousands of hours. As a result, the consumers spend lesser amounts on the replacement of these products, given the high product lifetime,” says Chetan.
The LED market is highly fragmented and competitive with international and regional vendors competing on factors such as product quality, technology, and price. But market competition is a good thing when the end result is a better, more efficient and cost-competitive product. Some of the biggest players in the LED Market today are Cree, GE Lighting, LG, Innotek, NICHIA, OSRAM, Philips Lighting, and Samsung Electronics.
Increasing outreach of energy-efficiency certification programs
Everyone has heard of ENERGY STAR certification, but there are others, like DLC, and Lighting Design Lab certification. These programs are energy-efficiency programs. These programs trace back to the energy crisis of the 1970s. It was a new concept of “energy conservation” to help customers cope with soaring energy prices.
The new concept has evolved into an important utility system resource that can also reduce greenhouse gases, save money for customers, and generate jobs. In the United States, the ENERGY STAR program was adopted by the Environmental Protection Agency (EPA) in 1992 to promote energy-efficient lighting solutions for buildings, homes, and industries.
According to Business Wire, “The introduction of stringent government regulations on energy efficiency has encouraged the adoption of ENERGY STAR-certified products worldwide.
Upcoming international events and infrastructure projects
You wouldn’t think an international event could contribute to any particular product’s growth, but you would be wrong. As an example, the FIFA World Cup 2018, being held in Russia, is expected to contribute significantly to the global LED market.
Increased construction of sports infrastructure, like stadiums, housing accommodations for athletes and an athlete’s village will require lighting. Then there are other public infrastructure projects, including roads, and commercial buildings like hotels, tourist facilities, and shopping complexes to consider. All this will drive the LED market.
Additionally, says the Technavio forecast, “the governments of various countries such as China and India are making significant investments in the development of infrastructure projects and smart cities to complement economic growth and to cater to the requirements of the growing urban population. These developments augur well for the growth of the global LED market during the forecast period.”
