8 September 2017
LED market growing at 18% CAGR, boosted by demand for energy-efficient lighting
The global light-emitting diode (LED) market is increasing at a compound annual growth rate (CAGR) of more than 18% during 2017-2021, rising from $18.51bn in 2016 to $24.67bn in 2021, forecasts market research firm Technavio.
In particular, the luminaires segment comprised $14.28bn in 2016, while the general lighting segment will account for 77.37% market share by 2021. The Asia-Pacific (APAC) region is growing at 20.56% during the forecast period.
Demand for energy-efficient lighting solutions across sectors (such as the retail, hospitality, architecture, commercial and residential) is leading to increased adoption of LED lighting worldwide, notes the report ‘Global Light-emitting Diode (LED) Market 2017-2021’. The high luminous efficacy, greater life span, reduced energy use and falling average selling price (ASP) of LED lighting products is compelling consumers to switch to LED technology, it adds.
Four market drivers are contributing to the growth of the global LED market: 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.
Favorable policy environment and governmental support
The rapid depletion of natural resources and global warming have generated an indispensable need for energy conservation worldwide. In 2016, lighting applications were estimated to account for more than 20% of global energy consumption. There is an urgent need to reduce this energy consumption, and governments across the globe are focusing on the implementation of favorable policies to promote the use of energy-efficient lighting products.
“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,” says Chetan Mohan, lead analyst for lighting research.
Demand for energy-efficient lighting
Both governments and organizations across the globe are working on reducing the energy consumption and running costs for lighting. Compared with their counterparts such as incandescent lamps, LEDs are technically advanced and efficient in terms of energy consumption, luminous intensity, and efficacy.
“In addition to providing energy-efficient lighting, LED bulbs provide larger product life spans compared to incandescent bulbs, by up to thousands of hours,” notes Chetan. “As a result, the consumers spend lesser amounts on the replacement of these products, given the high product lifetime.”
Increasing outreach of energy-efficiency certification programs
Energy-efficiency programs (such as the ENERGY STAR certification, DLC, and Lighting Design Lab certification) aim to highlight the importance and need for energy efficiency. These programs are actively encouraging and promoting the use of energy-efficient lighting sources that help organizations and households to reduce their carbon footprints.
The ENERGY STAR program was established by the US Environmental Protection Agency (EPA) in 1992 to promote the use of energy-efficient lighting for buildings, homes and industries. 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
The FIFA World Cup 2018 (to be held in Russia) is expected to contribute significantly to the global LED market. The increased construction of sports infrastructure such as stadiums and the athletes' village; public infrastructure like roads; and commercial buildings like hotels, tourist facilities, and shopping complexes will drive demand for LED lighting, especially in the outdoor segment in the country till 2018.
In addition to the events, 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 the 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, concludes Technavio.