Global LED Lighting Market Forecast

Global LED Lighting Market Forecast

LEDs are considered to be one of the most perspective technologies of 21st century. World’s best research institutions are unanimously forecasting a rapid market share growth and solid investments in the years ahead.

Such an interest is derived from numerous advantages over traditional light sources, such as long life-span, more efficient energy consumption and safety. Governmental control also plays a crucial role in LED technology popularization. Many countries have already banned CFL’s and incandescent bulb’s production and given pride of place to eco-friendlier solutions.

Which trends will prevail on the market in 5 years? Let’s take a look into the future and try to answer the question: what should we expect?

 

Global LED Lighting Market Forecast

Let’s sum up the information and mark a few main vectors of LED market development.

1. The rapid growth

We can see from the graphics that market volume and share will be increasing by a huge ratio. Such explosive development will be a result of technology sophistication and some global movements. Let’s take a look on the most significant of them:

Substantial price erosion

LED lighting is still quite a costly affair. But in some time they may become the most cost-efficient lighting solution. Price reduction will become a result of LED’s enhanced luminous efficacy (amount of lumen per watt of energy) and manufacturing cost reduction. LED’s prices are forecasted to fall by 80% by 2021. So they will become available even to poor.

World population growth

According to UN Department of Economic and Social Affairs estimates the world population will exceed 7,7 billion people by 2020 and 8 billion people by 2024. Such a swell will lead to growing demand in lighting, both residential and industrial. The most intensive growth (up to 78%) will be observed in Asia-Pacific Region. That will result not only in market growth but also its shift to the east.

Urbanization

One of the today’s world primary trends is rural-urban migration. In years to come the most intensive urban population growth will fall on developing regions. China, India and Latin America will be among record-holders. It can be attributed to GDP per capita growth and, as a result, to citizens’ increased purchasing power.

Energy crisis and carbon dioxide emissions control

Natural resources depletion alongside with the global warming is a pressing issue of modern world. The analysis of global warming control measures showed up that obsolete light sources replacement is one of the most economical and effective solutions. That makes LED lighting sector extremely perspective for public investment.

Another energy crisis consequence is the constant electricity tariff’s growth. The less power resources are available the more expensive they are. This will result in people’s efforts to lower the consumption. And LED technology will become an optimal solution for this issue.

2. Inhomogeneity

Lighting is needed for different industry and residential sectors and each of them imposes its own requirements on light sources. That’s why the lighting industry is one of the most diverse technical fields.

Lighting industry is usually classified by the combination of 4 aspects:

Application
  • General lighting: residential, office, shop, hospitality, industrial, outdoor and architectural.
  • Automotive lighting: head lights, daytime running lights, marker lights, fog-lights, etc.
  • Backlighting: TVs’, laptops’, mobile phones’ displays.
  • Other: Signal and signage, health service, criminal investigation, science & research, etc.
Technology
  • Traditional (not eco-friendly): incandescent bulbs, halogen bulbs, gas-discharge and fluorescent lamps.
  • Ecologically clean halogen, gas-discharge and fluorescent lamps with smart control.
  • Solid state lighting: LED and OLED, infrared and razor.
Region
  • Europe, North America, South America, Asia, Pacific Region, Middle East, Africa.
  • Developed countries (members of Organization for Economic Co-operation and Development ), developing countries (not members of OECD)
Final market structure
  • Holders of estate, tenantry.
  • Lighting experts: designers, architects, installers, engineers, developers, etc.

Which sector is the most perspective?

General lighting, automotive lighting and backlighting will stay the major sectors.

General lighting is top-priority

General lighting is divided into seven applications: residential, office, shop, hospitality, industrial, outdoor and architectural lighting. The Most of attention will be paid to residential lighting as the number of households grows as compared to the number of all buildings. Office and outdoor lighting will also claim a substantial share. Hospitality and shop lighting will not have such a big market share as applications above. However, application features and requirement for frequent light objects replacement will positively affect the sales.

Intensive growth of automotive sector

Since 2011 automotive LED lighting is becoming more and more popular. Such holdings as Audi and BMW have already been using LEDs in daytime running lights for ages. Due to their low price, xenon and halogen headlamps are still holding leading positions in head lighting. But as the prices of LEDs fall, these positions will be contested.

Screens will become “organic”

Now LEDs are the main component of TVs, laptops and mobile screens. However, OLEDs are becoming more and more commonly used. According to the forecasts, their market share will keep growing even further due to such features as higher level of brightness and contrast control and thicker panel.

Other applications such as signage and health service won’t meet fundamental changes. Their market share will stay sufficiently small.

What regions should we pay attention to?

By geography LED lighting market will also be inhomogeneous. Application features and electricity grid properties vary from region to region. Population color preferences are also different: Europeans prefer warm tints and Asian people like neutral and cold lighting.

LED’s local market share depends on such factors as governmental control, economic development level and audience preferences. Due to global warming and climate change issues, governmental control became one of the main impact factors which determine the future of lighting market. In many countries CFLs and incandescent bulbs were banned in order to minimize energy consumption.

 

phase-out of incandescent light bulbs

 

Now the North America is the most fast growing region. By the projections of experts Asian LED market growth rate will be lagging behind European and American for some time. However, it will stay the leader by market volume and its presence will keep strengthening.

3. Shift from replacement to new installation

The future of incandescent bulbs is already predictable. The global market prefers more energy-efficient and durable solutions. So very soon they will fall into disuse.

This will lead to the shrinking of the market which replaces lighting sources by analogs and to growth of new lighting solutions market. Even LED’s long life-span won’t affect this growth a lot, as the application features are different for each market segment. For example, outdoor lighting demands maximal life-span and minimal maintenance costs. At the same time, in exclusive shops and boutiques lighting elements may be replaced each month.

More and more priority will be given to built-in lighting fixtures to the detriment of replaceable bulbs, mostly due to gamma control function. In some areas, such as architectural lighting, this advantage will compensate their high price.

For some constructions, such as underwater or architectural lighting systems, it is cheaper and easier to replace all lighting elements at the same time. That will become another growth driver for built-in fixtures market.

Such a transformation will affect all the market players and will require new creative business solutions.

Sum up:

The future of LED lighting market can be compared to a stormy ocean. Constantly changing it will bring us to new discoveries, rises, falls and changes of tide. Some won’t manage to stay afloat. But those, who will catch the right wave, it will lead to success and prosperity.

In such unpredictable conditions it’s crucial to stay vigilant, follow the industry news and, of course, to find reliable partners for such an adventurous journey.

 

Referral sources: 

Estimated LED penetration of the global lighting market from 2010 to 2020 by Statista

World Light Emitting Diodes (LED) Market - Opportunities and Forecasts, 2013 – 2020 by Allied Market Research

Lighting the way: Perspectives on the global lighting market by McKinsey&Company

Official website of UN Department of Economic and Social Affairs

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