MARKET CONSULTANCY - SHINING SOME LIGHT ON THE LED MARKET
The global lighting market is being impacted by multiple factors - three are particularly important. The first is the macroeconomic situation, which is influencing new construction and consequently the number of new lighting installations. Second, energy efficiency regulations and greater energy awareness are redefining future lighting product portfolios. And third, government action limiting certain energy sources will result in additional demand for energy-efficient products, such as LEDs. Assessing these environments for change is vital to understand current and (probable) future shifts in the global lighting market.
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The market for luminaire and lighting system control components is predominantly driven by new installations. New installations are linked to construction activity. This is supported by the fact that heavy investments in the installation of fixtures is more likely to be postponed when the economy is under strain. However, the lamp market is mainly driven by replacements. The later is a market by nature more resilient to overall macroeconomic trends: it depends almost solely on the number of installed sockets and the lifetime of the technologies in place. Even if incomes deteriorate significantly, consumers will still need to replace a failed light source.
Besides macroeconomic developments, regulation affecting lighting products is a key determinant of the future lighting market. Governments around the globe are accelerating initiatives in this field along two dimensions. Banning inefficient technologies is one. The other is to pass more stringent legislation on energy efficiency requirements and offer incentives for the building infrastructures. This path will further propel energy-efficient lighting technologies, such as LEDs.
LED is regarded as the most promising technology in terms of commercial viability in 2020 from among several kinds of clean technology - such as photovoltaic solar power, wind power and electric vehicles.
The price of LEDs is tumbling even faster than anticipated, helping to further drive technology transition. The green revolution in lighting is also continuing apace, with other energy-efficient lighting technologies being acknowledged as a bridge towards full LED penetration. Several factors are coming together to drive even faster the uptake of LED lighting.
The price of LED lighting products still remains high, and the initial purchase price represents a significant barrier to the decision makers when considering an initial investment in general lighting applications. However, faster LED price erosion is pulling forward the payback of LED lighting since, in most cases, the return of investment is paid off in energy savings.
New business opportunities are also emerging as the redrawn industry landscape assumes clearer contours. The lighting control system market is expected to grow strongly through to 2020. The growing global energy efficiency movement adds to the importance of lighting control systems in general and horticultural lighting every year. This means there is a strong incentive to reduce energy consumption via dynamic lighting controls, especially where electricity usage is high. Beyond saving energy, lighting control systems have several benefits when combined with LEDs. LEDs with a lighting control system can increase the lifetime of the LED light source , which improves the investment economics even further.These benefits of the lighting control systems are expected to translate rapidly into new business opportunities for lighting companies.
LED and lighting control systems require more technical knowledge than has traditionally been necessary for the lighting industry. An additional opportunity will arise when traditional lighting players and users request technical services, both R&D activities and for the renovation or new installation assets. Services of this kind are already emerging. Economic viability studies and assistance with documentation on playing for government and municipality subsidies are other valuable services for large-scale buyers in the lighting industry.
The new business models outlined above will doubtless represent just a fraction of the full downstream lighting industry spectrum going forward. Other new business models are bound to emerge as the lighting industry continues to evolve.
Here is a small study regarding LED lighting market share: