LED Market Growing At 18 Percent CAGR
Demand for energy-efficient lighting and favourable policy are helping to boost LED demand
Technavio market research analysts forecasts that the LED market will grow at a CAGR of more than 18 percent from 2017 to 2021, according to their latest report.
The demand for energy-efficient lighting solutions across sectors, such as the retail, hospitality, architecture, commercial, and residential, is leading to an increased adoption of LED lighting worldwide. The high luminous efficacy, greater life span, reduced energy use, and decreasing average selling price (ASP) of LED lighting products compel consumers to switch to LED technology.
Four market drivers contributing to the growth of the global LED market are: favourable 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.
Favourable policy environment and governmental support
The rapid depletion of natural resources and global warming have generated an indispensable need for energy conservation across the globe. In 2016, lighting applications were estimated to account for more than 20% of global energy consumption. There is an immediate 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.
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."
Demand for energy-efficient lighting solutions
Both governments and organisations across the globe are working on the lines of reducing the energy consumption and running costs for lighting solutions. LEDs when compared to their counterparts, such as incandescent lamps, 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. As a result, the consumers spend lesser amounts on the replacement of these products, given the high product lifetime," says Chetan.
Increasing outreach of energy-efficiency certification programs
Energy-efficiency programs, such as the ENERGY STAR certification, DLC, and Lighting Design Lab certification, are some of the programs aimed at highlighting 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 across the globe to achieve energy-efficiency and reduce their carbon footprints.
The ENERGY STAR program was established by the US Environmental Protection Agency in 1992 to promote the use of energy-efficient lighting solutions 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, scheduled to be held in Russia, is expected to contribute significantly to the global LED market. The increased construction of sports infrastructures like stadiums and athletes' village; public infrastructure like roads; and commercial buildings like hotels, tourist facilities, and shopping complexes will drive the 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.