Nowadays, almost everybody is talking about implementing light-emitting diodes (LEDs) in the lighting sector. The US Department of Energy (DOE) has been at the forefront of the solid-state lighting revolution. DOE has supported a market study predicting the market penetration of LED in general illumination applications ever since 2002. Approximately 50% of the general indoor lighting industry and 40% of the general outdoor lighting industry are said to have been engulfed by the LED fever as per various lighting expert sources. Several research studies have shown that the LED implementation awareness has grown steadily. But, what are the reasons for the much hype about this LED lighting? Let us check out the main factors for the adoption of the most sought-after LED technology in this article.
Key Benefits of Using LED Light Sources in Indoor and Outdoor Environments
Competitive Advantages: Most of the lighting professionals rely on LED as it provides them competitive advantages. Most of the lighting companies have already implemented LED solutions. LED is an efficient solution, boosting the productivity of workers, and enabling better quality control, easier operations (instant on/off), safety, and cost-efficacy. LED enhances light levels and illumination quality, reduces light energy consumption significantly, requires less maintenance, and offers rebates (60% of the project). The LED is also eligible for tax savings (according to the Energy Policy Act). By 2030, LED lighting is estimated to reach 84% market share of lumen-hour sales in the general illumination market. This will reduce lighting energy consumption by 40%, for 3.0 quads (261 terawatt-hours) savings, worth over US$ 26 billion (as per the current energy price) and equivalent to the total energy consumed by ~24 million US homes.
Huge Cost Savings: In accordance with the US Energy Information Administration (EIA), a 60-watt incandescent lamp on an average produces 16 lumens per watt and has a lifetime of 1,000 hours; a CFL produces 67 lumens per watt and lasts for 10,000 hours; and an LED produces 83 lumens per watt with 30,000 hours lifetime. The long-term energy and financial savings from the shift in lighting technology are consequently huge. In addition, the cost of LED lamps is estimated to drop, and their competence and lifetime are expected to improve. EIA forecasts if the LED light usage predominates by 2027, the lamps can reduce the energy consumption of 441,000-megawatt electric power plants annually.
Great Opportunities: LED lighting provides great opportunities to the commercial, residential, industrial, highways and roadways, architectural, public places, and other lighting applications. Lighting solution providers can build highly effective LED systems for a building and even an entire highway network, digitally. Even if energy savings from LED are quite impressive (as cited by MarketsandMarkets), there is a huge opportunity for further savings by accelerating investment in cost and efficiency improvements.
Attractive opportunities in global LED lighting market
Figure 1: LED lighting market offers lucrative opportunities OWING to increasing adoption of connected lighting Source: Investor Presentations, Annual Reports, Press Releases, Expert Interviews, and MarketsandMarkets Analysis
Growing Market: According to MarketsandMarkets, the global LED lighting market will grow from US$ 36.75 billion in 2015 to US$ 92.40 billion by 2022, at a CAGR of 13.66% during the forecast period. To take advantage of incredible cost and energy savings from the use of LED lights, government organisations, restaurants, and hospitals are retrofitting buildings and switching to LEDs from conventional lighting. To cater to the growing market for LED illumination and ease installation and conversion costs, software companies and manufacturers introduced lighting as a service (LaaS) model as a new approach for installing and controlling LED lights. Illumination is now powered, connected, and controlled digitally through LaaS. The innovation encompasses short- and long-term gains, such as reduced energy costs, improved energy efficiency, and the ability to harness and inspect a wide array of digital analytics. LaaS can lead to major cost savings for restaurants and hospitals, as well as for highways that are part of trade corridors. Significant cost savings can also be harnessed by retrofitting conventional hospital lighting systems with LED lights and using LaaS system.
Key industry insights
Figure 3: Reduction in LED prices
Low Maintenance Costs: Usually, LED illuminations have 6–10 years of life span when continuously operated, whereas fluorescent illumination needs to be changed every year, adding up maintenance fees. Facility administrators can include daylighting controls in patient rooms with enlarged window space, saving energy consumption and costs. In accordance with the US DOE, natural lighting exposure can lead to 12% increase in patient recovery time, 2.5% decrease in staff absenteeism, improved productivity and job satisfaction, and psychological well-being. Unoccupied space, such as restrooms, stairwells, mechanical rooms, and service areas, can be controlled and dimmed through LaaS to reduce energy consumption and costs.
Global LED Lighting Market: Key Global Trends
Lighting Control to gain a pivotal role with LED owing to long-term increase in functionality. LED will lead to a more complex control system, offering comfort, security, and flexibility to end users.
2013 and 2014—the breakthrough years for LED in the professional market in Europe, North America, and China. 2014 saw important inroads for LED in the large residential market, and the highways and roadways lighting market, which let LED to pass 40% and ~38% penetration of entire lighting sales in 2015.
LED replacement bulbs made considerable progress in residential application globally.
Europe and North America to mature first—higher growth rates during the forecast period in younger markets.
Europe—Implemented EU ban on incandescent and prospective ban on halogen, driving LED adoption in the region.
North America—Incandescent ban stimulated demand; utility rebates making solid-state lighting (SSL) affordable.
Latin America—Price is a key barrier to the adoption outside of high-end projects. LED will increasingly be able to challenge CFL.
Asia Pacific—China and India embracing LED and leading change for the region.
Middle East and Africa—Growth expected in the second half of the forecast period due to sharp decline in LED price.
Revenue Forecast Globally—2013–2022 (North America, Europe, Asia Pacific, Middle East and Africa, and Latin America)—APAC is the largest market.
Revenue Forecast by Application—Commercial (retail, office, and hospitality), industrial, and public places and highways and roadways lighting will have higher growth rates, and residential lighting will have the largest market (in terms of revenue) by 2022.
Asia Pacific—the largest market for both indoor and outdoor LED lighting worldwide. The market scenario in this region features aggressive expansion of production facilities by manufacturers, anticipating a positive outlook. Residential and commercial applications will boost the market for indoor general lighting. Nevertheless, residential users are projected to drive the market with slower adoption than commercial applications in offices, hotels, hospitals, and other areas.
India is expected to be one of the most profitable markets, largely supported by favorable government initiatives and increasing awareness pertaining to the benefits of LED lighting among end users. The Government of India’s LED program is expected to emerge as a win-win from the consumer point of view. The government has changed the contours of procuring and distributing LED bulbs across India, putting the project on the fast track. With the improvement in economies of scale and number of producers, LED bulbs will become more affordable. Moreover, the smart cities initiative by the Government of India is uplifting the demand for LEDs as an energy-efficient lamp source.
Smart buildings and smart cities, on behalf of convergence of green and smart technology trends, will become progressively important and a driver for consultancy-based services.
n Performance contracting is progressively becoming a market mainstay—end users are enthusiastic about maximising cost savings and enhancing competence.
LaaS (leasing-type models and “pay-as-you-use” services) gaining a grip in the industry for enabling businesses to reduce upfront capital expenditure.
Cloud-based services with strong data interpretation focus will be key enablers for new-generation intelligent buildings.
Companies such as Philips Lighting Holding B.V. (Netherlands), Cree, Inc. (US), OSRAM Licht AG (Germany), GE Lighting (US), Eaton Corporation plc (Ireland), Dialight plc (UK), and Zumtobel Group AG (Austria) are identified as the key players in the LED lighting ecosystem.
Companies such as Digital Lumens (US), Fulham Co., Ltd. (US), LED Engin, Inc. (US), Lumenpulse Group (Canada), Neptun Light, Inc. (US), Tanko Lighting, Inc. (US), and LED Lighting Systems, LLC (US) are identified as key innovators owing to their contribution to the LED lighting market in the form of innovative solutions.
Summarising Key Points
Several end users are deploying smart LED solutions owing to their cost-efficiency and ecofriendly nature. The LED revolution is driven by Asia Pacific, Europe, and North America. Further growth in the LED market will be less centralised and challenge the leading global participants. LED replacement lamps are now at a price point that can effectively challenge conventional technologies and take over the market significantly by 2020. The challenge is to provide non-commoditised products, making the most of digital LED illumination advantages. LED drivers and lighting management solutions will be the key factors.
LED Revolution across the Globe
Retrofitting bases with LED light: It is a boom time for US LED manufacturers under President Donald Trump for securing major lighting contracts.
IoT set up a standard for sensors in LED fixtures: Top LED producers, Internet of Things (IoT) technology companies, and industry groups established the IoT-Ready Alliance for the installation of IoT technology in luminaires. The alliance is setting industry standards to enable LED light fixtures to be IoT-ready, facilitating a swift and easy installation of superior IoT sensors—as simple as changing a light bulb.
Lighting now considered a significant element in urban residential development: New government regulations supporting sustainability and the awareness about environmental issues are the prime growth drivers for LED lighting. Rapid technological evolutions in this domain are driving the adoption of intelligent lighting in both residential and streetway spaces.
Strict energy compliance regulations from the European Commission: Using energy efficiently, Europeans can lower energy bills, reduce reliance on external oil suppliers and gas, and protect the environment. Energy efficiency has increased at all stages of energy chain, starting from generation to final consumption. EU has planned 20% energy savings target by 2020, equivalent to turning off 400 power stations. In November 2016, the European Commission proposed an update to the Energy Efficiency Directive, together with new 30% energy efficiency target for 2030, and actions for updating Directives to meet new targets. Policies for improving energy efficiency in Europe comprise an annual decline of 1.5% in national energy sales; EU countries making energy-efficient renovation to minimum 3% of buildings (central governments); minimum energy efficiency standards and labeling for products such as boilers, household appliances, lighting, and televisions; preparation of National Energy Efficiency Action Plans every 3 years by EU countries; and other measures.
LED Implementation Future—Roads Ahead 2017
LED replacement lamp is the winner in the medium-term for replacing conventional technologies worldwide. LaaS on cloud-based networks for customised application management will pave the way for connected lighting, living, and enhanced energy and facility management. Capitalising, leasing, and maintenance are other service models expected to evolve around LaaS. LED lighting controls are a new-generation lighting management system to target verticals—highways and roadways focusing on safety, offices focusing on energy saving aspects, and residential focusing on ambiance.
Residential
Low Energy Saving—A part of growing zero-emission concept
High Effect/Ambience—Mainstream due to falling price and increasing end-user awareness
Offices
High Energy Saving—Potential in retrofit and new smaller offices—still plenty
Low Effect/Ambience—Controlling the CT/red, green, and blue (RGB)/color rendering index (CRI) for enhancing the well-being and productivity of workers
Retail and Hospitality
Low Energy Saving—Strong demand from secondary facilities (corridors, staff rooms, etc.)
High Effect/Ambience—LED increasingly used in ambient lighting for influencing customer mood
Industrial
Low Energy Saving—Still low penetration and large potential (warehouses)
Very Low Effect/Ambience—Creating the best lighting environment for assembly and precision working
Highways and Roadways
Replacement of high-pressure sodium (HPS) lights with LED lights
Smart city projects installing LEDs with solar panels
Architectural
Ambiance to shape public buildings at night
Artificial movement of lights to create shape and edge attracting users
Public Spaces
Increasing outdoor entertainment activities attracting modern stage lighting
Need to increase operational efficiency for airport perimeters to ensure luggage check with ease
Stadium installing LED floodlights
Gear Up for the Revolution
Market participants should work in association with building management system (BMS), and lighting and HVAC companies. With robust growth forecast, establishing market presence, a network of connections, and customer relationships is essential for future success. With performance contracting becoming the preferred business model of customers, suppliers need to develop service capabilities or associate with facility management companies and energy service providers for partaking in the dynamic part of the market. The global adoption of innovative lighting solutions has been on an upswing with amazing success in the European and Asian markets.
Even if LED solution has high initial setup cost, it should not be ignored for getting the long-run benefits in the industry. The companies should not shy away from implementing LEDs; they should rather treat this as an investment to keep pace with technological growth. It would be better if the organisations can get rid of all skepticism about LED lighting services and move toward fast LED implementation. LED streamlines project operations in the commercial and industrial sectors.
Adopt this technology for cost-efficiency, increased delivery speed, and enhanced profitability.
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