With technology revolutionizing the way we, humans, function, advancements only seem to be adding to our convenience, and so is the case with the lighting industry, which has managed to evolve and prosper in no time. All forms of design basics with respect to architecture are incomplete without proper and appropriate lighting. Thus, quite evidently, the potential of lighting is huge when it comes to the development of smart cities.
Considering that, the potential of connected technology and light-emitting diode (LED) lighting in today’s time is immense in transforming everyday experience while, at the same time, ensuring sustainability. With the urban population expanding rapidly and over 60% of the world’s population expected to be living in cities by the year 2030, requiring more than 70 billion light points, it is quite evident that lighting solutions will have a pivotal role to play in the future course of urbanization.
Having said that, there are a myriad of trends being observed in the lighting industry today, with some having the potential to be the game-changers.
With the world witnessing a technological shift from conventional to green lighting, LEDs have come across as a boon to support a sustainable environment. The increasing adoption of LEDs, particularly in the automotive, healthcare, residential, and commercial sectors, is providing lucrative opportunities to those operating in the industry. Moreover, the growing adoption of smart LEDs with advanced features, including auto off/on, adaptive lighting, motion activation, and the color-changing ability to create an ambience and set the indoor experience as per mood and preference, is one key trend being observed in the lighting market. Moreover, with the surging focus on the adoption of energy-efficient lights, the energy consumption for lighting applications is expected to lower down considerably. For instance, according to the U.S. Department of Energy, the energy consumption by energy-efficient lighting systems in the country would drop by 15% by 2020 and by 40–60% by 2030, in a conservative forecast. On account of this, the LED lighting market, globally, which stood at $67.6 billion in 2019, is expected to register a CAGR of 12.9% between 2020 and 2030.
With the rising focus of governments across several countries, including those of developing nations, especially China and India, on infrastructure modernization, the adoption of LED lighting is projected to increase manifold. The growing focus on energy-efficient illumination solutions and the plummeting prices of LEDs can be viewed as the factors underpinning the LED industry growth. Moreover, the high adoption of these lights, particularly in the Asia-Pacific (APAC) region, can be ascribed to the considerably high demand being generated from the residential sector, especially in India, China, and South Korea. Infrastructural development taking place on account of the booming population in these countries is fueling the demand for and consumption of LED solutions. Furthermore, the growing consumer awareness on the importance of energy-efficient lighting solutions in the view of the growing environmental concerns and rising power tariffs is another prominent factor driving the market demand for LED solutions in the region.
In this day and age, applications of lighting systems are going limitless. Expanding the indoor (residential, commercial, and industrial spaces) and outdoor (highways, streets, stadiums, tunnels, parking lots, etc.) dynamics, the role of lighting has evolved substantially and is being centered around ambience lighting and mood lighting for both the domains.
Moreover, the industry continues to witness growing focus of governments across the globe on energy efficiency. As per CLASP, an international nonprofit organization with a mission to serve as the primary resource and voice for appliance, lighting, and equipment energy labelling systems, lighting accounts for approximately 15% of the total energy consumption across the world. Thus, regional governments are striving to accelerate the global transition to energy efficiency with the adoption of LED technology, which holds the potential to save around 600 TWh of electricity in 2030, which is almost at par with the electricity consumption of the entire African continent.
In the area of ambient lighting, the automotive sector is expected to witness the fastest growth in demand in the coming years. With the expected rise in vehicle production and growing preference for interior lighting, the demand for ambient lighting solutions from the automakers is expected to surge in the coming years, driving the market at a CAGR of over 9% during 2020–2030. Thus, in view of the growing demand for ambient lighting solutions, several market players are introducing new products to expand their portfolio and customer base. For instance, in May 2020, OSRAM Licht AG introduced the Synios S 2222 family of lights for various applications, including ambient lighting and architectural lighting.
Besides, with several countries focusing on indoor farming techniques to raise agricultural yield on account of the rising population and the consequent surging demand for food, the demand for horticulture lighting products is expected to increase in the coming years.
However, in the past few months, the market demand in the lighting industry, to certain extent, has been impacted by the COVID-19 pandemic, primarily on account of the temporary shutdown of several manufacturing units. Moreover, the disruption in the supply of the raw material too affected the production of lighting systems, thereby impacting the market growth. Nonetheless, in the wake of the pandemic, UVC lights are witnessing a sharp rise in their demand for the disinfection of workplaces, healthcare centers, and public transport. Thus, the companies offering germicidal lights are expected to reap some benefits from the looming pandemic.
APAC is expected to continue leading the lighting industry in the coming years, characterized by the presence of numerous registered and unregistered players. Moreover, in this region, the market will be mainly led by China, on account of the various large-scale players operating within. The vast production base, coupled with the growing population of the country, is expected to support the market growth here. In India, the government’s UJALA program aims to boost the adoption of the LED technology. Moreover, the program aims to increase energy access in rural India, making domestic production mandatory for sourcing LED bulb tenders. This, in a way, would accelerate the country’s efforts to become an integral part of the supply chain operating globally, especially when most companies are planning to move production from China, in the wake of the pandemic, which was first reported in the Chinese city of Wuhan.
The market in North America and Europe too is going to witness notable growth in the coming years. Key factors helping the market advance in these regions include high adoption of advanced technologies and the growing focus on energy efficiency.
In view of this, companies such as Koninklijke Philips N.V., GE Lighting, OSRAM Licht AG, and Cree Inc. are actively taking strategic measures, including intensification of their focus on research and development to support product innovation and development, to increase their customer base and expand their market. For instance, in February 2019, Cree launched the next-gen XLamp XP-E2 Photo Red (660 mm) and Far Red (730 mm) LEDs with shortened payback period and higher performance to support applications in the field of horticulture.
Other key players in the market include LumiGlow Inc., Havells India Limited, Wipro Enterprises (P) Ltd., Signify N.V., Heliospectra AB, Black Dog Grow Technologies Inc., Syska LED Lights Private Limited, Schneider Electric SE, Arrow Emergency Lighting Limited, Zumtobel Group AG, Hubbell Incorporated, Lightronics B.V., Opple Lighting Co. Ltd., Cree Inc., Acuity Brands Inc., Samsung Electronics Co. Ltd., HELLA GmbH & Co. KGaA, and Thorn Lighting Ltd.
Among the various types of lighting solutions employed across the world, including LED, compact fluorescent lamp (CFL), halogen, high-intensity discharge (HID), and incandescent, LED lights are expected to witness the highest demand in the near future, on account of the various benefits associated with them in terms of less energy consumption, more cost savings, easy installation, and low upfront and maintenance costs. Among the application areas of these lights is the automotive sector, wherein automakers are increasingly employing digital LEDs to enhance the safety features and interiors in their offerings.
Besides, with regard to the end use (residential, industrial, and commercial) of lighting systems, the residential sector is projected to continue dominating the market, on account of the increasing development of residential projects across the world, generating high demand for lighting solutions.
The lighting industry is clearly working its way from the traditional model to the LED technology. With environmental regulations across the world becoming more stringent, the penetration of LEDs seems to be only getting accelerated with every passing day. For instance, the Chinese government has already passed a legislation banning the use of incandescent lighting technology, which, in turn, is expected to boost the adoption of energy-efficient lighting solutions. Another important matrix supporting the adoption of LED technology is the declining technology price, which is further contributing to the growing share of LED in general lighting applications.
In the light of technological transformation, including digitalization, it is quite logical to expect the lighting industry leapfrogging and shaping with the incorporation of more advanced technologies like machine learning and augmented reality, which would support a digitalized physical infrastructure in the times to come.