The global LED lighting market size was valued at $45.57 billion in 2018, and is projected to expand at a CAGR of 11.8% by 2025, according to a report published by Grand View Research, San Francisco. Increasing demand for power-efficient illuminating systems across commercial and industrial sectors, rising concern over reduction of non-renewable sources of power and decreasing price of light emitting diodes (LED) lights are likely to propel the growth.

Likewise, technological advancements, shift from conventional to green lighting and enhanced energy efficiency standards have also spurred demand.

In addition, strict regulatory policies regarding conventional lighting and energy consumption across United States, European Union, China and Canada are anticipated to favor the product demand through 2025. Corresponding ratings and design standards categorizing energy efficiency, such as CASBEE in Japan, BREEAM in EU and standards for green construction in China are projected to bode well for market growth in near future.

Plus, governments are offering incentives and rebates on replacement of traditional lamps with LED products, thus improving adoption of LED products worldwide. Smart illuminations are also anticipated to offer lucrative opportunities for application in industrial and commercial areas, as they have the capability to adjust light using control zones. Smart city schemes have become predominant in United States and several European nations with rising focus on strategies to lessen peak power demand and overall consumption of energy.

Design insights

Based on design type, the LED lighting market has been bifurcated into lamps and luminaires. LED luminaires emerged as the largest segment in 2018. The market for LED luminaires is predominantly driven by new installations. It includes lights used in high bays, downlights, track lights, troffers and suspended pendants for various applications.

The LED lamps is anticipated to expand at a high CAGR over the forecast period, owing to increasing adoption in developing countries. These lamps have various advantages over incandescent ones, including robustness, energy efficiency and good temporal stability. Moreover, they are available in various designs and applications such as T-Lamps, reflectors, A-Lamps and MR-16 lamps. In European countries, price of LED lamps is anticipated to compete with compact florescent lamps by 2018, which shall further speed up the shift from CFLs to LEDs. In addition, accentuated regulation roadmaps to phase out incompetent lightbulbs shall contribute to demand for LED lamps in commercial applications.

End-use insights

The commercial segment emerged as one of the top-grossing LED lighting segment in 2018. The demand for LED troffers and downlights is driving growth.

Application insights

The indoor lighting segment was valued at over $31.7 billion in 2018, and is expected to witness stable growth by 2025. And, the commercial sub-segment accounted for the largest market share in 2018. Usage of LED lights in offices, retail stores and more continue to rise significantly over the past few years.

Outdoor applications, including campuses, industrial, warehouses and public places such as signage, continue to boost demand. Government initiatives such as LightSavers program by The Climate Group, UK, are expected to trigger the substitution of traditional lighting solutions. Rising demand for high-resolution 10 mm signs, which are exemplary for high-volume traffic zones, and customizable content are anticipated to revolutionize the outdoor display industry over the coming years.

Architectural illumination emerged as the largest outdoor application segment. This segment has been an early adopter of LED lighting, and is widely used in various applications such as exterior commercial wall lights, ground recessed lights, lamp posts and architectural exterior floodlights.

Regional insights

Asia Pacific accounts for the largest market share of 41.3% in 2018, and is likely to continue the dominance in terms of both usage and manufacturing over the forecast period. Taiwan, Japan and China are the key contributors to regional growth, owing to initiatives undertaken by the respective governments for embracing LEDs coupled with existence of a large number of market players.

The debt crisis in Europe adversely impacted LED demand since their production requires vast capital investments. In recent times, Europe and North America markets have witnessed a boom owing to government support and growing usage of ultra-modern lighting in several industries. Furthermore, from the Chinese supplier’s side, European manufacturers are getting priority over U.S. manufacturers owing to increasing trade-war between United States and China, which led to sanction of tariffs that caused increase in import duties and eventually overall product price.

Strong dollar policy is likely to help the United States become a major growth driver for overall demand for LED illumination. The country has also been a strong advocate of LED lighting. In recent years, the United States has announced new policies and guidelines regarding the use of LED technology, invested in R&D of energy-efficient lighting solutions, expanded use in commercial and industrial applications and participated in public-private partnerships to boost local markets.