LED SERVICES MARKET ANALYSIS

Market Insight- Global LED Services Market

Market Overview

Light-emitting diode (LED) is a semiconductor source of light that emits light when current flows through it. LEDs are more efficient, brighter, more cost-effective, and more lasting than conventional incandescent bulbs. These lights are cost-effective that delivers around 50,000 hours of illumination with a very small amount of energy consumption. As a result of these advantages, LEDs are adopted in various residential, business, commercial, industrial, and public settings. Many developed, as well as emerging economies, are encouraging the use of LED lighting fixtures that can save energy as well as costs. LED Services Market includes lighting services such as installation/design/maintenance/others provided by commercial electrical/lighting contractors/integrated solution providers.

The global LED services market was valued US$ 11.8Mn in 2019 and expected to grow at CAGR of 11.1% over the forecasted period 2019-27.

Market Dynamics- Drivers

1. Increasing installation of LED lighting due to longer lifespan is expected to drive growth of the global LED services market during the forecast period

The major reason behind rising installation of LED light bulbs is the longer lifespan of LED lighting. LEDs have a longer lifespan, nearly about 100,000 hours, as compared to incandescent bulb with 1000 hours and CFL with 8000 to 10,000 hours lifespan. LEDs can also reduce the labor cost and achieve lower maintenance work due to a longer operational life. Furthermore, LED lighting fixture is far more efficient than conventional incandescent bulbs. It has an efficiency of 80% to 90% as compared to conventional light bulbs with 20% efficiency. LED lights to use around 50% less energy than traditional incandescent and halogen options that are primarily employed for residential and commercial applications. Moreover, use of violet LEDs instead of blue with gallium nitride material offers longer life and greater efficiency. Thus, these factors are expected to drive growth of the market.

2. Long-term contracts offered by service provides is expected to propel the global LED services market growth over the forecast period

Earlier, LEDs were limited to the residential application and some parts of the commercial segment. However, growing concerns related to energy efficiency, quality of lighting, and stringent environmental policies have increased installations LED lightings. Currently, conventional LED lighting fixtures are replacing traditional lighting systems. Moreover, concepts such as smart cities, smart homes, and smart street lighting are creating a demand for LED services. Hence, these factors are expected to propel the global LED services market growth over the forecast period.

Europe region dominated the global LED services market in 2019, accounting for 35.2% share in terms of value, followed by North America and Asia Pacific, Middle East and Latin America respectively.

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Source: Coherent Market Insights

Market Dynamics- Restraints

1. High initial costs related to LED devices, installation, and services are expected to hamper the global LED services market growth over the forecast period

The major restricting factor for adoption of LED lightings is its relatively high initial installation costs as compared to substitute technologies such as CFL. This is due to the fact that LED performance majorly depends upon installation type and fixture. The fixtures need to be installed in such a way that minimum heat is generated by the LED.  Any harm to the LED chip by heat can lead to device failure. Therefore, adequate heat sinking is required to maintain longer life of the LED. Moreover, LED installation process in many applications may take a longer time and higher cost since the process includes site survey, designing, consulting, installation, and maintenance. Hence, these factors are expected to hamper the global LED services market growth over the forecast period.

2. Quality concerns and lack of awareness in emerging regions is expected to restrain growth of the global LED services market during the forecast period

Lack of awareness among populace combined with low quality of LED lightings, especially in emerging regions such as MEA and Asia Pacific is expected to restrict growth of the market. There is still a massive unawareness among consumers in India and China where they prefer incandescent bulbs and CFLs over LED lights. Moreover, there are major issues regarding low quality of LED lightings MEA region, which is hindering adoption of the same. Thus, these factors are expected to restrain growth of the global LED services market in the near future.

Market Opportunities

1. Advent of IoT-enabled LED in smart cities and smart homes can provide major growth opportunities

Many consumers are preferring LED lighting systems integrated with Wi-Fi, chips, and sensors. These lightings are being preferred in shopping malls, hospitals, offices, and malls. Such devices offer enhanced energy-savings and can monitor the environment in the surrounding with help of software to collect and analyze data. There is constant demand for IoT-enabled LED lighting in smart cities and smart homes. For instance, in 2016, The U.S. Department of Transportation invested US$ 165 million in smart-city solutions. The funds are aimed to ease traffic congestion and improve driver and pedestrian safety. Moreover, in September 2016, Panasonic announced that it is likely to play a key role in setting up the smart residential project ‘Future Living Berlin’ in the Adlersh, a district of Germany’s capital.

2. Increasing demand for LED lighting architectural applications can present lucrative business opportunities

The demand for LED lighting solutions has increased significantly in the recent past. This is owing to features such as RGB (red, green, blue) controllability, flexibility, and speed of color control. Previously, conventional lighting required high maintenance cost while RGB code colors are controlled by color film filters and also flexibility and speed of color control are limited. However, LED has overcome these drawbacks and can adapt to new applications. Thousands of LEDs are linked together and still can be controlled individually. This is a significant advantage over conventional lighting solutions. Furthermore, LED strips, outdoor wall fixtures, and LED bulbs are used to light architectural creations to create a uniform lighting, which looks impressive and people get attracted to the same.

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Source: Coherent Market Insights

Market Trends

1. North America Trends

Growing adoption of wireless lighting controls is a major trend in the market

End users in North America are increasingly adopting wireless lighting controls due to advantages offered by these lightings such as Energy-efficient lighting systems, reduced run-time, and flexibility. Companies such as GE lighting have gained benefits of optimized performance, improved cost control, etc. For instance, GE has developed ‘LightGrid’, an Outdoor Wireless Control System for consumers within the North America region.

2. Latin America Trends

Increasing demand for public lighting application

Demand for energy-efficient products and LED lighting has increased due to paradigm shift toward renewable energy. Various technology features of LED such as longer lifespan, energy-saving capacity, durability, flexibility are gaining the competitive advantage over other lighting products such as CFL and Incandescent lamps. The LEDs are witnessing significant demand in the region, owing to aforementioned advantages. Moreover, stringent government norms and regulatory policies toward energy conservation are driving growth of the regional market.

Regulations

Alabama’s Local Government Energy Loan Program offers zero-interest loans to public schools and universities for energy efficiency improvement projects that will pay back in utility savings. Upgrades eligible for funding include heating and cooling equipment, insulation improvements, water-saving efficiency measures, and energy-efficient lighting upgrades.

Competitive Section

Key players operating in the global LED services market are Thorlux Lighting, Bright Special Lighting S.A., Cree Inc., LEDVANCE GmbH, KKDC Co., Ltd., Philips Lighting Holding B.V., Global Light LLC, OPPLE Lighting Co., Ltd., Endo Lighting Corp., Ideal Industries, and Reggiani SPA.

Segment information:

In global LED services market, by application segment, the residential, sub-segment dominated the global market in 2019, accounting for 45.1% share in terms of value, followed by Business lighting and public lighting respectively.

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Source: Coherent Market Insights

Key Developments

1. Major companies in the market are focused product launches, in order to expand product portfolio. For instance, in May 2017, Philips Lighting Holding B.V. introduced first integrated, connected LED lighting system designed for recreational sports fields. The Philips PerfectPlay system enables recreational sports centers to reduce energy costs, simplify operations, and maximize revenue potential while providing better quality lighting for sports events.
2. In February 2017, Bright Special Lighting S.A. provided lighting solutions for the exhibit “Melpomene”, presented at the exhibition “The Muses Project” held at the house of Cyprus in Greece.