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The global LED lighting market size was valued at USD 50.91 billion in 2020 and is expected to witness a compound annual growth rate (CAGR) of 12.5% from 2021 to 2028. Stringent regulations to ban or limit the use of inefficient lighting technologies and government rebate and retrofit programs to encourage the deployment of LED lighting are contributing to the market growth. LED lighting is comparatively expensive; however, it offers better service life and high lumen power at less wattage compared to incandescent, CFL, and halogen light sources. Moreover, continuously declining prices of LED lamps and luminaires and the availability of smart lighting solutions, coupled with updated energy policies across the world, are expected to provide an impetus for the market growth over the forecast period.
LEDs are highly efficient, reliable, and offer a longer life span, which is anticipated to boost their application in both indoor and outdoor settings. These lights are cost-effective compared to incandescent lights, delivering around 50,000 hours of illumination with a small amount of energy consumed. Low cost of operation and reduced heat losses also make them a suitable replacement for incandescent lights. Technological advancements, shift from conventional to green lighting, and enhanced energy-efficiency standards have also spurred the product demand.
In addition, stringent regulatory policies regarding conventional lighting and energy consumption across the U.S., the European Union (EU), China, and Canada are anticipated to favor the product demand over the forecast period. Corresponding ratings and design standards categorizing energy efficiency, such as Comprehensive Assessment System for Built Environment Efficiency (CASBEE) in Japan, Building Research Establishment Environmental Assessment Method (BREEAM) in the EU, and standards for green construction in China, are projected to bode well for the light-emitting-diode lighting market growth. In the U.S., the products are required to meet multiple regulations, including Energy Star Program, United Nations Environment Programme (UNEP), and National Electric Code (NEC).
Governments offer incentives and rebates on the replacement of traditional lamps with LED products, and this is helping improve the adoption of LED products worldwide. Smart illuminations are also anticipated to offer lucrative opportunities for application in industrial and commercial areas. They can adjust light using control zones. Smart city schemes have become predominant in the U.S. and several European nations with the rising focus on strategies to reduce peak power demand and overall energy consumption.
Impact of Covid-19 Pandemic
In 2020, the Covid-19 pandemic disrupted the overall market growth. Major players, such as Acuity Brands Lighting and Signify Holdings, incurred revenue losses owing to a decline in demand, disruption in supply and distribution, and delay in completion of construction projects (that help create the demand for lighting). In addition, the temporary lockdown and partial ban on mobility led to a declined contribution to the market from the industrial and commercial sectors, such as retail, manufacturing, and hospitality.
China is the largest product exporter as well as manufacturer and has also gained prominence in terms of adoption across the country. However, it was the first country to be affected by Covid-19, which disrupted the supply of product components across the world and created the supply-demand gap. However, the availability of the Covid-19 vaccine and the decline in the rate of infections in 2021 are expected to redirect the market toward growth as businesses resume operations.
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