Boston, Mass. – The market for light-emitting diode (LED) luminaires will grow more than 12-fold over the next decade from $2 billion today to $25 billion in 2023, a compound annual growth rate (CAGR) of 25 percent, according to Lux Research. The two primary drivers behind the LED lighting growth rate include new performance features and falling costs, according to a new Lux report.
New product developments and new technologies have addressed many of the challenges faced by LED component manufacturers over the past few years, including size, luminous efficacy (lumens per watt), thermal management and even cost. Growth in the LED lighting market has been driven in part by the ability of LED component manufacturers to address the retrofit market by focusing on new developments that help lower cost, while still meeting performance requirements. These include new packaging and innovations that deliver better light extraction and increased conversion efficiency.
A good example is Cree's SC3 technology that focuses on performance and cost. The key driver behind the initial development two years ago was to double the lumens per dollar of any of its previous LEDs. The company's aim was to deliver the same performance but at a lower price point.
The report titled, “Casting the Light: Illuminating the Opportunities in 2023's LED Luminaire Market," finds that recessed modular will be the largest LED luminaire market segment, reaching $14.5 billion in 2023 from $1.5 billion in 2013. This growth is primarily driven by lighting replacements such as fluorescent.
“As LED packages rapidly fall in cost and improve in efficiency, the cost structure of LED luminaires will shift, and present opportunities in other components such as secondary optics and drivers,” said Christopher Hwang, Lux research associate and the lead author of the report, in a statement. “This trend, in turn, influences the rate of adoption of emerging technologies, such as alternating current (AC) LEDs and high-CRI LEDs in recessed modular, high-bay and roadway luminaires."
Some of the biggest opportunities for technology developers and component suppliers are in the recessed modular luminaire, optics, and LED driver markets.
LED package costs will fall more than 80 percent to less than $4/klm thanks to improved efficiency, increased manufacturing yields and utilization, according to Lux. As a result, the bill of materials (BOM) of a standard 3,500 lumen recessed modular luminaire will fall 35 percent, from $85 in 2013 to $55 in 2023.
In addition, the report reveals that AC LED-based luminaries will be cost competitive by 2018, but only in low-power applications such as the recessed modular luminaries. Lux analysts also forecast high-CRI LEDs will remain a niche product with a price premium of 9 percent by 2023.
The biggest areas of opportunities in the component sector are optics and LED drivers, which will dwarf the LED package market, said Lux. Analysts forecast the secondary optics market will be the biggest growth opportunity in components, reaching $6.9 billion in 2023, while the drivers market will reach $4.9 billion.