Driven by superior features and falling costs, the market for LED luminaires, or optimized permanent light fixtures, will grow more than 12-fold over the next decade – at a compound annual growth rate (CAGR) of 25% from $2bn currently to $25bn in 2023, according to Lux Research.
The market research firm used historical trends as well as projected average price reductions to build a model that calculates the adoption rate of LEDs within each end-market application – office, industrial and street lighting. They found that recessed modular will emerge as the largest LED luminaire market, growing from $1.5bn in 2013 to $14.5bn in 2023 by replacing incumbents 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,” says Lux Research associate Christopher Hwang, lead author of the report ‘Casting the Light: Illuminating the Opportunities in 2023's LED Luminaire Market’ (part of the Lux Research Energy Electronics Intelligence service). “This trend, in turn, influences the rate of adoption of emerging technologies, such as alternating current (AC) LEDs and high-CRI [color rendering index] LEDs in recessed modular, high-bay and roadway luminaires,” he adds.
Lux Research analysts examined the LED landscape in order to identify the largest opportunities within the luminaire market for investors, technology developers and component suppliers. Their findings include the following:
Efficiencies will drive down LED package costs. LED package costs will fall over 80% to less than $4/klm due to improved efficiency, increased manufacturing yields and utilization. As a result, the bill of materials (BOM) of a standard 3500 lumen recessed modular luminaire will fall 35%, from $85 in 2013 to $55 in 2023. High-CRI LED will remain a niche product. AC LED-based luminaires will become cost competitive by 2018, but will provide a technology advantage only in low-power applications, such as recessed modular luminaires. In contrast, high-CRI luminaires will remain a niche product, with a 9% cost premium by 2023, finding adoption in high-occupancy applications. Optics market represents a huge opportunity. The LED package market will be dwarfed by opportunities in optics and drivers. The secondary optics market will be the biggest growth opportunity in components, growing to $6.9bn in 2023, while the drivers market will reach $4.9bn.
