Navigant Research Blog

LEDs Experience Growth but Commercial Lighting Market Revenue Declines

— April 7, 2017

According to the US Energy Information Administration (EIA), lighting in the commercial sector (which includes commercial and institutional buildings) and public street and highway lighting consumed 11% of total commercial sector electricity in 2016. LEDs provide more efficient lighting alternatives to traditional lighting options–such as incandescent, fluorescent, halogen, and even compact fluorescent lamps in the commercial market. The increased efficiency, decreasing prices, and longer lifespan of LEDs have spurred their growth in the lighting market. Lighting is considered low hanging fruit for efficiency upgrades in commercial buildings, as these technologies are cheaper than other building upgrades focused on efficiency.

Decline of the Commercial Lighting Market

According to Navigant Research’s recent report, Market Data: Energy Efficient Lighting for Commercial Markets, global lamp revenue is expected to decline at a 0.8% compound annual growth rate (CAGR) between 2017 and 2026. The decline is modest due largely to the expected number of replacement lamps needed for burnouts during the forecast period. While total global market revenue is expected to decline, LED revenue is the only lighting technology revenue expected to experience growth during this time. The total global number of lamp shipments is expected to decline at a quicker pace than revenue due in large to part higher priced LEDs.

Lamp Revenue by Lamp Type, World Markets: 2017-2026

(Source: Navigant Research)

The Implications 

When we think of a thriving market, we think of an ever expanding market where there is room for all interested parties to get a piece of the pie. However, due to LEDs’ increased efficacy, long lifespan, and continued market penetration, the overall lighting market is declining. This means there is an oversaturation of lighting manufacturers that will experience revenue declines.

The declining market is experiencing fierce competition. Smaller companies are suffering because they have less resources and might not be equipped to compete against the largest lighting incumbents. In order to stay competitive, lighting companies must shift how they generate revenue. Today, lighting companies are finding alternative ways to generate revenue that are changing the lighting industry. Some companies have been successful with new technologies, such as visible light communications for indoor positioning, some are expanding their lighting controls offerings, and others are experimenting with new business models, such as lighting as a service. Lighting companies will need to define their offerings and demonstrate their competitive edge to solidify their place in the changing lighting landscape.


LED Street Lights Experience Continued Growth

— November 10, 2016

The declining costs of LEDs have made the technology a more economical choice for cities and municipalities interested in upgrading street lighting. These reduced costs, coupled with the longer lifespan and higher efficiencies of LEDs over incandescent, high-pressure sodium (HPS), metal halide, and compact fluorescents, have ensured a strong LED presence in the future of street and outdoor lighting.

Recent LED Street Lighting Projects

Long Beach, California recently announced the completion of the first phase of its LED street light retrofit project. Phase one included replacing roughly 1,750 HPS street lights with LED versions. This first phase was funded through a $659,000 Port of Long Beach Community Mitigation Grant. The second phase of the project will replace about 24,000 HPS street lights with a cost of roughly $6.1 million, which will be offset within 4 years by the energy savings and rebates offered by Southern California Edison, which total $3.2 million. The new LED street lights are expected to last 24 years when operated 12 hours per day, and the total lifetime savings for this project are expected to be approximately $15.1 million.

Further north, West Kelowna, Canada will be converting 1,750 HPS street lights to LEDs. Initially, the city will replace 193 street lights with LEDs during a pilot project, costing an estimated C$60,000 ($44,746), including a C$10,000 ($7,457) grant from electric service company BC Hydro. The LEDs from the pilot project alone are expected to save the city C$4,500 ($3,361) over a 1-year period. West Kelowna has estimated that the full retrofit project will save C$13 million ($9.7 million) over a 15-year period once the installation is complete. San Francisco, California also recently announced it will install LED streetlights to decrease maintenance costs and improve the safety of city residents. It plans to install about 18,000 LED lights within a 14-month period.

The Future of LED Street Lights

Long Beach, West Kelowna, and San Francisco are only a few of the numerous cities transitioning to LED street lights. According to Navigant Research’s recent report, Outdoor Lighting Systems, global shipments of outdoor lighting luminaires are expected to grow from 24.1 million units in 2016 to 30.3 million units in 2025. These figures include outdoor lighting for street lighting, including highways and roadways, city parks and public areas, sports parks, commercial site lighting, parking lots, and university and college campuses. LED luminaires currently lead the market for outdoor lighting, accounting for an estimated 67.9% of unit shipments in 2016—by 2025, that share is expected to grow to 93.8%. Whether for increased energy savings, reduced maintenance, improved safety, or other motivating factors, cities are poised to continue to transition to LED street lights.


The Human Benefit Potential of LED Lighting

— July 1, 2016

LEDsHumans are visual creatures. Accordingly, the type of light we are exposed to can affect human behavior. Unfortunately, though, the extent to which light affects the brain is not well-known. Indeed, we understand very little about the brain overall, but the extent to which light affects the brain has until recently been largely unstudied. The emergence of LED lighting has enabled scientists to design experiments to ascertain what links exist between light and behavior. LEDs have immense controllability; they can be turned on and off rapidly (even faster than the human eye can perceive) and their color and brightness can be easily tuned. As scientific studies establish the myriad connection between light and behavior, lighting is expected to become an increasingly important part of business strategy, and not just the purview of a facilities manager.

Do You Want Fries With That?

A recent study published in the Journal of Marketing Research quantified the impact that lighting in restaurants has on what and how people eat. The researchers found that brightly lit rooms prompted diners to be more alert, increasing the likelihood of ordering healthy foods by 16%-24% over orders in dimly lit rooms. The study attributed the difference to alertness through comparison of results to follow-up studies that increased diners’ alertness through the use of a caffeine placebo or by prompting diners to be alert.

The human responses to lighting are not limited to inside buildings, either. The American Medical Association issued guidelines for communities to select LED lighting options to minimize potential harmful effects. LEDs emit more blue light than conventional lighting. Though the blue light appears white to the naked eye, it can worsen nighttime glare and decrease visual acuity. Additionally, blue-rich light adversely suppresses melatonin and can potentially lead to reduced sleep times, dissatisfaction with sleep quality, excessive sleepiness, impaired daytime functioning, and obesity. The effects are not limited to humans—outdoor LED lighting can disorient some bird, insect, turtle, and fish species.

The Future Is Bright

Lighting is ubiquitous in the built environment, and as such, the potential to modify human behavior is immense. In the future LED utopia, it will be easier to wake up in the morning, eat healthily, be more productive at work, and be a better person. Beyond personal implications, lighting presents opportunities to businesses as well. Whether it is attracting top talent or increasing sales, many of the challenges businesses face may be addressed by lighting. As we better understand the impact of light on behavior, savvy businesses will be able to translate this effect into better performance.


Commercial Buildings and Printed Electronics: Staid No Longer

— June 17, 2016

modern square and skyscrapersThe staid modern commercial building is in a state of evolution. The change is both cerebral and physical—and occurring at a rapid pace. New sensors, analytics, and controls that improve efficiency, services, and occupant comfort and safety while making the facilities cheaper to operate are coming to market. Navigant Research expects the global building automation system (BAS) market to grow from $58 billion in revenue in 2013 to $91.9 billion in 2023. This relatively modest growth does not capture the additional value that new and advanced sensors and controls—enabled with new technologies such as printable and flexible electronics—will bring to commercial office space.

A Fusion

Printed electronics can be hailed as close to the pinnacle of the digital age, a fusion of mass production, computer design, and innovations in circuit board printing and microfabrication. The domain of commercial building applications, while well-established, has the potential to be a rich application for printed electronics. This is due to two main factors:

  • Building technology is rapidly adopting fully digital controls and energy efficient applications.
  • The flexible and extensible nature of printed electronics as a platform enables close to infinite customizability of the equipment and devices themselves.

The Role of Printed Electronics

A recent white paper, jointly published by the Canadian Printable Electronics Industry Association (CPEIA) and the Continental Automated Buildings Association (CABA), examines how printable and flexible electronics can play a role in evolving the function and operation of commercial buildings through new additive manufacturing technology. The paper focuses on the major components of BASs, in addition to lighting, HVAC, and fire & safety. It explores how printed electronics can change building operations and automation systems, enabling improved controls, sensors, and ultimately better conditions for those inside. This paper also examines the degree to which these technologies are ready for development and deployment using the technology readiness levels defined by NASA.

The white paper presents specific example applications where printed electronics can provide disruptive and compelling alternatives to some of the conventional technologies used in the intelligent buildings industry. For example, self-sensing transparent printed organic LEDs (OLEDs) could sense, at the fixture, how much light is needed, putting lighting control at the luminaire for optimal tailored lighting conditions. According to Navigant Research’s OLED Lighting for Residential and Commercial Buildings report, the North American OLED market is set to double in size in the next 10 years. At the same time, printed air quality sensors could provide a better indoor environment to building inhabitants, with cheap printed, embedded sensors being deployed in a rich network in a building.

While investment in these technologies is still needed, printed electronics have the potential to improve the performance of BASs and, in turn, increase the value of commercial space.


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