Energy Efficient LEDs Displace Conventional Technology and Costs Shrink Overall

By Danielle Stewart

Precision Paragon Lighting RetrofitImproving lighting efficiency is an investment in the future.  Yet costs have been prohibiting many people from becoming early adaptors of energy efficient commercial lighting such as LED lighting. This is finally starting to change as we now have research that shows the costs of LED lighting is finally coming down, according to a recent report from Pike Research, LEDs will displace more than 52 percent of the global market for lamps in commercial buildings by 2021. Pike Research finds that the combination of declining prices for commercial LED lighting and the long lifetimes of LED lights will have the effect of shrinking the overall value of the market.

While revenues from LED lamps in the commercial sector will rise by 8.5 percent through 2021, to $2.7 billion, Pike Research finds, the overall market for commercial lighting will peak at $54 billion in 2012 before slowly shrinking and hitting about $30 billion in 2021.

“It would be hard to imagine in today’s world that technology will not beat out tradition,” says senior analyst Eric Bloom. “The commercial lighting industry will undergo a transformation over the next 10 years that will result in a significant drop in direct revenue from unit sales. Lamp and luminaire manufacturers and others in the value chain will have to rely on lighting controls and services to offset the revenue and profit lost in this process.”

Internationally, the trend toward replacing traditional lighting with energy efficient systems depends on economics of the region as well as if the infrastructure can adapt. While Europe and Asia are always thinking in terms of conservation and open to government programs to limit consumption, the United States is not as easy a sell. We have a highly fragmented population that must take into consideration state codes, regional electric rate variations, and populations of people who are new to the concept of conservation. America wasn’t thinking too much about conservation until our economy tanked and gas prices flew through the roof. After hitting Americans where it hurt the most – their wallets – all of a sudden conservation became a talking point around the dinner tables of average Americans.

Some parts of Africa, the Middle East, Latin America, and parts of Asia are working toward developing adequate infrastructure and are lagging behind in commercial lighting efficiency due to other higher priorities.

Pike Research’s report, “Energy Efficient Lighting for Commercial Markets,” describes the key factors that are driving growth of energy efficient lighting around the world: trends in energy codes, rebate and subsidy programs, sustainability/green certifications, raw material supply issues, geopolitical influences in developing and developed nations, and more.  The report describes the influence of industry structure and the many technology issues involved in the decision to adopt newer lighting technologies.   An executive summary of the report is available for free download via the Pike links in this article.


Danielle Stewart is a lighting design consultant and a blogger for P-2, a leading energy efficient lighting manufacturer.

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