In 2015, the UK LED lighting market was estimated to have grown by 38% in value terms, incorporating all finished, mains-operated LED lighting products, domestic and non-domestic used within construction and building. The LED lighting market is experiencing an explosion in growth as the new technology becomes more widely accepted in the mainstream lighting market, further encouraged by energy cost savings and CO2 concerns, driven by legislative changes, in turn resulting from environmental pressures. The market remains largely reliant on total system upgrades and new installation applications.
However, both replacement products and replacement LED lights which use existing light fixture are starting to take more share of the overall market. Non-domestic end users dominate, with over 90% of market value, and while the domestic LED sector accounted for a small share, it has experienced dramatic growth between 2013 and 2015. Infrastructure remains the leading sector within LED lighting with many councils, replacing and planning to replace, conventional street lighting with LED lighting in order to achieve energy cost savings. The leisure & entertainment and health & education sectors have been early adopters of LED lighting and will continue to be major end users in the near to medium term. Retail use is also growing.
The five largest suppliers in the LED lighting market we estimated to account for around 75% of the market in 2015, while the remainder of the market was fragmented and comprising many second and third tier specialist and smaller firms. However, there is currently a high level of corporate activity taking place in this market due to its recent rapid growth.
In 2015, the LED lighting market was characterised mainly by sales of LED luminaires, while replacement lamps and LED controls and accessories made up the remainder. The new use of this technology for lighting often requires installation of specific luminaires in order to achieve the full benefits. That said there has been significant development of replacement products for traditional bulbs / lamps, where the LED replacement product has been specifically designed to fit the original luminaire, thereby widening the scope for LED market growth. Product development has been rapid, as major suppliers of LED products are finding it hard to complete with cheaper commodity LEDs and are looking instead to add value, for example by integrating with new technologies, such as the Internet of Things (IoT).
“The average price of LED lighting products has fallen substantially during the last three years, driven by the growing volumes of sales, manufacturing techniques and increased competition” said Keith Taylor, Director of AMA Research. “In 2015, the global price of LED bulbs was estimated to have fallen by 30-40% - this will have an obvious impact within the office, commercial and industrial sectors which are looking to replace existing fluorescent lighting and seek the commercial benefits of doing so.”
High growth is forecast across all sectors with domestic use a particular growth area over the next few years. The lack of product standards in the market has led to some consumer reluctance to purchase LED lamps, but this barrier to growth should recede as these lower quality products are forced out of the market by a combination of EU legislation and LED price falls. LED lighting penetration into the domestic sector has also previously been hampered by the quality of the light produced by LED bulbs, but this will change as the latest generation of bulbs are producing warmer light which is more comparable with that of incandescent bulbs. Wider use of high value application-specific products in the non-domestic sector is also expected to support the market in the longer term, and it is likely that high power and super power LEDs will gain market share compared to mid-power LEDs. Overall, the market is expected to continue to continue to see double digit growth between 2016 and 2020.
The ‘LED Lighting Market Report – UK 2016-2020 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services within the construction and home improvement markets. The report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.