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TrendForce: Global LED Outdoor Lighting Market Enters Maturation Phase

26 February 2014 LED Terri Wang

Affected by the global economic downturn, there has been rising number of city bankruptcies. In turn, city management are increasingly valuing sustainable development. Outdoor lighting construction and maintenance costs have gradually increased over the years in city public lighting expenditures. City managers are creating suitable living environment that uses low investment and maintenance costs and can be met on a limited budget.

As LED streetlight solutions mature, city governments have proven from early pilot projects that LED luminaires are energy efficient, environmental friendly and have long lifetime. LED streetlight prices have also dropped to prices close to conventional luminaires. From manufacturers’ exponential shipment growth statistics, and concentrated release of city government bid contracts, LEDinside believes LED outdoor lighting has moved from the development phase to a mature market. In the next few years LED outdoor lighting shipment volume and market size growth will soar on a YoY basis.

North American Market

By the end of 2013, more than 600 U.S. cities have planned to install LED streetlights. For instance, there will be 142,000 LED streetlights installed in Los Angeles, 41,000 in Seattle, 40,000 in Las Vegas, and 32,000 in Boston. New York is also planning to replace 250,000 streetlights with LEDs by 2017, which is to be followed by the replacement of decorative lights in urban commercial areas. In addition, most areas in Canada are also actively implementing LED streetlight installation programs or incentives.

The North American outdoor lighting market is maturing as more manufacturers enter the market. Manufacturers’ competitive strategies mainly include providing high cost performance products, paying more attention to environmental factors, and satisfying professionally high-end demands. For example, Cree launched 100W  LED streetlight priced at US$ 99 to meet low-budget council’s installation demands. In addition, consumer demands are switching from halogen and incandescent lamps to LED lights that are more energy-saving and have long-lifetimes. Top manufacturers such as Osram and GE have started to reduce their traditional lighting business and focus more on LED products and solutions.

European Market

The European street light market has always been a business-to-government (B2G) oligopoly market with few products and fairly stable supply chains. Typically, local brands or manufacturers are dominant in the market with good government relations and considerable scale. European consumers are less sensitive to LED street light prices than consumers from other regions, but have high quality demands.

Japanese Market

The Japanese government 2014 budget of 95.88 trillion Japanese yen (US $920 billion) announced on Dec. 22, 2013 set a new record high. The budget is mainly for increasing financial support for social welfare, national defense, and public buildings. To reach their target of halving the current financial deficient of around 50 trillion Japanese yen, the Japanese government increased taxes and cut back on bond issuance. The government’s more long term goals incorporates lighting projects and infrastructures related to the 2020 Olympics. Some related construction has already  kicked off. The government plans to introduce LED lighting and OLED lighting into these projects in order to attract international attention.

Chinese Market

There has been high consistency in Chinese new streetlight installation volume and government fiscal expansion cycle. In 2009, Chinese government proposed a RMB 4 trillion economic stimulus plan. As a result, the annual number of newly installed street lights reached 1.84 million units (YOY +12.17%). Since 2012, China has tightened monetary spending and strictly managed public expenditure budgets. New street light installations in Chinese cities are forecasted to decline. The future growth momentum will mainly come from LED street lights replacement demands, especially the outdoor street light project supported by EMC business models.

Emerging Market

LED outdoor lighting installation and related policies are increasingly receiving attention in different emerging markets including India, Russia, Southeast Asia Region (Vietnam, Indonesia, Malaysia and Thailand), Latin America( Brazil, Mexico, Argentina and Columbia), and Australia. Russia has started phasing out 25W and above incandescent bulbss in 2014, while Malaysia has also implemented measures to phase out or ban incandescent bulbs and traditional lighting in all buildings by 2014. LED penetration rates are projected to increase significantly in Thailand and India in 2015, according to LEDinside. In addition, major cities in Australia, Argentina, Colombia and India have begun LED streetlight installations.

In general, North America, China, and Europe still have the highest demand for outdoor lighting. However, due to slashed budgets and high market penetration rates, growth rates have eased. The Latin America market has been developed much later, while in Brazil the 2016 Olympics and 2014 World Cup will lead to soaring outdoor lighting market growth.

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