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New LED applications will revolutionize the horticultural lighting industry
From：2019.10.09
The latest analysis of LED gardening lighting market, industry and technology development trend
New LED applications will revolutionize the horticultural lighting industry
Currently, the growth of the horticultural lighting market is mainly driven by greenhouse applications. In greenhouses, artificial lighting is used to compensate for changes in natural light to improve crop yields. For these applications, traditional light sources such as fluorescent lamp and high pressure sodium lamp (HPS) are the most mainstream solutions. However, recent developments in LED technology have allowed it to gradually enter the horticultural lighting market and gain market share. The main advantage of LED technology lies in the lower power consumption compared with the existing technology, which can save a lot of energy cost. Moreover, led-based lighting systems are less calorie-efficient and can be used to illuminate areas with dense crops. By installing LED lights near the bottom crops where the relative surface crops lack light, they can improve the consistency of output and increase the yield of crops.
Greenhouse applications are only a small part of the LED garden lighting market, and new applications, LED by urban farms, will drive rapid growth in the medium and long term. Today, arable land is mostly far from the populous metropolises. As consumers learn more about where and how their food is grown, farmers find it increasingly difficult to keep up with urban growth. Crops such as crops, fruits and vegetables from urban farms can be grown in multiple layers without sunlight (using artificial lighting) in certain enclosed environments or as an effective solution to these needs and challenges.
In the short term, most of these new indoor gardening applications (and related industries) are emerging from higher-value crops (such as plants used in medicine). However, urban farming will not be limited to these high-end products. In fact, there are already many urban/vertical farms growing common vegetables such as radishes, lettuce and basil in various regions of the world.
Market opportunity for LED garden lighting
The horticultural lighting market (system level) was $3.1 billion in 2016 and is expected to grow to $3.8 billion in 2017. The current market is primarily driven by greenhouse applications (92% in 2017) and existing lighting technologies (79% in 2017), but the gradual replacement of LED technologies and the rise of new applications will further increase the size and appeal of the horticultural lighting market at both the system and LED levels.
In this scenario, the horticultural lighting market is expected to grow to nearly $8.6 billion by 2022 (a compound annual growth rate of 17.8 percent over that period), and of course, that's just the beginning of the explosion. Indoor/vertical farms will continue to grow rapidly between 2022 and 2027, driving the overall market size to more than $17 billion by 2027.
The horticultural lighting LED segment market is expected to grow from about $100 million in 2017 to $400 million in 2022 (up from $700 million in 2027).
LED technology: a market spoiler for the horticultural lighting industry
With the increasingly fierce competition in the global lighting market, horticulture lighting industry may be a new opportunity for the LED lighting industry, and the application of LED technology to develop high value-added products to gain more profit space. Of course, established LED vendors still face competition from new entrants, mostly start-ups and small and medium-sized enterprises, who are trying to grab market share in a market full of growth opportunities.
As of the fourth quarter of 2017, the market for LED garden lighting was still small, with fewer than 50 vendors offering LED lighting systems specifically for this market.
Looking to the future, the development of horticulture lighting industry is closely related to market dynamics. In fact, the marketing and communication of major industrial manufacturers are mainly focused on two major applications:
1. Medical crop cultivation, currently the main market driving force;
2. Vegetable planting, a growing "low-end/volume large products".
Some established lighting vendors may not be involved in the first application (at least not publicly) to protect their brand image. This presents many new entrants with the opportunity to quickly generate revenue and enhance their expertise and experience in the horticultural lighting market.
At the device level, most LED manufacturers tend to adopt a "technology-driven strategy," utilizing their traditional LED product lines (such as uv, visible, and near-infrared leds) to quickly provide horticultural lighting solutions and related marketing tools (such as proprietary data sheets, etc.). In the future, as more research is conducted on the effects of LED lighting on crop growth, these manufacturers will begin to offer solutions specifically for horticultural lighting (such as well-modulated wavelength, multi-wavelength combination, etc.).
At present, the missing link in the industrial chain is mainly at the module level. In 2017, there was no real module level supplier in the horticulture lighting LED industry. Therefore, this market is still an emerging market, the industry is still very young, and it lacks relevant standards and regulations. In this context, each lighting system manufacturer is designing its own LED lighting module with a specific wavelength combination/scheme.
Some vendors are beginning to position themselves as solution providers, offering not only lighting systems, but global solutions that integrate sensors (humidity, oxygen content, etc.) and data management software. The goal of these smart lighting systems is to further increase the output of greenhouses and urban farms.
