25 Sep 2018
Horticultural LED Lighting Market, Industry and Technology Trends
The horticultural lighting market’s current boom is driven mostly by greenhouse applications, for which artificial lighting is used to compensate for natural light variations and increase production yield. For these applications, traditional light sources like fluorescent and high-pressure sodium (HPS) lamps are currently the most popular solutions. However, LED technology is catching up and recent developments have allowed the technology to enter the horticultural lighting market.
But greenhouse applications represent only the tip of the iceberg in this business, and new applications, mainly driven by urban farming, are likely to make the horticultural lighting market boom in the mid/long-term. Nowadays, arable land is usually far from big cities and metropolises with millions of people. And as consumers become more conscious of how and where their food is produced, farmers are finding it more difficult to keep up with urban growth. City farming represents a potential solution to handle these needs and challenges by allowing for the growth of plants, fruits, and vegetables in a confined environment, on multiple layers (to maximize production), and without sunlight (i.e. using only artificial light).
In this context, we estimate the 2017 horticultural lighting market (i.e. system level) to represent a business of ~$3.8B. And it should grow to more than $8B in 2022, driven by the transition to LED technology and the emergence of new applications. But this is only a starting point. Indeed, indoor/vertical farms are poised to boom from 2022 – 2027, propelling the total market to more than $17B in 2027.
Such trend is likely to have an impact on the industry as LED technology act as a game changer. In a global lighting market that is becoming increasingly competitive, horticultural lighting is seen by the LED lighting industry as a new opportunity for which to develop high added-value products and reap greater margin levels. However, established LED players also face competition from new entrants (mostly start-ups and SMEs) desiring their own share of this growing opportunity.
As of Q4/2017, the LED horticultural lighting industry is still small, with less than 50 players identified as offering dedicated LED-based systems. The industry is highly concentrated in North America (50%), the result of medicinal cannabis’s legalization. Looking ahead, industry evolution will strongly depend on market dynamics. Indeed, industrial players’ marketing and communications are currently focused on two main applications:
• Medicinal plants (mostly cannabis) production, which is today the main market driver
• Vegetable production, which is developing with a “low-end / high-volume products” focus
Part of the established lighting system industry may never proceed (at least visibly) with the first application (medicinal plants), in order to preserve brand reputation. Such a situation is likely to benefit new entrants that will generate revenue swiftly and rapidly increase their horticultural lighting market expertise.
In this presentation, we will present an overview of horticultural LED lighting landscape, highlighting main applications and market opportunities, drivers, as well as technology and industrial trends.