New application will drive the transformation of horticultural lighting industry
At present, the growth power of horticultural lighting market mainly comes from greenhouse application. In greenhouses, artificial lighting is used to compensate for changes in natural light to increase crop yields. For these applications, traditional light sources such as fluorescent lamps and high pressure sodium lamps (HPS) are currently the most mainstream solution. However, the development of LED technology in recent years enables it to gradually enter the garden lighting market, to seize market share. The main advantage of LED technology is that compared with the existing technology lower power consumption, can save a lot of energy costs. Furthermore, the LED lighting system is less calorific and can be used to illuminate the crop-intensive areas, installing LEDs in the vicinity of lower-level crops with less light on the surface crops, improving output consistency and increasing crop yields.
Greenhouse applications are also only a small part of the LED horticultural lighting market, and new applications pushed by city farmers will boost the market's rapid growth in the medium and long term. Today, most of the arable land is far from the populous metropolis. As consumers get to know where and how their food is grown, farmers find it increasingly difficult to meet urban growth. Crops such as crops, fruits and vegetables in urban farms can be used in a certain closed environment without daylight (using artificial lighting), with multi-layer cropping (yield maximization), or as an effective solution to meet these needs and challenges.
In the short term, these new indoor horticultural applications (and their associated industries) have mostly sprung up in high-value-added crops such as medicinal plants. However, urban farms will not only be limited to these high-end products, in fact, there are already many cities/vertical farms in various parts of the world, and common vegetables such as carrots, lettuce and basil are being grown.
Gardening Lighting Applications
Market opportunities for horticultural lighting
The 2016 horticultural lighting market (System-level) was $3.1 billion and was expected to grow to $3.8 billion in 2017. The current market is mainly based on greenhouse applications (2017 92%) and existing lighting technology (2017 accounted for 79%) drive, however, with the gradual replacement of LED technology and the emergence of new applications will be at the same time at the system level and led device level, further improve the size and attractiveness of horticultural lighting market.
In this case, the horticultural lighting market is expected to grow to close to $8.6 billion trillion by 2022 (a CAGR of 17.8% per cent during the period), which is, of course, only the starting point for market outbreaks. Indoor/Vertical Farms will continue to grow rapidly during the 2022-2027-year period, driving the overall market scale to more than $17 billion by 2027.
2017, the horticultural lighting led device-level market is estimated to be around $100 million, up to 2022 to 400 million U.S. dollars (2027 up to $700 million).
2017 vs. 2022 vs. 2027 horticultural lighting Market revenue forecast
LED technology: Market spoiler in horticultural lighting industry
Global lighting market competition is increasingly fierce, horticultural lighting industry or will be LED lighting industry new opportunities, the use of LED technology to develop high value-added products to obtain greater profit margins. Of course, old-fashioned LEDs still face competition from new recruits, mostly start-ups and small and medium-sized businesses, who are trying to snatch their market share in a market full of growth opportunities.
Until the fourth quarter of 2017, the LED horticultural lighting industry was still small, with less than 50 manufacturers offering LED lighting systems specifically for the market.
Focusing on the future, the development of horticultural lighting industry is closely related to market dynamics. In fact, the main manufacturers of the marketing and communication focus on two major applications:
1, the cultivation of medical crops, currently the main market driving force;
2, vegetable cultivation, the growing "low-end/volume of large-scale products."
Some old-fashioned lighting systems vendors may not be involved in the first app (at least not publicly) to protect the brand image. This creates opportunities for many new vendors to quickly gain revenue and improve expertise and experience in the horticultural lighting market.
At the device level, most led manufacturers tend to adopt a "technology-driven strategy" that utilizes their traditional led product lines, such as ultraviolet, visible and near-infrared LEDs, to quickly provide horticultural lighting solutions and related marketing tools such as proprietary data sheets. In the future, with an in-depth study of the impact of LED lighting on crop growth, these vendors will begin to provide solutions specifically for horticultural lighting (e.g., carefully modulated wavelengths, multiple wavelength integrated schemes, etc.).
At present, the missing link in the industrial chain is mainly in the module level, the 2017 horticultural lighting led industry has not appeared the real module-level supplier, so the market is still a new market, industry is very young, lack of 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 began positioning themselves as solution providers, providing not only lighting systems, but also global solutions for integrated sensors (humidity, oxygen content, etc.) and data management software. The goal of these smart lighting systems is to further increase the production of greenhouse and urban farms.