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Analysis of the LED Lighting Market in the GCC

  • October 2013
  • 124 pages
  • Frost & Sullivan
Report ID: 1864405

Summary

Table of Contents

Energy Efficient and Cost Effective Technology Resolves Energy Issues for a Greener Environment

There has been a swift flow of infrastructure investments in the Middle East region, especially in Gulf Cooperation Council (GCC) countries such as KSA and Qatar due to rising population and the upcoming FIFA World Cup in 2022. Government legislations mandating the usage of energy efficient lighting in this region and growing environmental concern have resulted in wide awareness about green products. People's inclination toward focusing on long term benefits is boosting the demand for LED lighting solutions, where technology upgradation goes hand-in-hand with cost savings in the long run despite the higher initial cost compared to conventional technologies.

Executive Summary—Key Insights

• Lighting Trend: Growing infrastructure investments in the Gulf Cooperation Council (GCC) region are steadily driving the energy efficient and intelligent lighting market, as lighting accounts for X% of the total energy consumption in the Middle East which is a higher electrical usage compared to the rest-of-the-world.
• Energy Saving: Energy issues in the region can be easily resolved by abandoning the use of conventional lighting (such as incandescent and halogen) and adopting energy-saving solutions such as light emitting diodes (LED), resulting in saving approximately X% of the energy consumed in lighting. This accounts for $X to $X million.
• Go-green Idea: As GCC countries are environment-conscious and highly focused on carbon capture, approximately X megatonnes of carbon dioxide emission can be controlled, annually, by switching to LED lighting solutions. Therefore, governments in some GCC countries are encouraging the utilization of LED lighting for streetlights and municipal buildings to achieve sustainable development through greener technology.
• Market Reach: Currently, LED lighting accounts for only about X% of the total lighting in the GCC region and is expected to be a high-demand lighting technology across the region by 2017, accounting for about X% of the total lighting market.

Executive Summary—Market Trends and Key Factors

• Energy Efficiency Standard: GCC countries are taking the lead in the Middle East region by showing interest in bringing in global energy efficiency standards and developing LED lighting technology.
• Product Innovation: Ongoing research and development is expected to constantly upgrade the quality and efficiency of LED lamps, increasing their adoptability.
• Import Regulations: The GCC Customs Union, imposes a X% tariff on the cost, insurance, and freight (CIF) invoice value of most products used for general illumination.
• Challenging Factors: LED lighting installations require a more complicated design, spanning optical, thermal, and electronics domains. LED lamps are expensive compared to conventional lamps.
• Increasing Applications: Here, LED technology is compared with other conventional technologies which do not offer wide range of product selection due to limited application. Traffic signal is the recent application gaining importance in the region.
• Lack of Electricity: According to the International Energy Agency (IEA), globally, one in five i.e. aroundXbillion people do no have access to electricity for lighting purposes. This problem should be addressed for further development of the LED market.

CEO’s Perspective

1. Good quality and a good brand image in the market will help increase the customer base and increase loyalty for LED lighting products.
2. LED products need to be priced appropriately and must be of superior technology to be able to compete with other lighting products in the market.
3. Promotion of LED products among all major electrical and lighting consultants in new locations will help in geographical expansion.
4. Easy availability and quick delivery time, a best practice, will help in retaining customers and developing new ones.
5. Industry acceptance, track record, and client base will create confidence among suppliers to avail more credit facilities in order to handle huge projects and meet the growing demand for products.

Market Overview—Definitions

LED Technology
Light emitting diode (LED): An LED is a semi-conductor diode which emits narrow spectrum light through the principle of electro luminescence. The wave length of light and hence, the colour, depends on the materials used in the semi-conductor diode.

LED Light
An LED light refers to the composite structure of the luminaries and the diode itself, which generates light.

LED Lighting System
An LED lighting system is a customized panel or strip of LEDs hooked up to a separate lighting system altogether.

LED Lamps
LED replacement lamps are clusters of white or mixed colour LEDs, that can be screwed on to a conventional light fixture.

LED Fixtures or Luminaries
LED fixtures or luminaries are the holding attachment devices of LED lamps, which are then fixed to the final destination in a building.

LED Drivers
An LED driver is a self-contained power supply with outputs matching the electrical characteristics of an LED or an array of LEDs.

Market Definitions—End-user Scope of the Study

The following are the end users (and their applications) of LED lighting that have been considered in this study
• Residential—Includes villas and apartments that require focused lightings.
• Commercial—Includes office buildings, commercial complexes and shopping malls (retail) where LEDs are used for display, ambience, and general illumination.
• Industrial—Includes manufacturing plants and warehouses requiring general illumination.
• Hospitality—Includes hotels, restaurants and resorts with general illumination needs.
• Healthcare—Includes hospitals and laboratory with general illumination requirements.
• Others—Includes public spots, government buildings, airports, educational institutions which require street lights.

Market Definitions—Terms and Acronyms Used

Definition of Terms

Pricing:
Average prices are those set by the manufacturer (factory gate prices) and not those set by wholesalers, distributors or any other third-party. Market sizing is based on this and excludes costs associated with all components other than the LED lamp, luminaries and drivers.

Market sizing:
Sum total of regional LED markets (Lamps, Fixtures, LED drivers) yields the total market size for LED lighting in GCC.

Regions Covered:
This study will cover only six GCC countries of Middle East Region:
• The United Arab Emirates
• The Kingdom of Saudi Arabia
• Qatar
• Oman
• Kuwait
• Bahrain

Exchange Rate:
Conversion rate considered
• $1 = X AED
• $1 =X SAR
• $1 = X KWD
• $1 = X BHD
• $1 = XQAR
• $1 = X OMR (Average: 1/1/2012 to 31/12/2012).

List of Acronyms
• LED—Light Emiting Diode
• GCC—Gulf Cooperation Council
• UAE—United Arab Emirates
• KSA—The Kingdom of Saudi Arabia
• $—United States Dollar
• AED—United Arab Emirates Dirham
• SAR—Saudi Arabian Riyal
• KWD—Kuwaiti Dinar
• BHD—Bahraini Dinar
• QAR—Qatari Riyal
• OMR—Omani Riyal
• CFL—Compact Fluorescent Lamp
• TFL—Tubular Florescent Lamp

Market Overview—Evolution of LED

LED technology has been around for almost eight decades now, but it is only over the last X–X years that it has made considerable progress in the field of area lighting. LEDs were used in indicators and display screens earlier. The timeline below traces the developments in LED lighting technologies.

1907: Electroluminescence as a phenomenon was discovered
1927: Reported creation of the first LED
1955: Reported on infrared emission from gallium arsenide (GaAs) and other semiconductor alloys
1961: Received the patent for infrared LED
1962: The first practical visible-spectrum (red) LED developed
1972: Invented the first yellow LED and improved the brightness of red and red-orange LEDs
1976: First high-brightness, high-efficiency LEDs for optical fibre telecommunications
1994: The first high-brightness blue LED was demonstrated
1995: Investigated the efficiency and reliability of high-brightness LEDs and demonstrated a ‘transparent contact’ LED
2001-2002: Processes for growing gallium nitride (GaN) LEDs on silicon were successfully demonstrated
2012: Demonstrated high-power InGaN LEDs grown on silicon substrates commercially

Key Questions This Study Will Answer

What will be the market trend for LED products in GCC?
Which end-user segments will have a major scope in the region?
What are the factors impacting growth of the market?
Is the market growing, how long will it continue to grow and at what rate?
Are the LED products offered today meeting customer needs or is there additional development needed?

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