The worldwide lighting control system market, like nearly all other markets, has suffered a significant decline since the onset of the global recession late in 2008. Most suppliers of lighting control systems have reported a 15-20% drop in revenues in 2009. In the first half of 2010, the market continued its decline, albeit at a slower pace. Currently, the downward trend in the lighting controls market is expected to continue throughout the rest of 2010.
The emergence of energy efficiency as a paramount concern for governments, consumers, and businesses alike will drive market performance in the near future and beyond. Decision makers have opened their eyes to the potential savings that can be realized by implementing an energy reduction strategy. “The commoditization of lighting components and the sophisticated data analysis and management service requirements of many customers are two factors that have induced many lighting control suppliers to view powerful, easy-to-use software and a robust global service network as quintessential to future growth,” according to ARC Research Analyst Joseph Gillespie, the principal author of ARC’s Lighting Control Systems Worldwide Outlook.
Increased Focus on Building Lifecycle Costs
One aspect of building systems that was not always considered in the past is that energy efficiency, lower environmental impact, and improved employee productivity all add up to a lower total cost of ownership and more attractive bottom line. However, this oversight is quickly dissipating and as building owners and engineers plan new projects or prepare for renovations, they are considering more than just the cost of buying, installing, and commissioning individual elements. Intelligent control systems can monitor and optimize energy consumption, quickly send out alarms and notifications that can prevent downtime, provide reports of systems that may be in override mode, increase comfort in employee workspaces, and record historical data to monitor trends in energy consumption. Systems that are geared towards lowering the total cost of ownership over the entire lifecycle of the building and have the ability to tie this information into the enterprise level will experience the strongest growth over the forecast period.
Wireless Gains Momentum
Adoption of wireless devices for use in lighting control systems has gained traction. The labor costs are lower than for running cable in new and existing buildings, wireless devices can be used where traditional cable methods would be impossible or prohibitively expensive and time consuming, and they are much more flexible when the building configuration changes. The technology has also matured in terms of ease of installation, functionality, and reliability, and the cost continues to decrease.
Wireless by itself does not provide any value. But when used to connect low cost solutions that can reduce energy usage or alert workforce of potential equipment failures, wireless-enabled solutions can result in fast ROI, making them very appropriate in today’s challenging environment.
North American Market Will Be Driven by Stimulus and Retrofit Projects
There is increasing local and national focus on drafting legislation that addresses building energy usage. There have been several major pieces of legislation in the US within the past five years that provide framework and financial incentives via increased tax deductions, loans, and grants to increase energy efficiency in buildings. These include The US Energy Policy Act of 2005, The American Clean Energy and Security Act of 2009, the Waxman-Markey climate bill, The American Recovery and Reinvestment Act of 2009 (ARRA), and others.
As much as 75% of the opportunities in the North American lighting controls market will come from existing buildings that need to be updated or retrofitted. This trend will accelerate in the next few years as government-funded stimulus money is used to increase the energy efficiency of existing buildings and help reduce the growing threat of a collapse in the US commercial real estate market. The ARRA allocates $6.3 billion to state and local governments to make investments in buildings to increase energy efficiency and $4.5 billion for federal buildings to increase their energy efficiency.
By providing a non-invasive, less costly, and less time-consuming solution, suppliers will be able to leverage the boom in the retrofit sector of the lighting controls market.