As the LED lighting market grows beyond single color and color-changing applications into general illumination applications such as residential, commercial and off-grid applications, and ultimately into outdoor area applications, it is forecast to exceed $5 billion in 2012, corresponding to a compound annual growth rate of 28% from 2008 to 2012, according to a recent report.

The report notes this will be only the beginning for the ultimate replacement of conventional light sources, including high-efficiency fluorescent and HID fixtures. However, many challenges face the LED industry to accomplish that goals. The report offers a detailed assessment of the market drivers and challenges faced by the LED lighting fixture industry in penetrating the general illumination market. It provides application analyses and forecasts for nine lighting market segments through 2012.

Through 2007, LED lighting applications included niche markets such as exit signs, architectural lighting, accent and decorative lighting, and entertainment lighting, many of which used red, green, and blue LEDs. However, white LED fixtures have begun to capture a strong market position in selected applications such as consumer portable lighting and solar landscape lighting, and more recently have begun to be used on a limited basis in applications such as retail display lighting, commercial and industrial lighting, and outdoor area lighting.

In 2008, white LED fixtures accounted for just over 50% of the total LED lighting fixture market. The penetration of white LED lighting fixtures into general illumination applications will accelerate when such fixtures offer quantifiable energy and cost savings relative to the use of conventional light sources.

In recent years, LED technology has made impressive performance gains, which in turn have improved the efficacy of LED lighting fixtures. In the forecast period 2008-2012, white LED fixtures will make gains in market share as the best commercially available high-performance white LEDs move beyond luminous efficacies of 100 l/W.

Further improvements in designing fixtures that can optimize LED operation are expected to drive the growth in LED lighting fixture market. Both recessionary pressures and mass manufacturing will further reduce the cost.