Indoor/vertical farms set to boom, LEDs leading the transition, says Yole

November 23, 2017 //By Julien Happich
Indoor/vertical farms set to boom, LEDs leading the transition, says Yole
The 2016 horticultural lighting market (i.e. system level) represented a business of about US$3.1 billion, representing approximately US$3.8 billion in 2017. But according to a recent report from market research firm Yole Développement, this market is set to grow rapidly at a 17.8% CAGR between 2016 and 2022, possibly reaching more than US$17 billion by 2027.

While Yole sees the current business mostly driven by greenhouse applications and incumbent technologies (92% and 79% in revenue, respectively) during 2017, the transition to LED technology and the emergence of new applications will expand the market’s size.
In its report "Horticultural LED Lighting: Market, Industry and Technology Trends" Yoles sees this market reaching nearly US$8.6 billion in 2022. 

Horticultural lighting market revenue ($B),
2017 vs. 2022 vs. 2017.
Source, Horticultural LED Lighting:
Market, Industry and Technology Trends,
Yole Développement. 

than US$17 billion in 2027”, comments Pierrick Boulay, Technology & Market Analyst at Yole.
At the LED device level, market opportunity represents almost US$100 million in 2017 and should grow to about US$400 million in 2022, eventually reaching US$ 700 million in ten years' time.

The LED lighting industry sees horticultural lighting as a new opportunity for which to develop high added-value products with greater margin levels. In Q4/2017, Yole identified less than 50 players as offering dedicated LED-based systems. The industry is highly concentrated in North America with a 50% market share (number of companies involved), the result of medicinal cannabis’s legalization.

“Looking ahead, industry evolution will strongly depend on market dynamics,” explains Joel Thomé, PISEO’s CEO. “Indeed, industrial players’ marketing and communications are currently focused on two main applications including medicinal plants (mostly cannabis) production, which is today the main market driver and vegetable production, which is developing with a “low-end / high-volume products” focus.”

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