The LED replacement lamp market will grow 30% annually, in terms of units sold, between 2012 and 2016 according to new research published by analyst firm Strategies Unlimited.

A new report from Strategies Unlimited titled “LED replacement lamp market analysis and forecast” projects that the global LED retrofit lamp market will exceed $3.7 billion by 2016. This indicates major growth in solid-state lighting products intended for existing sockets. From a $2.2 billion market in 2011, the firm expects an annual 30% growth in the number of units sold.

According to the report, Japan consumed 24.7 million of the 39.9 million LED A-19 lamps sold globally in 2011. An analyst from Strategies Unlimited said that the Japanese Eco-point program was in part responsible for the high consumption, as well as growing environmental concerns and high prices in the compact-fluorescent lamps (CFLs) market.

The market for LED-based linear fluorescent replacements has also indicated a strong year, with 19.3 million units sold. However, the report indicates that over 60% of those sales came from China and Japan, compared to 18% of sales in the US and European Union combined. Currently, a major obstacle in linear lamp sales is documented lower light output for LED-replacements relative to typical fluorescent lamps. This means that typically linear LED-retrofit projects take place where customers are willing to accept reduced light output for the sake of savings. As market growth increases, this is expected to change as new products and higher efficiency designs become tested and approved for use.

Rising electricity rates and longer working hours in both commercial and industrial applications, such as in China, make energy efficiency a top concern. Consistent with predicted market growth, new products and innovations are greatly improving light output and sparking global change to eco-friendly, energy efficient LED lighting. LEDOracle has recently seen increased implementation of both linear and Edison base LED retrofitting projects in a variety of applications. Projects at Trump Palace NYC, The Garden City Hotel, and Aloft in Brooklyn all saw improved lighting quality and saved 50-90% in reduced energy consumption.

In terms of unit pricing, the firm forecasted a 14% annual decline in the average selling price of LED-based lamps. This helps spur growth as affordability is key in LED implementation, but can reduce total sales numbers and negatively impact profit margins for manufacturers. Concerning the current oversupply of LEDs, the firm noted that the excess is in backlighting LEDs, whose components are not ideal for general-illumination purposes. Although, some manufacturers, such as Ikea, are now producing low-cost, low-light output products.

LEDOracle believes this positive performance from the LED market will continue throughout the next decade both globally and in the US, with incentive and rebate programs from energy companies already available nationally. Lower prices and new technological innovations in light output and design will continue to push consumers and manufacturers into the LED lighting revolution.