Market Dynamics
Growth in indoor farming practices
Indoor farming is not dependent on soil and external climatic conditions; it is a form of plant production in which plants are grown indoors by utilizing artificial light sources such as high pressure sodium lamps (HPS), metal halide, and LED, among others. This allows regular plant growth, without being much affected by environmental factors such as storms and extreme temperatures. In addition, indoor farming enables to keep away plants from insects and pests, thereby reducing the usage of harmful pesticides. Indoor farming first originated in Denmark in 1957, due to lack of sunshine for growing plants. Similarly, such factories were setup in Japan, the U.S., and the Netherlands in the later years.
However, due to the lack of suitable technology to obtain sufficient yield and excessive operating costs, indoor farms have failed to gain popularity. Earlier, indoor farms used HID lamps as the main source of lights for plants, which were high on electricity consumption and heat emission. The development of the LED technology for grow lights is now allowing growers to cultivate plants indoors while keeping the electricity consumption at a minimum level. On the other hand, fluorescent grow light is a cost-effective alternative to LED grow lights; however, their light output is suited for only some types of plants. LED grow lights are proving to be far more beneficial as their light spectrum can be adjusted to suit the plant requirements and can provide higher returns on investment over a longer term.
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The need for indoor farming is expected to rise across the world, especially in the urban areas, in the near future. According to the estimates of the United Nations, nearly 80% of the world’s population would be residing in cities and metropolitan regions by 2050. The land available for cultivation would not be sufficient to meet the rising demand of the urban population.
Also, as the distance between cities and farms increases, the logistics costs would drive up the prices for fresh vegetables. To counter all these effects, plants would need to be grown within the confines of the cities. LED grow light manufacturers have started working with commercial growers to setup industrial-scale indoor farms in cities. General Electric (U.S.) is providing LED lighting systems to Mirai, Inc. (Japan) for its plant factory in the Miyagi Prefecture, Japan.
Royal Philips (Netherlands) is working with growers in the Netherlands and Japan for the development of full-scale indoor plant production facilities. Looking at all these developments, indoor farms are expected to increase in number with the rise in urban population. This, in turn, would drive the market for LED grow lights.
High costs of energy-efficient and better quality grow lights
The use of grow lights is increasing with the rising awareness about their benefits. Different sources of artificial lights have been used to grow plants indoor. Earlier, HPS and electric ballasts were widely used for indoor farming, which were effective light sources but power consuming. Nowadays, LEDs are in trend; these grow lights are overcoming the drawbacks of high pressure sodium (HPS), high -intensity discharge (HID) lights, and electric ballasts.
The initial capital required for the purchase of good-quality LED grow lights is higher compared to that of conventional lighting technologies such as FL and HID. This is mainly because each LED grow light unit contains arrays of LEDs, specially designed for horticultural applications. Often, these units contain different types of LEDs with variation in watts and wavelengths to provide a broad range of light spectrum and intensity for different types of plants.
High-powered LED grow lights are available in the market for prices starting from USD 500. A high-quality, full-spectrum LED grow light can be installed as the primary light source for commercial indoor growing and can cost around USD 2,000 or more, depending on the power output and other specifications. A high-powered induction grow light also costs USD 1,300 or more, whereas high-powered plasma grow light costs around USD 3,000.
The costs of these grow lights are higher compared to that of a 1,000 watt HPS light, which costs between USD 100 and USD 150 and provides sufficient light for photosynthesis. This significant price difference is restraining the growers to adopt energy-efficient grow light technologies such as LED, induction lighting, and plasma lighting.
However, advancements in the semiconductor technology and rising awareness about the long-term benefits of LEDs are creating a certain degree of interest in LED grow lights among the growers, especially for indoor applications. The LED grow light manufacturers have also started introducing new products with competitive pricing to encourage more number of growers to adopt this technology.
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