Traditional but energy-thirsty incandescent Christmas lights are facing a dim future.

Holiday light bulbs were exempted from the federal law that’s phasing out other incandescent bulbs, and that seemingly ensured that they could keep decorating trees, decking halls and providing seasonal cheer. But now they’re being put to a test as fearsome as a government regulation: competition.

LEDs – super-efficient lights that use a lot less energy than incandescents – have been around for years. LED stands for “light-emitting diode,” which creates light by moving electrons over a semiconductor material, instead of heating up a filament, as a traditional bulb does.

LED technology was expensive, which limited the lights’ appeal, but prices have dropped dramatically. A couple of years ago, LEDs to replace a 60-watt bulb cost $40, but they can now be found for under $10.

And LED Christmas lights are cheap enough that the larger ones save enough energy compared with incandescents that most of their purchase cost can be recovered within a year.

The shift is showing up at stores, which are selling more of the efficient lights. Wal-Mart is devoting half of its shelf space for Christmas lights to LEDs and offering a string of 50 mini LED lights for $5, down from $6.30 last year.

“We know our customers are gravitating toward them,” said Debbie Serr, a Walmart spokeswoman.

Costco is selling no incandescent Christmas lights at all.

General Electric, which has peddled holiday lighting for more than a century, expects that two out of every five strings of lights sold this year will be LEDs.

Sales of the lights were up 50 percent last year at the Light Bulbs Etc. store in Lenexa, Kan., and while it’s too early to say how they’ll do this season, sales are expected to be strong again.

“I think eventually we’ll see Christmas incandescents go away,” said Larry Fuqua, general manager of the store.