With IT becoming so much a part of every area of business, it was only a matter of time before certain IT industry concepts moved into other spheres. Technology professionals have been lauding the value of as-a-Service offerings for many years now, gaining improved efficiencies and cost savings, and Lighting-as-a-Service (LaaS) promises to deliver the same.
LaaS is similar to leasing in that it avoids the need for the huge upfront capital outlay required to outfit a building with new LED lighting systems, but it goes much further. With LaaS, the lighting supplier remains responsible for monitoring and maintaining lights, including making any replacements. The supplier guarantees uptime and light levels, often specified in contractual lux levels. LaaS deals also ensure that the supplier looks after recycling and other end-of-life issues. The service model offered by LaaS helps guarantee energy savings and the financial savings that go along with reduced electricity consumption.
Most importantly, because LaaS takes lighting off the balance sheet, companies can better allocate their money for other initiatives. Instead of putting up capital investment for a lighting upgrade at the beginning of a project, businesses can turn the investment into an operating expense for the company through LaaS. With a portion of the money saved on reduced energy bills, companies can budget a monthly expense payment for their lighting while using the rest of the cash for something else.
Similarly, LaaS helps facility or plant management find more time to oversee other departments and capital projects, knowing the lighting is well-managed and maintained. In addition, the service can have a built-in scheduled maintenance programme, if desired. While the LaaS market is in its infancy, it is seeing increasing uptake among companies all over the world. According to UrbanVolt, US companies Bikeworld and Cargotec are saving 70% and 73% on energy costs respectively, thanks to LaaS. These are just two companies that have included the benefits of their LaaS agreements in their financial reporting.
Despite the fact that the as-a-Service business model is ubiquitous in commercial buildings in the form of copy machines, and has unlocked big economic and carbon-saving opportunities in the solar-power and personal mobility sectors, it has not reached critical mass for building energy efficiency – yet. Global revenue for LaaS services is estimated at just $35.2 million this year, but it is forecast to grow 52%, to a total of $1.6 billion, in 2025.