Lighting as a Service

This new interesting idea has been floating around recently, the idea of having lighting as a service business model. The gist of the idea is that manufacturers will install, maintain, and operate customer’s lighting systems with no upfront cost to the customer. The lighting system will pay for itself through energy cost savings. This model is very similar to...

Apr 15th, 2014
Content Dam Su Site Images Su Shonikavijay

This new interesting idea has been floating around recently, the idea of having lighting as a service business model. The gist of the idea is that manufacturers will install, maintain, and operate customer’s lighting systems with no upfront cost to the customer. The lighting system will pay for itself through energy cost savings. This model is very similar to the Solar Panel model where the customer simply selects the service that meets their need and then has the peace of mind knowing that their solar energy equipment is running at its peak performance and meeting performance expectations. The solar modules are installed, cleaned, and maintained by the solar company (a select few customers do need to pay some money for the installation upfront and/or get solar incentives for their projects).

Lighting technology has evolved to be nearly as complicated as solar panels for many customers. To avoid reliance on foreign rare earth metals, reduce the carbon footprint, reduce waste, and reduce energy costs, our lighting industry is moving towards a direction where our lighting systems are getting smarter and more energy efficient. However, the average consumer cannot keep up with these changes in lighting and resort back to using old, familiar, and inefficient lighting technologies.

The idea of lighting as a service is very new with limited case studies, so it is difficult to say how it will pan out. One recent project isPhilips Lighting’s LED project for Washington, DC’s Metro in which they upgraded 25 parking garages with financing being done through lighting as a service model.  I think that the idea is forward looking and is keeping up with today’s changing market. With so much ambiguity and lack of LED knowledge, the average customer is better handing over their lighting system to the experts. And what do they have to lose? This idea also deals with one of the biggest drawbacks of SSL technology: the expensive upfront cost of the system. Changing from an old lighting infrastructure to modern LED lighting is just one more thing to worry about for many consumers. For instance, the risk associated with changing fluorescent tubes to LED requires training, and many customers might just stick with the familiar fluorescent tubes to avoid the headache and safety risk.

This business model can also work for cities and municipalities who pay for street lights. Many cities pay utilities to operate and maintain their street lights, and these utility companies usually do not find it crucial to reduce energy costs from these street lights since they get paid regardless. Having a model where projects are being financed strictly through energy savings is a surer way to install systems that are running optimally and saving energy. It also assigns more accountability on manufacturers to make sure their products can pay for themselves.

More in Blogs