• LED Lighting
  • Connected Lighting
  • Energy Efficient Lighting
  • Business Model
  • Emissions Reductions

The Business Case for Light as a Service

Danielle Jablanski
May 20, 2021

Light bulb

Light as a service (LaaS) provides an innovative business model that replaces and upgrades industrial and commercial lighting systems while relieving customers from owning and operating the new system. Customers receive the lighting and services they need and want without purchasing materials and managing risks associated with large and expensive assets. 

While this shift requires a spending transition from CAPEX to OPEX, the result is a low cost, high reward solution for lighting replacement and upgrade initiatives. Furthermore, LaaS finance models determine monthly subscription fees to spread installation and equipment costs out over time. This contract flexibility results in immediate savings for end users by operationalizing an upgraded system, which substantially cuts customer energy consumption and costs.

LaaS Presents New Benefits

LaaS is a flexible, performance-based lighting management service that can include connected lighting systems and intelligent controls to optimize usage. Connected lighting is increasingly being complemented by the installment of upgraded, more efficient lighting fixtures such as LEDs. 

Beyond the purchase and installation of new lighting, LaaS contracts are based on customer needs, incorporating additional maintenance, technical support, financial services, and operational insights on a case-by-case basis. LaaS with enhanced sensors and software tools can collect data to provide additional information for decision-making regarding efficient and effective lighting. These additional sensors can add value by measuring and recording things such as occupancy, activity patterns, temperature, humidity, and daylight levels. 

Key features of connected lighting and LaaS for personnel: 

  • Third-party installation of lighting and equipment 
  • Third-party recycling of all recyclable existing materials and equipment 
  • Better lighting color and appearance 
  • All maintenance and repair responsibility transferred to the third party 
  • Enhanced safety for employees and guests 

Key features of connected lighting and LaaS for businesses: 

  • Immediate cost savings that encourage and increase cash flow 
  • Reduced energy consumption from lighting systems 
  • Reduced CO2 emissions from lighting systems 
  • The ability to stipulate key performance indicators (KPIs) with the vendor 
  • Measured lighting data for improved and optimized operations and lighting efficiency 

Guidehouse Insights recently published a white paper commissioned by Signify to evaluate the market cornerstones, benefits, and challenges for connected lighting and LaaS in manufacturing environments titled Connected Lighting and Light as a Service in Manufacturing. Signify, a leading vendor in connected lighting and LaaS, offers complete lighting upgrade solutions, intelligent control systems, and sophisticated software to meet individual customer needs. Contract KPIs can include commitments on installed power capacity, light levels and luminosity, and uptime. 

The number of companies offering as a service business models is increasing to meet the changing lighting landscape within commercial buildings, which is expanding into more connected systems to propel the broader intelligent building market. As more service models add value across industry and commercial markets, connected lighting and LaaS offer a low cost, high reward solution for lighting replacement and upgrade initiatives. LaaS technology is currently deployed in many use cases across several industry verticals, including retail, manufacturing, transportation, sports, horticulture, and more.