When it comes to saving money and energy, the Lighting as a Service (LaaS) model provides clean, efficient lighting on a subscription basis, enabling businesses to transition away from traditional lighting solutions without major investments in upgrades or installation costs.
But what about the state of the Lighting-as-a-Service market? Is it growing? Stable? What does the future look like?
Let's take a look...
Global Lighting as a Service Market Trends and Growth Drivers
The market share for the LaaS industry has been on a significant uptrend. According to a market report by the IMARC (a leading market research and advisory firm), the global current market of LaaS has reached US$ 622 Million in 2022 with a projected CAGR (Compound Annual Market Growth Rate) of 43.5% from 2023 - 2028.
These market dynamics translates to an estimated global lighting-as-a-service growth of US$ 9060.29 Million by 2031.
Given these forecast period figures, it's clear that LaaS is becoming an increasingly attractive proposition for businesses as they look to reduce their energy costs and ensure their lighting systems are up-to-date.
The market size reached is significant, and this trend is expected to continue in the coming years..
A good understanding of the impetus to the market growth and how it relates to the LaaS service market size is key for anyone looking to take advantage of this emerging service industry.
With this in mind, let's look at the factors driving this growth.
Internet of Things (IoT)
IoT technology facilitates more than just remote control of lighting systems; it allows for real-time data collection and analysis of lighting usage, thus enabling efficient energy management and cost savings.
Additionally, the IoT capabilities in LaaS serve as a foundation for a network of connected devices, turning lighting infrastructure into a kind of information highway. This can be used to gather data on building operations, space utilization, and even employee patterns, further contributing to efficiency.
With this level of control and information, businesses can make informed decisions about their energy usage, supporting sustainability goals.
Therefore, the convergence of LaaS and IoT presents significant opportunities for businesses, driving the uptake of LaaS solutions.
Not only does LaaS enable lower energy costs through improved efficiency, but it also reduces maintenance fees by having experts handle the installation and servicing of the lighting system.
Additionally, unlike traditional lighting systems, LaaS solutions can be customized to fit specific requirements and budgets, giving businesses more options when it comes to lighting.
The cost-effectiveness of LaaS is further supplemented by various government initiatives and policies aimed at promoting energy-efficient lighting technology, including :
- Tax credits
- Subsidies, and
- Rebates for commercial buildings that implement LED lighting systems.
These measures significantly reduce the cost burden for businesses looking to upgrade their lighting infrastructure, thus increasing the adoption of the LaaS service market.
With businesses looking to reduce their energy costs and governments offering incentives to promote sustainability, the need for efficient LaaS solutions is expected to increase.
This presents an opportunity for businesses in the market, including providers of lighting solutions and energy efficiency services in an increasingly competitive landscape.
Furthermore, companies can capitalize on this trend by leveraging their expertise in IoT to create smart lighting solutions that offer increased control and data-driven insights into building operations.
In addition, businesses can look towards partnerships with governments or utilities as a way of gaining further access to the market.
Zero Maintenance Liabilities
One of the most significant advantages of the LaaS service market is the freedom from maintenance liabilities.
With traditional lighting systems, businesses often have to bear the burdens of regular maintenance, potential breakdowns, and the associated costs.
However, with the LaaS business model, providers, like us here at Future Energy Solutions, take on all these responsibilities for the end user as a part of their service contracts.
For example, under our LaaS model, we're responsible for:
- Maintenance and
- Management of the lighting system
There's also an added bonus of regular upgrades to the latest lighting technology, ensuring businesses benefit from advancements in energy efficiency and illumination quality.
This arrangement reduces the time and resources businesses need for managing their lighting infrastructure so they can focus on their competences.
Regulatory Policies on Energy Efficiency
Most governments are introducing stringent regulations and policies to promote energy efficiency and reduce carbon emissions, pushing businesses to adopt more energy-efficient solutions, such as:
- European Union's Energy Efficiency Directive (EED): sets rules and obligations for member states to use energy more efficiently at all stages of the energy chain.
- Department of Energy (DOE) in the US: has established energy efficiency standards for commercial and residential buildings.
These regulatory policies are not only driving businesses toward adopting more energy-efficient solutions, but they are also encouraging innovation and technological advancement in the energy industry.
As a result, Lighting as a Service providers are continually looking to develop and improve their offerings to meet these evolving regulatory standards and the demands of their customers.
Consequently, the influence of regulatory policies on energy-efficient lighting, such as LED technology, is a critical factor driving the adoption and growth of LaaS worldwide.
Rapid Industrialization and Urbanization
As cities expand and new industries emerge, there's a growing need for efficient, cost-effective lighting solutions.
Urban areas, with their high concentration of commercial buildings, require advanced lighting systems that can meet their diverse needs while maintaining energy efficiency and sustainability.
Industrial setups, too, are seeking out innovative lighting solutions that can withstand harsh operating conditions, reduce energy consumption, and contribute to safer working environments.
LaaS, with its flexible models and state-of-the-art technology, fits these requirements perfectly, providing tailored solutions that drive operational efficiency and cost savings.
Moreover, the growth of smart cities, which incorporate information and communication technologies to enhance the quality and performance of urban services, is another factor boosting the adoption of LaaS.
Smart city initiatives prioritize sustainability and efficiency, and LaaS solutions — in combination with IoT technology — have emerged as a vital component of this urban transformation.
Regions Where LaaS is Most Prevalent
The uptake of LaaS is widespread across several regions, with a particularly high concentration of major players in North America.
According to one study by Straits Research, the North American region leads the market due to the early demand for lighting solutions with an emphasis on energy efficiency and reducing energy costs.
This trend is particularly noticeable in areas with high commercial and industrial presence, such as:
- New York
Latin America is another key region for LaaS adoption, particularly in countries like Argentina and Brazil. Businesses in this region are gradually embracing advanced lighting systems as they become aware of the potential savings associated with energy efficiency measures.
In the global market, Europe follows closely after North America in the adoption of LaaS. The stringent regulations regarding energy efficiency, such as the European Union's Energy Efficiency Directive, have significantly driven the LaaS industry in this region. Germany, the United Kingdom, and France are observed to have the highest adoption rates in Europe.
The Asia Pacific region, led by China and Japan, is also witnessing a growing interest in LaaS solutions, spurred by increasing urbanization and industrial growth, indicating the region is forecasted to exhibit the highest growth rate in service market in the coming years.
The LaaS industry can be segmented into three main components:
- Luminaires and control equipment
- Software and communication systems
- Maintenance and other services
Each of these play a vital role in the industry...
Luminaires and Control Equipment
Luminaires and control equipment form the backbone of any LaaS solution since they include the physical components of the lighting equipment, such as fixtures, lamps, and controls.
The choice of luminaires and control equipment can greatly influence the lighting quality, energy efficiency, and overall performance of the LaaS solution. LED luminaires, for instance, are popular for their superior energy efficiency and longer lifespan compared to traditional lighting options.
Software and Communication Systems
The software and communication systems segment pertains to the digital tools and technologies that enable the operation, monitoring, and control of LaaS solutions.
This typically includes lighting control software, wireless communication systems, and data analytics tools, which are all used by users to control and optimize their lighting usage, realize energy savings, and gain insights into their lighting data.
Maintenance and Other Services
These services typically include the design, installation, maintenance, and upgrade of lighting devices, as well as customer support services.
Given the "as-a-service" nature of this service-based model, these services are a key selling point, as they allow businesses to outsource the upkeep of their lighting systems to experts, freeing up their own resources for core operations.
Industries That Benefit from Successful LaaS Implementations
LaaS has made significant inroads into several industries due to its numerous advantages, such as energy efficiency, cost-effectiveness, and improved lighting quality.
These industries have leveraged LaaS to not only enhance their facility's lighting conditions but also to reduce their carbon footprint and achieve sustainability goals:
LaaS provides LED gym lighting with adaptive lighting such as LED lights that can adjust to different times of the day, enhancing the environment for both trainers and members alike.
This is not just about illuminating the workout spaces; lighting can also serve to motivate gym-goers, creating an upbeat atmosphere that encourages more intense workouts.
Moreover, LaaS allows fitness centers to achieve significant energy and cost savings. Given the importance of sustainability in today's society, gyms employing LaaS solutions can also leverage this as a marketing point, appealing to environmentally-conscious consumers.
LaaS is instrumental in gas station lighting, particularly during night hours.
The precise and bright illumination offered by LED lights ensures clear visibility for customers, promoting safer refueling operations.
Additionally, the automated controls allow for efficient utilization of energy, dimming or brightening the lights based on the ambient light conditions.
The reduced energy consumption leads to considerable cost savings—a significant advantage for gas stations operating around the clock.
Furthermore, the LaaS model also takes care of maintenance and upgrades, providing gas station operators with peace of mind and allowing them to focus on their core business operations.
As such, LaaS is not just a sustainable choice for gas stations, but also a smart business decision.
Since convenience stores often operate extended hours, energy-efficient lighting solutions are crucial for their profitability.
By implementing LaaS, convenience store owners can take advantage of energy-saving LED illumination coupled with smart controls that tailor the lighting levels to the needs of the hour.
Moreover, LED convenience store lighting significantly enhances customer experience, influencing:
- Perceived quality of products
- Guide customers' navigation through the store
- Affect their purchasing decisions
This allows them to maintain a well-lit, appealing store environment that attracts and retains customers, all while saving on energy and maintenance costs.
Retirement homes need to ensure their residents' comfort and safety, both of which are significantly impacted by lighting quality. With LED lighting solutions for retirement homes, a well-lit environment can be maintained; one that caters to the specific needs of the elderly, such as:
- Minimizing glare
- Enhancing visibility, and
- Supporting circadian rhythms
On the operational side, implementing LaaS can lead to substantial energy savings, reducing the overall costs for these establishments.
The maintenance services included in the LaaS model ensure that any lighting issues are promptly resolved, preventing any inconvenience to the residents and staff.
Parking structure owners' primary concerns are safety and visibility, both of which are significantly improved with the implementation of LED parking garage lighting.
In addition, the smart controls associated with LaaS can adjust the lighting based on occupancy and time of day, ensuring that lights are not needlessly left on and leading to significant energy savings.
This is a crucial advantage for parking structures that operate 24/7, as it substantially reduces their energy consumption and associated costs.
The implementation of LaaS prison lights brings about improvements in safety, security, and energy efficiency. LED lighting, a key component of LaaS, offers superior illumination compared to traditional lighting, which is vital for maintaining visibility and safety of both inmates and staff.
Moreover, the smart controls embedded within LaaS systems can adjust lighting to fit specific situations, such as an increased brightness during inspections or lowered lighting during rest hours.
This adaptability can contribute to a more controlled and secure environment. The energy efficiency of touch lighting solutions along with the optimized usage enabled by smart controls can lead to significant cost savings, essential for public service entities operating under tight budgets.
The ambiance created by LED Lighting-as-a-Service plays a significant role in dining establishments, shaping the overall guest experience. You can adjust the brightness and color temperature throughout the day, creating a cozy breakfast atmosphere, a lively lunch setting, or an intimate dinner mood.
Beyond aesthetics, LaaS LED lighting for restaurants ensures optimal visibility in crucial areas, such as the cooking and serving sections, enhancing safety and efficiency. It also offers energy efficiency, reducing the overhead costs for these establishments that often operate for extended hours.
LED car dealership lighting provides consistent, high-quality illumination, which dramatically improves visibility and reduces the risk of accidents or errors during production.
Moreover, the energy efficiency and automated control systems of LaaS result in substantial cost savings. This is particularly beneficial for automotive manufacturers operating on a large scale with long working hours.
Beyond the production environment, optimized lighting can enhance vehicle displays, highlighting their features and making them more appealing to potential buyers.
In learning environments, the quality of lighting has a direct impact on student performance, with good lighting improving visual acuity and reducing eye strain. LED lighting for classrooms through our Lighting-as-a-Service model provides bright and even illumination, enhancing visibility and creating a conducive atmosphere for learning.
Moreover, the intelligent controls allow for the adjustment of light intensity based on the time of day, the task at hand, or even the mood of the class, enabling a dynamic learning environment.
No only that, but the energy efficiency and maintenance savings means schools and universities can drastically cut down on their energy use, freeing up budget costs to focus on education.
In these large, expansive spaces, achieving consistent, high-quality lighting is crucial for ensuring safety and efficiency.
LaaS solutions, with their LED lighting, provide bright and uniform illumination, enhancing visibility across the hangar and facilitating precise inspection and maintenance work on aircraft.
Intelligent controls within the LaaS aircraft hangar lighting systems allow for the adjustment of lighting to suit different tasks and times of day, optimizing the use of light and reducing energy consumption.
The durability and longevity of LED lights also mean fewer replacements, reducing maintenance costs and downtime.
Manufacturing environments require clear, bright lighting to ensure precision in tasks and to safeguard workers from accidents without having to worry about maintenance and upgrade costs.
LED factory lighting meets these requirements, offering superior illumination compared to traditional forms of lighting.
Warehouses, with their vast spaces and high shelves, demand excellent illumination for efficient operations and worker safety.
High-quality warehouse LED lighting provided by LaaS ensures adequate, bright light throughout these spaces, minimizing shadows and dark corners, and thereby reducing the risk of accidents.
The quality, intensity, and color temperature of lighting can drastically influence the ambiance of a hotel, resort, or restaurant, directly impacting a customer's perception and satisfaction.
LaaS hospitality LED lighting solutions deliver superior quality illumination, enabling establishments to create the perfect atmosphere for their guests.
Moreover, smart controls within LaaS systems allow for dynamic lighting adjustments, enabling lighting customization based on time of day, event, or desired mood.
The quality and intensity of lighting plays a pivotal role in product presentation, effectively drawing customers' attention to products and influencing their purchasing decisions.
With LaaS LED retail lighting solutions, stores can achieve high-quality, dynamic illumination that appropriately highlights their merchandise.
The quality of lighting in healthcare facilities — ranging from patient rooms and operating theaters to reception areas and corridors — can have a profound impact on:
- Patient well-being
- Staff productivity, and
- Overall operational efficiency
LaaS LED hospital lighting, with its high-quality LED lighting, ensures optimal illumination, contributing to a conducive healing environment for patients and a well-lit, efficient workspace for healthcare staff.
Challenges and Solutions
Despite the numerous benefits of LaaS, the market faces several challenges that need to be addressed for wider adoption:
Costs (This is a Misnomer!)
Businesses often feel that it takes a significant outlay to shift from traditional lighting to an LED solution through Lighting-as-a-Service.
However, with FES, there is no initial outlay. Instead, we take on all of the installation and retrofit costs and then share the savings with you.
Education Regarding the Benefits
Many businesses still underestimate the potential energy savings and improvements in operational efficiency that Lighting-as-a-Service can bring.
To tackle this, increased efforts in education and marketing are necessary to highlight the long-term cost savings, energy efficiency, and improved working conditions LaaS can offer.
Case studies showcasing successful LaaS implementations could also be very effective in demonstrating the tangible benefits to potential customers.
Many businesses may already have existing lighting systems in place, and the prospect of integrating LaaS into these systems can seem daunting.
For example, making the switch from ordinary lighting to a smart LED lighting system often requires that existing wiring systems be rewired not to mention the lighting retrofits.
This is where employing a lighting provider fixes the challenge. With our LaaS model, we take away the entire stress and strains making the jump.
Future Prospects of LaaS
The lighting-as-a-service market is poised for significant growth in the coming years. According to another market research report by Mordor Intelligence, LaaS is projected to record a compound annual growth rate (CAGR) of over 50.4% between 2020-2025.
This growth can be attributed to the rising demand for energy-efficient lighting systems and the increasing adoption of IoT in the lighting industry.
Furthermore, advancements in technology are bound to play a crucial role in shaping the future of LaaS. As artificial intelligence (AI) and machine learning continue to evolve, we can expect to see more sophisticated, AI-powered lighting tech that can learn from and adapt to their environment.
Another potential innovation is the integration of LaaS systems with other smart building technologies. In the future, Light as a Service could become a part of a more comprehensive building automation system, alongside increased adoption of recycling equipment and solar energy systems.
All these developments contribute to a more efficient, sustainable, and comfortable living and working environment.
Moreover, the development of advanced sensors and controls could enable more precise and personalized lighting solutions. This could involve the use of biometric data to adjust lighting conditions based on an individual's preferences or physiological needs, enhancing the user experience and overall well-being.
FES Lighting is the LaaS Market Leader
With an industry-leading commitment to innovative solutions, FES Lighting stands at the forefront of the Lighting-as-a-Service market.
We offer tailored, energy-efficient lighting solutions with a full suite of services including installation, maintenance, and technical support.
By choosing FES Lighting, businesses can reap the numerous benefits of LaaS, such as improved operational efficiency, significant energy savings, and an enhanced working environment.
Don't miss out on the opportunity to transform your business with one of the top lighting as a service providers.
Contact FES Lighting today to learn more about how our LaaS solutions can benefit your business now and towards sustainable lighting solutions of the future!
Key takeaways: Embracing LaaS for Sustainable Lighting Solutions
Light-as-a-Service is a transformative solution that offers significant benefits including energy efficiency, cost savings, and improved working conditions.
Despite initial challenges such as high upfront investments cost and a lack of awareness, increased education can make LaaS a viable choice for businesses. The future prospects of LaaS are promising, with continual advancements in technology driving its forecast growth and adoption.
We encourage businesses to consider LaaS not just as a lighting solution, but as a strategic decision that can lead to long-term savings, improved operational efficiency, and a sustainable future.
Don't hesitate to reach out to FES Lighting to explore how LaaS can transform your business.