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What is Lighting as a Service?

The best businesses and organizations are always looking for the Next Big Thing or the next Smart Thing. Their eyes are always open for the next opportunity to do something better, faster, more budget-friendly, and more business-friendly. 

Every time a process can be tweaked to yield greater results, these top companies are ready to listen. Any time an old piece of wisdom can be challenged, these leading businesses are first in line to try something new.

But staying at the leading edge of the business world is difficult. It requires an innovative outlook, and people who know where to look for the latest and greatest solutions–and people who know how to implement those solutions. The biggest hurdle, though, is the oldest of business challenges: the budget.

Lighting-as-a-Service is a solution to the budget challenge. 

What is Lighting as a Service? 

Lighting-as-a-Service (LaaS) is a method of delivering a lighting retrofit project without upfront capital expenses.  

Almost every commercial project, whether it’s lighting, signs, or electrical requires a capital expense.

Source: iStock

New equipment costs money.
New buildings cost money.
New lighting costs money.

Or do they?

Over the past few years, many businesses have been seizing the advantages offered by “Blank”-as-a-Service, where the “blank” can be almost anything. In these models, “as-a-Service” signifies that a product or service (the “Blank”) is being purchased without a large upfront capital expenditure.

Instead, “Blank-as-a-Service” models allow companies to spread out the capital costs of, say, developing a new piece of software (in Software-as-a-Service) and effectively pay on a subscription basis.

This new Big Thing (and new Smart Thing) is making it possible for organizations without massive capital budgets to remain competitive by acquiring and using products and services they might otherwise never be able to afford.

Blank-as-a-Service is changing the rules of the game for what businesses can expect to do with their resources. It’s enabling more enterprises to level the playing field with their larger competitors, and giving a greater number of companies the flexibility they need to answer today’s challenges while still being prepared to take on tomorrow.

And that’s all great.

But how does LaaS actually work if you need some new lights?

How Does Lighting-as-a-Service Work?

In this video, FSG lighting expert Dan McLaughlin explains the “what”, “why” and the “how” of lighting-as-a-service.

LaaS allows businesses and organizations to upgrade their lighting system to the newest technology and controls without it being a CapEx project.

Lighting-as-a-Service works by taking the cost of a lighting upgrade or retrofit, rolling it into an ongoing agreement or purchase plan, and spreading out the cost over months or years. Think of paying for a LaaS project as “subscribing” to new lights. 

Jared Johnson, from FSG Southern California, said, “LaaS is made possible by the lower utility bills that come with new lights. When it costs so much less to keep your business’s lights on, it’s easy to take the cost of the lights themselves, add that to your new monthly energy bill, and still pay less than you were originally.”

But the payment structure of LaaS is just the first of many benefits you can expect to get from this model.

What are the benefits of Lighting as a Service?

LaaS is Universal

LaaS works for businesses and organizations of all shapes, sizes, and kinds. From hospitals and education to non-profit facilities, industrial applications, and even flight academies, LaaS is available for you.

Hospital Image 10

Source: IStock | Hospitals

Source: FSG | Non-profits

AEPA lighting purchasing

Source: FSG | Schools

More and more lighting contractors in the United States are offering LaaS alongside more traditional lighting retrofits and upgrade projects. The LaaS market is already worth several hundred million dollars and is expected to grow even more over the next few years.

LaaS Support & Maintenance

When you get your lights through LaaS, you’re entering into a long-term relationship with your contractor. Quality lighting contractors will incorporate an ongoing service and supply feature over the life of the LaaS “subscription.”

The best thing about this relationship is the simplicity it brings to your business. Minor maintenance issues and nominal upgrades will be the responsibility of your contractor, freeing you from the time (and additional cost) of dealing with lighting headaches.

Source: FSG

Beyond that, a good lighting contractor will also make sure everything about your new lighting system is up-to-date and in compliance with any local, state, or national requirements. Unlike a traditional model where the contractor would show up, install the lights, then wish you good luck, a LaaS contractor is a partner for the long haul. 

Finally, a good LaaS deal is one that includes all of the best rebates and incentives. Smart lighting contractors are on this from the beginning. Your new lights will benefit from manufacturer programs and incentives from your utility company to make the total cost of the subscription as low as possible. 

Financial Benefits of LaaS

Since the entire point of LaaS is paying less per month on your lights than you currently do, you can walk into such a project knowing that you will immediately have positive cash flow.

Whether you need a quick injection of positive flow, or you’re looking to maximize every facet of your business and facilities, this immediate influx will always be welcome. Since this cash flow comes with the added benefit of making your building more efficient, and thus cheaper to operate and maintain in the future, it’s a great two-for-one deal.

Chad Owens, a LaaS specialist with FSG, particularly highlighted this benefit for property managers. “[LaaS] creates an ease of operation. Because of the flat rate, maintenance expense is streamlined. Many times, property managers are faced with limited capital for deferred maintenance. LaaS frees up capital to allow multiple projects to proceed.”

What is an example of a LaaS project?

The National Flight Academy took advantage of Lighting-as-a-Service to led retrofit their 102,000 square foot facility in Pensacola, Florida. The National Flight Academy is the world’s largest simulated aircraft carrier.  The NFS is an experience for 7-12th graders that inspires interest in Science, Technology, Engineering and Mathematics (STEM).

“The proposal actually looked too good.”

John O’Hara, Director of Education, National Flight Academy

John O’Hara, Director of Education at NFA, had some things to say about the LaaS project. “The proposal actually looked too good. We read it 4 or 5 times trying to figure out, ‘where’s the catch?’ And we just couldn’t find one.” 

John Ohara NFA

Source: FSG

The challenge for the National Flight Academy was that they are non-profit and did not have a lot of capital available for a project like this. NFA  was able to get 3000 lights replaced with no upfront capital. A standard term for a project like this is 3-7 years. The project pays for itself over that time out of the savings.

All in all, the National Flight Academy was able to get a 54% wattage reduction and an estimated $204,804 in net savings over 10 years. 

LaaS in the Future

The LaaS market is new, and ready for growth. The estimated global revenue for these services is estimated at $35.2 million for 2016, while most existing projects are only test cases and pilots. As more lighting companies, IT integrators, and facilities management service providers enter this market, LaaS will grow rapidly. Companies are still refining their business models and adding offerings to entice new customers. Through the near 2025, Lighting-as-a-Service is forecasted to grow around 50%, to a profit shy of $2 billion in 2025. North America is estimated to represent only half of this revenue!

There is a global, growing need for energy saving in commercial lighting that is creating scope for this market. It’s expected that the transition to energy-efficient lighting will reduce total global electricity demand for lighting by as much as 40% by 2030. For instance, New York is planning to replace upward of 250,000 street lights with LEDs, followed by the replacement of decorative lights across urban areas.

LaaS: The Right Choice For Your Business

Zero upfront cost, the best rebates, lower energy expense, and efficiency for years to come: those are the benefits of getting your next lighting upgrade through a Lighting-as-a-Service model.

FSG is the LaaS contractor you want by your side for that upgrade. We’ve been at the forefront of offering this service so that our customers can get the most out of their business today. Call us at (512) 886-1258 to learn more about how we can help.

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