LED Lifespans Lead Manufacturers to New Business Models

In my years working in commercial offices – cubicle farms, we called 
them, then – the sight of a building maintenance staffer up on a ladder 
to replace a burned out fluorescent tube lamp or ballast was a regular 
occurrence. As commercial building owners and managers make the switch 
to much longer-lived LED replacement options, lighting manufacturers 
will be selling many fewer lamps, and they’re looking for new options to
 make up that anticipated lost revenue. RAB Lighting

Chuck Ross

In my years working in commercial offices – cubicle farms, we called them, then – the sight of a building maintenance staffer up on a ladder to replace a burned out fluorescent tube lamp or ballast was a regular occurrence. As commercial building owners and managers make the switch to much longer-lived LED replacement options, lighting manufacturers will be selling many fewer lamps, and they’re looking for new options to make up that anticipated lost revenue.

One way those companies are repositioning themselves is to shift their marketing focus, from lighting-equipment supplier to lighting-services provider and technology consultant. This model, called “lighting [or lumens] as a service” (or “LaaS,” for short) is becoming more common, especially as controls become a bigger element in lighting operations.

The financial models for these approaches can vary widely. In some cases, they are structured much like a traditional energy services company (ESCO) contract, with the supplier fronting all equipment and installation costs, including sensors and controls, and the customer paying a monthly fee based on a percentage of guaranteed energy-cost savings. In other cases, customers might own their systems, but get assistance with design and installation and pay a monthly service fee for maintenance as well as cloud-based data storage, reporting and control software.

Regardless of contract specifics, we’re sure to see growing interest in LaaS approaches as the transition to LED lighting accelerates. A recent Navigant Research report sponsored by Advanced Energy Economy forecasts that global LaaS-related annual revenues will reach $1.6 billion by 2025, up from $35.2 million in 2016, with North America accounting for half of the market.


Photo courtesy of RAB Lighting

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