Lighting-as-a-Service (LaaS) Market Trends

Growth Drivers

• Strict government mandates for energy efficiency and sustainability: Governments across the world have introduced strict energy efficiency mandates that are driving the adoption of smart lighting systems. These mandates have impacted the public and commercial sectors. For instance, the Better Buildings Initiative of the U.S. includes lightning upgrades as part of the energy-efficient measures, which deployed over 1.3 million LED streetlights across U.S. cities. Another major initiative is the EU Green Deal, where the European Commission has earmarked around 1 billion euros to finance public infrastructure projects that include smart lighting systems.
   
• Increasing corporate and commercial real estate demand for cost-effective and scalable solutions: Trends highlight that commercial real estate owners are shifting to LaaS models. This trend is supported by the rising requirement to meet sustainability and cost goals. Recent data supporting the trend was from the U.S. commercial real estate sector, which invested USD 1.0 billion in energy-efficiency technologies in 2023, with lighting services constituting a major part of the investment. Additionally, LaaS allows businesses to convert traditional capital expenditures into operational expenses. This model supports the growing trend towards flexible financial structures. In terms of successful use cases, the U.S. Energy Information Administration (EIA) reported that an average of 35% energy savings were achieved by the commercial buildings that have adopted LED-based LaaS solutions.

Technological Trends of the Global Lighting-as-a-Service (LaaS) Market

The global lighting-as-a-service market is expanding rapidly. Major technological advancements in IoT and energy-efficient systems are driving the growth. A recent advent supporting growth is the advent of AI, which has bolstered the creation of smart lighting. A successful case study in the manufacturing sector is that of Siemens and its deployment of AI-powered LaaS systems, which reduced factory lighting energy costs by over 35% within the first year. The table below highlights the successful use cases of LaaS solutions in various sectors:

Building Supply Chain Resilience in the Global Lighting-as-a-Service (LaaS) Market

The global lighting-as-a-service market is impacted by disruptions in the supply chain due to geopolitical conflicts and logistical bottlenecks. To reduce the reliance on single suppliers, companies are diversifying their supplier base. The diversification has assisted in the measurable decline of supply chain bottlenecks. The table below highlights the supply chain resilience strategies of key players in the market:

Challenges

• High upfront costs and complex financing models impede adoption among SMEs: A key impediment to the global IaaS market is the difficulties SMEs face across various regional markets face in fulfilling multi-year service contracts. The budget constraints and limitations of flexible payment options are impairing SMEs. This remains a major financial barrier, which is limiting market penetration forcing providers to innovate accessible pricing models.