Market Overview
Lighting-as-a-Service (LaaS) is a type of business model in which end-users avail lighting services from LaaS providers on a subscription basis. LaaS includes services such as design, installations, maintenance, and restoration of lighting products and solutions in a facility.
The Europe LaaS market registered a value of EUR 250.0 million in the year 2019 and is anticipated to achieve a CAGR of 26.5% during the forecast period, i.e. 2020-2028, and further cross a value of EUR 2016.2 million by the end of 2028. The market is thriving on the back of the growing construction of smart cities in the region, increasing number of small and large projects across several end user verticals, rising construction activity in the region, along with the increasing use of LED and HID in the lighting industry. The increasing range of product offerings for smart cities and utilities with features including dynamic dimming, intelligent street lighting and lighting failure detection among others provides huge opportunities for the adoption of lighting systems, and in turn the opportunities for LaaS players to serve these clients. Additionally, LaaS is a lucrative model for both small and large companies across industry verticals. Increasing application areas for lighting including industrial facilities to hospitals, provides ample opportunities to both small and large players in the LaaS industry to operate, thereby offering greater flexibility in terms of their business investments.
Market Segmentation Synopsis
By Component
The Europe LaaS market has been segmented on the basis of component into hardware, software and services. The hardware components segment held the significant market share in the Europe LaaS market on the back of the increasing developments observed in the energy & utility industry, for instance, replacement of conventional use of metal halide (MH) lamps with the use of LED lamps to save energy, coupled with the emergence of wireless hardware lighting solutions in the market to simplify the challenges related to wiring structures. The segment includes lighting control products, such as relay units, dimmers, switches, sensors, ED ballasts, gateway and others, along with lights & luminaires, such as bulbs, lamps, lasers, sensors, LED emitters, lighting modules, and others. The hardware segment comprises both the lighting products and their accessories to install the products such as the clamps, poles, and others. The lighting controls segment under hardware segment is thriving on the back of the growing applications of sensor-based lighting controls with wireless connectivity and the need for remote access control for lighting products.
The software segment under component segment in the Europe LaaS market is anticipated to grow on account of the rising implementation of software, such as ZigBee, GPRS, WIMAX and others in the lighting industry, coupled with the rapid advancements in the lighting technology and the need for advanced technology-based solutions in the lighting industry. CLICK TO DOWNLOAD SAMPLE REPORT
The services segment under the component segment, on the other hand, includes installation, planning, implementation of the total configured lighting solution. LaaS service providers offer two different types of services, i.e. installation and maintenance. Availability of numerous flexible plans for consumption by end user industries offers a significant opportunity for the growth of the segment during the forecast period.
Market Drivers and Challenges
Growth Indicators
Increasing Need for Energy Efficient and Cost Saving Lighting
The LaaS model aids organizations to avoid high capital investments for lighting products, which otherwise occupy a major share of the operational costs. As a result, organizations get economical retrofits with no capital investments and low operational costs. Moreover, with the availability of flexible subscription models, organizations tend to procure LaaS solutions and services, which on the other hand is also contributing to the rising demand for cost and energy efficient lighting solutions, and in turn drive the growth of the Europe LaaS market. Additionally, increasing advancements in lighting technology has resulted in the paradigm shift towards smart lighting technology amongst the end users, specially across the countries in the Western Europe, which is anticipated to drive the growth of the Europe LaaS market.
Growing Demand for LaaS Services from the Commercial Sectors
Installations using the LaaS model across the commercial sector of Europe is witnessing an eminent rise on account of the rising number of companies incorporating the technologically advanced lighting products, which are known to possess several benefits. For instance, Philips launched a wireless lighting system in the year 2017, also called the Philips InterAct Office System, which enables a reduction in the energy usage by ~70%. Additionally, growing adoption of LaaS models across the commercial sector can be attributed to the growing focus of lighting companies towards refinement of their offerings and business models in order to entice the customers. Such factors are anticipated to drive the growth of the Europe LaaS market in the coming years.
Barriers
Lack of Awareness Amongst End Users
The predominance of traditional business models across an array of commercial end users and the less degree of cognizance and acceptance amongst the municipal and industrial end users, impacts the awareness for LaaS model amongst the end users, which is anticipated to create a major roadblock towards the growth of the Europe LaaS market. Additionally, low replacement rates of the installed lighting systems, coupled with the presence of counterfeit and low quality lighting products in the market space is anticipated to raise the challenge for the growth of the market in the coming years.
Top Featured Companies Dominating the Market
Some of the affluent industry leaders in the Europe LaaS market are Koninklijke Philips N.V., Illuxtron International, GE Lighting, OMS spol. s r.o., Halla, a.s., ADUROLIGHT, Osram Licht AG, OPPLE Lighting Co., Ltd. and Cree Lighting.
