Lighting as a Service (LaaS) Market Report Overview
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The global Lighting as a Service (LaaS) market size was USD 439.8 million in 2021 and market is projected to touch USD 9563.7 million by 2031, at a CAGR of 35.6% during the forecast period.
The COVID-19 pandemic has been unprecedented and staggering, with the Lighting as a Service market experiencing higher-than-anticipated demand across all regions compared to pre-pandemic levels. The sudden rise in CAGR is attributable to the market's growth and demand returning to pre-pandemic levels.
Lighting as a Service (LaaS) is a business model that offers lighting solutions as a subscription-based service rather than traditional ownership. It includes lighting fixtures, installation, maintenance, and energy management services. LaaS enables organizations to adopt energy-efficient lighting solutions without upfront capital investments, leading to reduced energy costs, improved lighting quality, and enhanced sustainability.
The market is witnessing significant growth due to several factors. Firstly, the rising awareness regarding energy conservation and sustainable lighting solutions is driving the demand for LaaS. Organizations across various sectors are increasingly focused on reducing their carbon footprint and optimizing energy consumption, leading to the adoption of efficient lighting technologies offered through LaaS. Additionally, the rapid advancement in LED lighting technology is fueling market growth. LED lights are highly energy-efficient, have a longer lifespan, and offer better lighting quality compared to traditional lighting systems. LaaS providers leverage LED lighting solutions to deliver cost-effective and environmentally friendly lighting options to their customers.
COVID-19 Impact: Shift towards Energy Efficiency Accelerates the Adoption of the LaaS
The COVID-19 pandemic has had a significant impact on various industries, including the market. The pandemic has highlighted the importance of energy efficiency and sustainability as organizations strive to reduce operational costs and create resilient infrastructures. The need for flexible lighting solutions, remote monitoring capabilities, and reduced energy expenses has surged during the pandemic, driving the adoption of Lighting as a Service.
Latest Trends
"Integration of Li-Fi Technology to Increase Product Demand"
An emerging trend in the market is the integration of Li-Fi (Light Fidelity) technology. Li-Fi is a wireless communication technology that uses light waves to transmit data. By modulating the light emitted from LED bulbs, Li-Fi enables high-speed data transmission, offering a secure, energy-efficient, and reliable wireless connectivity solution. The integration of Li-Fi technology into the Lighting as a Service solution opens up new possibilities for smart lighting applications. Li-Fi-enabled lighting fixtures can serve dual purposes, providing both illumination and wireless data connectivity. This integration allows for seamless and efficient communication between devices, creating a connected ecosystem within buildings.
Li-Fi technology offers several advantages in the context of this service. It provides higher bandwidth and faster data transfer speeds compared to traditional Wi-Fi, making it ideal for applications that require real-time data transmission, such as machine learning devices, smart buildings, and indoor navigation systems. Additionally, Li-Fi is immune to electromagnetic interference and offers enhanced security, as it requires direct line-of-sight communication
As the demand for smart lighting solutions and machine learning connectivity continues to grow, the integration of Li-Fi technology in Lighting as a Service is expected to gain traction. This trend not only enhances the functionality and efficiency of lighting systems but also contributes to the development of intelligent, interconnected environments.
Lighting as a Service (LaaS) Market Segmentation
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- By Type Analysis
According to type, the market can be segmented into indoor and outdoor lighting solutions.
Indoor lighting solutions are widely adopted in commercial buildings, offices, retail stores, and healthcare facilities, among others. Outdoor lighting solutions are used for street lighting, parking lots, stadiums, and public spaces. Both indoor and outdoor lighting segments are witnessing significant growth due to the increasing demand for energy-efficient lighting solutions and the need for better lighting quality.
- By Application Analysis
Based on application, the market can be divided into commercial, municipal, industrial, and other sectors.
The commercial sector holds a significant market share as businesses focus on reducing operational costs and enhancing visual aesthetics through efficient lighting systems. Municipalities are also adopting LaaS to improve street lighting infrastructure, reduce energy consumption, and enhance public safety. The industrial sector is increasingly leveraging LaaS to optimize energy efficiency and reduce maintenance costs in manufacturing facilities.
Driving Factors
"Increasing Emphasis on Energy Efficiency Enhances Market Growth"
The demand is driven by various factors. One of the primary drivers is the increasing emphasis on energy efficiency and sustainability. Organizations across sectors are actively seeking ways to reduce energy consumption and carbon emissions. LaaS enables businesses to upgrade their lighting infrastructure with energy-efficient LED lighting solutions, resulting in significant energy savings and reduced environmental impact.
"Government Initiatives Promoting Energy Efficiency Increases Product Demand"
Government regulations and initiatives promoting energy efficiency are also driving the adoption of the service. Many countries have implemented policies and incentives to encourage the use of energy-efficient lighting solutions. For instance, in the U.S., the Energy Policy Act and various utility rebate programs incentivize the adoption of energy-efficient lighting systems.
Restraining Factors
"Long-term Contract Commitments Hinders Market Growth"
Despite the numerous benefits offered by Lighting as a Service, there are some restraining factors affecting market growth. One of the challenges is the initial capital investment required for implementing LaaS solutions. Organizations may need to invest in retrofitting their existing lighting systems or installing new fixtures, which can be a barrier for some businesses, especially small and medium-sized enterprises. Also, another restraining factor is the long-term contract commitments associated with Lighting as a Service. LaaS contracts typically have a duration of several years, and organizations need to carefully evaluate their lighting requirements and contractual terms. The long-term commitment may pose challenges if the business needs to change or if more advanced lighting technologies emerge during the contract period.
Lighting as a Service (LaaS) Market Regional Insights
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"North America Leads Due to a Strong Focus on Energy Efficiency"
North America is the leading region in the market. The region has a strong focus on energy efficiency, sustainable practices, and technological advancements. The U.S. and Canada are witnessing significant adoption of LaaS solutions across various sectors, driven by supportive government regulations, rising energy costs, and a growing emphasis on environmental conservation.
Europe is also a prominent region in the market, with countries such as Germany, the United Kingdom, and the Netherlands at the forefront of adoption. The European Union's energy efficiency targets and favorable policies promoting sustainable practices have boosted the demand for LaaS solutions in the region.
Key Industry Players
"Key Players Focus on Partnerships to Gain a Competitive Advantage"
Prominent market players are making collaborative efforts by partnering with other companies to stay ahead of the competition. Many companies are also investing in new product launches to expand their product portfolio. Mergers and acquisitions are also among the key strategies used by players to expand their product portfolios.
List of Market Players Profiled
- Koninklijke Philips (Netherlands)
- ABB (Cooper Industries) (Switzerland)
- General Electric (U.S.)
- Osram (Germany)
- SIB Lighting (U.S.)
- Cree (U.S.)
- RCG Lighthouse (U.S.)
- Digital Lumens (U.S.)
- Lutron (U.S.)
- Future Energy Solutions (U.S.)
- Lunera Lighting (U.S.)
- Itelecom USA (U.S.)
- Legrand S.A (France)
- Igor Inc (U.S.)
Report Coverage
This research profiles a report with extensive studies that take into description the firms that exist in the market affecting the forecasting period. With detailed studies done, it also offers a comprehensive analysis by inspecting the factors like segmentation, opportunities, industrial developments, trends, growth, size, share, restraints, etc. This analysis is subject to alteration if the key players and probable analysis of market dynamics change.
REPORT COVERAGE | DETAILS |
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Market Size Value In |
US$ 439.8 Million in 2021 |
Market Size Value By |
US$ 9563.7 Million by 2031 |
Growth Rate |
CAGR of 35.6% from 2021 to 2031 |
Forecast Period |
2024-2031 |
Base Year |
2023 |
Historical Data Available |
Yes |
Regional Scope |
Global |
Segments Covered |
Type and Application |
Frequently Asked Questions
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What value is the global Lighting as a Service market expected to reach by 2031?
The global Lighting as a Service market is expected to reach USD 9563.7 million by 2031.
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What CAGR is the Lighting as a Service market expected to exhibit by 2031?
The Lighting as a Service market is expected to exhibit a CAGR of 35.6% by 2031.
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What are the driving factors of the Lighting as a Service (LaaS) market?
The driving factors of the Lighting as a Service (LaaS) market include an increasing emphasis on energy efficiency, sustainability, and supportive government regulations promoting energy-efficient lighting solutions.
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Which are the key players or most dominant companies functioning in the Lighting as a Service (LaaS) market?
The dominating companies in the Lighting as a Service (LaaS) market are Koninklijke Philips, ABB (Cooper Industries), General Electric, Osram, SIB Lighting, and Cree.