Lighting-as-a-Service

Philips has secured a performance-based contract with the Washington Metro to design, finance, install, and maintain a system of 13,000 controlled LED lights in 25 parking garages.

The Washington Metropolitan Area Transit Authority signed a 10-year turnkey lighting-as-a-service contract with Philips Lighting Americas. (A sister division, Lumileds, sponsors this site.)

WMATA parking facility.

(Source: WMATA)

The WMATA will pay for the project, plus 10 years of maintenance, through the savings the new lights will provide, estimated at $2 million annually. Of that, $600,000 will come from maintenance. The rest will come from the 68 percent energy savings.

A Metro spokesman told DCist.com that the contract has a two-year option beyond its 10-year term. "It takes the full 12 years to fully 'pay off' the project."

Installation will start next spring and is expected to take about a year.

Philips G3 luminaire.

(Source: Philips)

G3 and EcoForm luminaires will be used inside and outside the 25 WMATA parking garages. These will be manufactured in Philips facilities in San Marcos, Texas and will be powered by Lumileds Luxeon LEDs.

San Marcos will also provide a lighting control system that Philips says in a press release is "open and flexible, allowing it to be combined with other building automation systems."

Other financing models

In July, we discussed financing options for large-scale retrofits for government, industry, and nonprofits. Lighting companies are working with banks, private equity firms, and other money sources to structure (typically) deals that involve no money up front, pay the supplier out of energy and maintenance savings, and often provide a cash flow to the client.

Other financing options include property-assessed clean energy (PACE) financing and leasing. The latter has proved valuable in the solar energy business in the US.

Bruno Biasiotta, president and CEO of Philips Lighting Americas, said in the release:

With digital lighting systems we really need to break with conventional thinking and look to the services and delivery models of the software industry to understand the future of lighting and how we can remove one of the greatest barriers to adoption -- the up-front costs.

Philips is well positioned to make a performance-based, lighting-as-a-service model work. The company covers the lighting market from top to bottom. It has the scale and the stability (114 years of stability) that can reassure clients looking to sign multi-year contracts to take care of their lighting needs at the largest scales.

To me, this business direction looks like a long-term defensible advantage for Philips against the upstarts. Osram and GE could also pursue such a strategy convincingly, but Cree couldn't. What do you think?

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— Keith Dawson , Editor-in-Chief, All LED Lighting