SIB Lighting removes the need for capital expenditures by prodviding lighting as a service for a monthly fee.
Incandescent lighting is on the decline, and many businesses and venues are turning to LEDs, which use around 25 percent of the energy and last up to 25 times longer than traditional bulbs. For venues looking to save money with LED lighting, the upfront costs of installation required with the new system can be daunting. Companies like SIB Lighting, a division of Charleston, S.C.-based SIB Development and Consulting, are changing the traditional model to offer lighting as a service. This model requires little to no upfront costs, and facilities pay a monthly fee based on “pay what you burn.”
SIB Lighting President David Etzler said the idea came after talking to a number of customers who were interested in switching to LEDs but didn’t have the capital to support a new system.
“We were consistently hearing from customers that one of the biggest issues for implementing a new LED lighting system is the upfront cost. And while the savings are usually pretty substantial, sometimes up to 85 percent from what they traditionally have, they still have to put that money upfront; a lot of time that’s a significant investment of hundreds of thousands of dollars and possibly more. Then they have to wait for the money to be returned back to them with the savings.”
With their struggle in mind, SIB Lighting looked to the tech industry and the software as a service model for a cost-effective solution.
“What we decided to do was look at why that was happening and see if there was a solution for the companies who want to improve their lighting and savings, but the financial aspect is getting in the way,” said Etzler. “So, we created this concept of lighting as a service where we can actually install the lighting system, maintain it and, in a sense, rent it to the customer. How they pay for it is through the savings from implementing the system.”
The idea is to allow the client to finance the upgrade with the energy savings that result from it. SIB Lighting estimates monthly savings of 50 to 85 percent.
“We calculate how much savings will be achieved,” said Etzler, “we take a percentage of that savings and take that as the monthly payment, and the other percentage they keep and it goes toward their bottom line. So they are never actually billing negative on this, they’re always working from a positive cash flow, because their energy bill may have gone down $5,000 and they pay out $3,000, so they save $2,000. And they don’t have to put out any money up front, and they’re still seeing a reduction in their bill.”
After a site audit, SIB Lighting’s team of designers and engineers create a custom lighting system that is unique to the space. The company takes care of the installation and upkeep of the system, and energy monitoring equipment is also installed to track the actual usage of the system.
“Part of our process is actually installing monitoring equipment into the system,” said Etzler. “A lot of people who try this model work off a spreadsheet of assumptions. What we do is monitor all the lighting circuits to see exactly what you’re using right now, and we install our systems and we see the difference. That’s our actual difference that we base our billing on. We use facts, not theory.”
Etzler said they look to work with the “low hanging fruit” of the business, which are facilities with over 12 hours of lighting usage. The current client list spans a number of different facilities from parking garages and condominuiums like City 24 in Miami, to convention centers, office buildings, restaurants and hotels.
“Maintenance costs for lighting at these venues can often be very, very high,” said Etzler. “Because of the nature of the venues, the lighting is often in hard to reach places. These aren’t simply 10-foot ceilings like an office building or restaurant. These are stadiums or concert halls where lights are very high up. It can take a lot of time and money to get people up on lifts, etc. to change and service lights. With lighting as a service and a set monthly fee, all that hassle is taken care of.”
SIB Lighting’s financial strength through private equity capital and their focus on quality manufactured products, mostly American made, are what sets it apart from other companies, said Etzler.
“We’re getting a lot of people thinking this is too good to be true,” said Etzler. “And I agree and say to them, you’re right, it can be too good to be true if you’re not working with the right partner.”
Etzler points out that the model works well for facilties that are looking to save on a long-term basis but makes less sense for someone who is going to be selling or moving out of the building in a couple of years.
“We’re in it with them together," said Etzler. "Not just for the one-time sale and then we’re gone. We’re in it with you for the term of the contract and hopefully you’ll renew after that and we’ll keep doing it. It keeps us aligned and talking with the customers. If they change their facility or add to it, we can work with them to reconfigure the whole deal if we have to. Long-term clients and references are the keys to our business.”
Interviewed for this story: David Etzler, (843) 576-3606