The Irish firm behind the bright idea to sell light as a service
Innovation awards finalist UrbanVolt helps firms switch to sustainable energy
Declan Barrett, chief commercial officer and co-founder of UrbanVolt with Graham Deane, chief operating officer and co-founder. Photograph: Conor McCabe
Dublin-based UrbanVolt has developed a novel means of assisting companies making the switch to sustainable energy technologies. The firm’s unique light-as-a-service model offers customers entirely new energy efficient LED lighting systems at no upfront cost whatsoever. The cost is paid for out of the savings realised over the lifetime of the contract.
“We are not a lightbulb company,” says UrbanVolt chief executive Kevin Maughan. “We take out the entire system and all the fixtures and replace it. We take a share in the savings over the first five years. The customer gets an annual cash saving and zero capital expenditure. Our share of the savings includes project management, all installation costs and maintenance over five years. And at the end of the five-year agreement they keep the lights and all the ongoing savings.”
He points out that UrbanVolt is not a lighting company either. “We transfer the risk from the customer to us. If one light develops a fault and stops working and we don’t fix it they stop paying us. Other firms can provide lights and finance them but there is no transfer of risk. That’s the main difference in the service we provide. Everyone else is looking at financed lighting. We take the cash savings we secure for a customer and turn them into lighting. We also convert the savings into actual cash flow. That’s really where the focus is.”
The innovation had its genesis in a casual conversation among the three business founders when they were out for a Christmas drink together in 2014. “One of us had been in the property management business and he mentioned how replacing lights with LEDs could save between 70 per cent and 80 per cent on energy bills. We looked at this straight away. We literally did the calculations on the back of a beermat and worked out that there is a business in it. It’s not a product, it’s about monetising the long-term savings and turn them into a new source of cash flow for businesses. Cash flow is far more valuable than a physical asset.”
The product does play an important role of course. “Our solution is the most reliable LED product on the market. We developed it for commercial and industrial markets to last as long as possible with the least amount of faults possible. We have two contract manufacturers in China and Germany and they make the systems to order to our specifications.”
These specifications meet the exacting German TUV standards as well as those laid down by its insurance partner Munich Re. The insurance giant plays an important role in the business as it takes on the project risk for UrbanVolt’s customers. If UrbanVolt fails to live up to its obligations for whatever reason Munich Re will step in.
“Our clients get the benefit of Munich Re’s backing and their input into the product design”, says Maughan. “They can be sure they are getting a world-class project.”
Lighting systems are just the beginning. “There are two parts to the innovation. The first is customer facing where we give away the lights in return for a share of the savings. The second is in relation to investment markets. There are billions of euro trapped in energy efficiency funds but the fund managers requires investment grade risk. With the backing of Munich Re we can offer that risk rating.”
While the company has grown rapidly and installed 200 systems in Ireland over the past 18 months and is shortly to expand into the UK and US on the back of some major contract wins with multinational companies, Maughan also sees this as just the beginning.
“It’s like power by the hour,” he says. “We’ll get to a completely variable model and this is driven in large part by consumer behaviours. We have pay-per-view TV and services like Spotify and so on. Our next offering will be battery storage for clients and we will do that on a shared savings model as well. After that we will look at solar. Lighting is just the start.”