Lumia teams with investment partners to present LED lighting financing program to public customers

Nov. 20, 2014
Lumia® is pleased to present our latest feature meant to help make LED lighting available to a broader audience.

We have teamed up with external investors to provide a financing scheme, which initially is meant for government and municipalities but could possibly also be expanded to large private customers.

In it simplicity, Lumia® will provide the hardware and fund the installation costs up front. In return, we take a share of the energy and maintenance savings in the first 4-5 years depending on the energy costs, funding costs, usage pattern etc.

To illustrate the program, we present two alternatives; the current model where the customer pays upfront and the new model where Lumia® finances the upfront investment. For both alternatives, we assume the replacement is done in a maintenance cycle. I.e. new lighting is required; the decision is simply LED vs. conventional and subsequently how to finance it.

1. Municipality invests in LED lighting

A municipality in Denmark is due to replace lighting and decides to install:

100 pcs Oxford 150/24
100 pcs Galway 6060/40
100 pcs Copenhagen 9

Total investment: DKK 135,434 incl est. installation costs. Excl VAT

Usage pattern: 60 hours/week. Electricity: DKK 1.68/kWh Excl. VAT

Option 1: The municipality pays the cost up front and receives the entire saving

This gives a cash flow and a pay-back time around 18 months measured as the pay-back of the additional investment to get LED relative to the conventional choice.

The initial investment represents the additional invest relative to continuing with conventional lighting.

Option 2: Municipality decides to make use of Lumia® financing

Using Lumia® financing, the municipality receives a quotation based on the cost of capital and the calculated savings.

The municipality actually starts out with positive cash flow. This is because it not only gets the LED investment fully financed but also avoids spending cash on conventional lighting. In return, it has to grant Lumia® a 55% share of the savings in the initial four years. Thereafter, the municipality receives the entire savings for the remaining 10 years of average product lifetime.

2. Comparison of the two models

The two options have each their forces but it is not so simple as to say: “those with large cost of capital should use Lumia® financing and those with low cost of capital should finance in-house”. The Lumia® financing is based on the relevant government borrowing rate in each specific country and the duration of the facility. Please contact us for specific details.

We believe this facility can make it easier for sales partners to attract business from government and municipalities. We have also launched it because we want to help advance the transition to LED from conventional lighting. Not having a replacement in the budget this year is no longer a hindrance.
3. Frequently Asked Questions

Q: How big/small can a project be?
A: The bigger the better but we suggest a floor of USD 150,000 per project.

Q: Which countries are open for this program?
A: In principle, we can provide this globally although credit approval time may vary. Each country will need a certain volume of business to open up for this facility; however, European Union are considered as one area.

Q: Will we be able to avoid the tender process?
A: Within EU: No, but we do not have an overview globally. This obviously means securing the business takes longer but otherwise, this is just a step on the way.

Q: Can I get a commitment on the financing for my project before offering it to the customer?
A: Yes, you can provide us all the details of the customer, the security, the total investment and we will confirm whether it can receive financing and what the cost of capital will be.


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