This is how the in-development plugin for UE works. If you want to try separating out the lighting pass manually:I have question for Octane developers is it possible to render in one pass only shadows and lights with transparent background?
So when I import to Unreal I could mix baked shadows+light with regular texture, because for floor or carpet that you saw in video I needed to bake floor,carpet twice, but maybe with shadows+lights transparent pass I could render only once and mix them in UE4 with any regular texture.
1. Go to render passes and check "Raw", "Diffuse" and "Diffuse filter"
2. Bake the Diffuse pass and save it as "lighting.png"
3. In UE, set your material to be 'Unlit" and use an Add node to combine your original diffuse texture and the lighting image from above. Connect the diffuse to "base colour" and the combined passes to "emissive".
You can actually set the material to Default Lit if you like and mix it in with dynamic UE lights, but delete any directional lights from the scene as they don't work too well with it.
The plugin will automate this process.
Also, try to make sure your UE materials are power-of-two or it won't generate any mipmaps. The maximum texture size that it'll actually use is 4096x4096.