Quick answer
Start with the subsidies, then finance the balance. Several states run schemes that discount business lighting upgrades through approved suppliers, such as the NSW Energy Savings Scheme and South Australia's Retailer Energy Productivity Scheme. Whatever's left can usually be funded with green or equipment finance, or an unsecured business loan, so the power savings help cover the repayments from the first bill.
Key points
- Government guidance says LEDs use up to three quarters less energy than old halogens.
- State schemes in NSW and South Australia can subsidise business lighting upgrades through approved suppliers.
- Sensors, timers and daylight controls can add savings on top of the lamps themselves.
- Light fittings fixed to the building are harder to secure than equipment, so unsecured loans often suit.
- Run the numbers on the net cost after subsidies, not the full quote.
Claim the subsidies first, then finance what’s left. Several states discount business lighting upgrades through approved suppliers, including the NSW Energy Savings Scheme and South Australia’s Retailer Energy Productivity Scheme. The remaining cost can usually be funded with green or equipment finance, or an unsecured business loan, so lower power bills start offsetting repayments straight away.
Lighting is one of the least glamorous costs in a business and one of the easiest to cut. Warehouses running old high-bay fittings from dawn to dusk, shops with rows of halogen downlights, offices with fluorescent tubes buzzing over empty meeting rooms: the bills add up quietly. An LED upgrade is a small, well-understood project, which makes it one of the simplest ways into green finance. The trick is doing it in the right order.
How much can LEDs actually save?
The federal government’s business lighting guide says LEDs use up to three quarters less energy than old halogens. They also last much longer, which cuts replacement and maintenance call-outs, and they run cooler, which can ease the load on air conditioning.
The real saving for your business depends on a handful of things:
- Operating hours. A warehouse lit 16 hours a day saves far more than an office lit for eight.
- What you’re replacing. Halogens and old metal halide high-bays offer the biggest gains.
- Your tariff. Higher power prices mean faster payback.
- Controls. Sensors and timers mean lights are off when nobody’s there.
The same guide suggests occupancy sensors for meeting rooms, storage and print rooms, and bathrooms, plus timers and daylight-responsive fittings where use is predictable or there’s good natural light.
Which subsidies should you check first?
Before you take a quote, check what your state offers. Federal energy guidance points to:
| Location | What’s available |
|---|---|
| New South Wales | Energy Savings Scheme subsidies for eligible small businesses, delivered through approved suppliers |
| South Australia | Retailer Energy Productivity Scheme subsidies for upgrading entire premises to LEDs |
| ACT | A lighting efficiency webtool that reviews your setup and suggests upgrades |
These schemes usually work as a discount applied by an approved installer, not a grant you apply for yourself. That has two practical effects. First, you need to use a participating supplier. Second, the quote you finance should already show the discount, so you only borrow the net amount.
Scheme rules, eligible products and subsidy levels change, so confirm the current details with the scheme and the installer before you sign. Businesses in other states should ask installers and their energy retailer what’s on offer locally.
How do lenders fund an LED upgrade?
LED projects sit in a slightly awkward spot for equipment lenders. The fittings are physical items, but once they’re wired into the ceiling they become part of the building. That makes them hard to repossess and resell, which affects how they’re funded.
Green or equipment finance. Some lenders offer green asset finance for eligible energy-efficiency projects, sometimes on better terms than standard equipment finance. It works best for larger, clearly specified projects from established installers, often as part of a wider package that might include solar or efficient refrigeration.
Unsecured business loan. These generally run between $5k and $500k, with the amount worked out from your turnover and banking history. For most lighting projects, especially in rented premises, this is the simplest route because the lender isn’t relying on the fittings as security. See unsecured business loans.
Property-secured business loan. If the lighting is part of a bigger refurbishment of premises you own, a property-backed business loan (anywhere from $20k up to $5m, using a home or commercial building as security) can fund the whole project in one hit.
The government’s guidance on applying for a business loan recommends working out the maximum repayment you can afford before you start. For an efficiency project, compare that figure against the expected monthly power saving.
If you already have an installer’s quote with the subsidy applied, send us a quick enquiry and we’ll show you how the repayments could sit against your savings.
What should the installer’s quote show?
Ask for a quote that makes the numbers easy to check:
- The number and type of existing fittings being replaced.
- The new fittings, with brand and model. Federal guidance suggests choosing well-known brands, since LED quality varies.
- Any sensors, timers or controls.
- The subsidy or scheme discount, shown as a separate line.
- Estimated annual energy saving, with the operating hours and tariff used.
- Warranty on fittings and workmanship.
- Disposal of old fittings and tubes.
If the estimated savings rely on hours your business doesn’t actually trade, ask for it to be redone.
Illustrative example
Illustrative. A building products wholesaler leases a large warehouse and showroom in western Sydney. The warehouse runs 40 old high-bay fittings for 14 hours a day, six days a week, and the showroom has dozens of halogen downlights.
An approved installer quotes $46k for LED high-bays with motion sensors in the racking aisles, new showroom downlights and daylight controls near the roller doors. After the Energy Savings Scheme discount, the net price is $31k. The landlord approves the works in writing.
Because the fittings will be fixed to a building the wholesaler doesn’t own, the owner funds the $31k with an unsecured business loan sized on twelve months of bank statements. The estimated monthly power saving covers a large share of the repayment from the first bill, and the warehouse staff notice the brighter aisles before anyone looks at the numbers.
Does a lighting upgrade make sense if you’re moving soon?
It can, but the maths changes. If your lease ends in a year or two and you don’t expect to renew, the savings may not have time to repay the cost, and you may have to leave the fittings behind or pay to restore the old ones. In that case:
- price only the highest-use areas, such as the warehouse floor or trading floor, where payback is quickest;
- ask whether plug-in or portable fittings are an option for spaces like workshops;
- check whether the landlord will contribute, since better lighting adds value to their building;
- keep the finance term short so you’re not still paying for lights in a building you’ve left.
If you’re likely to stay, a whole-of-premises upgrade usually pays off better, because installation costs are shared across more fittings and the savings run for longer.
What about tax and the lease?
On tax, the ATO’s instant asset write-off guidance sets a $20,000 per-asset threshold for eligible small businesses in 2025–26. Whether lighting counts as depreciating plant or as capital works on the building affects how it’s claimed, so get your accountant’s view before you finalise the project.
On the lease, check three things: landlord consent for the works, any make-good clause requiring you to restore original fittings, and whether fixtures become the landlord’s property. Retailers can find more on how lenders see their sector on our retail shop loan page. If you’re also thinking about moving a kitchen off gas, our guide to switching a commercial kitchen from gas to electric covers that bigger job.
Brighter premises, smaller bills
An LED upgrade is one of those rare projects where the business looks better, works better and costs less to run. With the subsidy claimed first and the balance spread over a sensible term, the savings can do much of the heavy lifting on repayments.
The form is short (most people finish it in a minute) and simply enquiring means no credit check. Your details stay with us rather than being blasted out to every lender in town, so the only call you get is ours. One of our team reads your installer’s quote alongside your trading figures, then rings to walk you through the realistic options. Please put in accurate numbers, especially the net cost once the subsidy comes off, because that’s what lets us get the match right on the first go.
Frequently asked questions
Are there government subsidies for LED lighting for businesses?
In some states, yes. Federal energy guidance points to the NSW Energy Savings Scheme, which offers subsidies to eligible small businesses through approved suppliers, and South Australia's Retailer Energy Productivity Scheme, which offers subsidies for upgrading whole premises to LEDs. The ACT has a lighting efficiency webtool. Check your state's current rules before you sign a quote.
Can I finance an LED upgrade in a rented building?
Often, yes, with landlord consent for the works. Because the fittings become part of the building, equipment lenders may be reluctant to secure over them, so tenants often use an unsecured business loan sized on turnover. Check your lease for make-good and fixture clauses.
How quickly does an LED upgrade pay for itself?
It depends on how many hours your lights run, the type of lighting being replaced, your power tariff and any subsidy. Businesses with long operating hours, such as warehouses, supermarkets and gyms, usually see the fastest payback. Ask the installer to show their working, using your actual hours.
Should I add motion sensors at the same time?
Usually it's worth pricing. Government guidance suggests occupancy sensors for meeting rooms, storerooms, print rooms and bathrooms, and timers or daylight controls for spaces with predictable use. Adding them during the upgrade saves a second visit from the electrician.
Is an LED upgrade tax deductible?
The new fittings are generally a business asset that's depreciated, and some items may qualify for the instant asset write-off if they're under that year's limit. Whether lighting is treated as plant or as part of the building can change the answer, so ask your accountant.