Strata communities across Australia are facing a significant upcoming change: the national phase‑out of fluorescent lighting by the end of 2027.

For many buildings, this presents both a challenge and an opportunity.

While an LED upgrade will eventually become unavoidable, the transition can also improve energy efficiency, reduce running costs and strengthen sinking fund cashflow, even for schemes with limited funds available.

Why LED Upgrades Matter Now

Upgrading to LED lighting is no longer just a sustainability choice; it’s becoming a compliance requirement. Acting early can help strata committees and managers avoid cost pressures and take advantage of energy savings that offset project costs.

Key considerations include:

• Fluorescent lamps will be phased out by 2027, meaning replacement lamps will no longer be available and full LED upgrades will be required.
• Electrical installation costs are forecast to rise, driven by labour shortages and increasing demand as the deadline approaches.
• LED lighting typically reduces energy consumption by around 60%, creating ongoing savings that can be used to improve sinking fund cashflow.

Many body corporates choose to upgrade lights gradually as funds allow, but this often delays the financial benefits of a full upgrade and restricts other maintenance priorities. Exploring alternative funding pathways can help buildings complete the entire upgrade sooner and begin realising savings immediately.

Funding Options to Improve Cashflow

Green funding models allow strata buildings to complete an LED upgrade with no upfront deposit or outlay, using the energy savings generated by the new lighting to cover the project cost over time. This approach can help committees:

• Avoid drawing down limited sinking funds.
• Complete the full upgrade at once rather than in stages.
• Improve cashflow by diverting energy savings to repayments.
• Reduce long‑term operating costs once the funding term ends.

What an LED Assessment Provides

An LED upgrade assessment helps body corporate committees understand the financial and operational impacts of transitioning away from fluorescent lighting. A typical assessment includes:

• A review of existing lighting types and running hours.
• Estimated energy savings from LED and sensor‑controlled lighting.
• A projected Return‑on‑Investment (ROI) period.
• A comparison of funding options and cashflow outcomes.
• A clear outline of long‑term savings once the upgrade is complete.

This information supports informed decision‑making and helps committees plan for the upcoming fluorescent phase‑out with confidence.

Green-Funded LED Upgrade Example

Let’s use a lighting upgrade example with a 4-year financial payback to see how energy savings can offset project costs. Actual results may vary depending on lighting types, usage and rates:

• Project Cost: $30,000 lighting upgrade with a 3% inflation rate.
• Current lighting energy costs: $14,000.
• Energy savings: $9,962 per annum (71% energy reduction by using LED with sensors).

*This example is general in nature and not financial advice. Committees should seek appropriate professional guidance before entering any funding arrangement.

With a conservative four‑year payback period, the project can be funded entirely through diverted energy savings, with no deposit or outlay. After the funding term ends, the building retains full ownership of the upgraded lighting and continues to save approximately $11,000 per year compared to not upgrading.

Act Now

The upcoming fluorescent ban is a timely reminder for strata communities to review their lighting infrastructure and plan ahead. LED upgrades offer a practical way to reduce energy costs, improve sustainability and strengthen sinking fund cashflow – even when funds are limited. Early action can help buildings avoid rising installation costs and ensure a smooth transition before the 2027 deadline.

Summary

• Not acting or proceeding with a green funded LED upgrade assessment is the risk.
• Obtaining an ROI assessment is the first step in ensuring you make sound financial decisions
• Acting now will help your Body Corp get the most benefit from its sinking fund – regardless of your current sinking fund balance.

Example – If you had $40K in your sinking fund and you wanted to upgrade your lights to LED ($30K) and also paint the building ($30K) – you could choose to green fund the $30K LED upgrade (realise the energy savings) and then also proceed with painting the building (keeping a $10K buffer) whilst improving your cash flow.

Article Contributed by Tony Arhanic, Queensland Sales Manager/Estimator at E&E Lighting Australia.

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