Warehouse managers across Australia are making the switch from old metal halide and fluorescent lighting to LED, but many struggle to calculate the true return on investment. Let’s break down the numbers so you can present a solid business case to stakeholders.

Start With Your Current Lighting Costs

First, audit what you’re spending now. A typical 400W metal halide fixture draws around 455W when you factor in the ballast. If you’re running 100 fixtures for 12 hours a day, that’s 545kWh per day, or roughly 16,350kWh per month.

At an average commercial electricity rate of $0.25 per kWh (which varies by state and time-of-use tariffs), you’re looking at $4,087 per month just in energy costs. That’s $49,044 annually for those 100 fixtures alone.

Don’t forget maintenance. Metal halide lamps need replacement every 10,000-15,000 hours. At 12 hours per day, you’re replacing bulbs every 2-3 years. Factor in lamp costs ($30-80 per bulb), ballast replacements ($60-120), and labour for your maintenance team or contractors. Budget around $150-200 per fixture over a three-year period for traditional lighting maintenance.

Calculate LED Operating Costs

A 150W LED high bay provides comparable light output to a 400W metal halide. That same 100-fixture warehouse now draws only 180kWh per day, or 5,400kWh monthly.

Your monthly energy cost drops to $1,350, or $16,200 annually. That’s a saving of $32,844 per year on electricity alone.

LED maintenance is minimal. Quality commercial LEDs last 50,000-100,000 hours—that’s 11-22 years at 12 hours daily operation. Most come with 5-10 year warranties. You’ll essentially eliminate lamp replacement costs during the payback period.

Don’t Miss Available Rebates

This is where many Australian businesses leave money on the table. State energy efficiency schemes can significantly reduce your upfront investment:

NSW Energy Savings Scheme (ESS): Commercial lighting upgrades qualify for Energy Savings Certificates (ESCs). A warehouse upgrade typically generates 20-40 ESCs per fixture, worth $15-30 each depending on market rates. That’s $1,500-3,000 per fixture in rebates.

Victorian Energy Upgrades (VEU): Similar program offering Victorian Energy Efficiency Certificates (VEECs). Commercial lighting projects can see rebates covering 30-50% of upgrade costs.

Queensland, SA, and other states: Check your state’s energy efficiency programs through energy.gov.au for current schemes.

Work with an accredited provider who can handle the paperwork and discount the rebate value upfront. Don’t pay full price when thousands in rebates are available.

Factor in Productivity Gains

Better lighting directly impacts warehouse operations. LED high bays provide instant-on illumination (no warm-up time), better colour rendering (CRI 80+ vs 65-70 for metal halide), and reduced shadows.

Quantifying productivity is trickier, but consider:

• Reduced picking errors from better visibility
• Faster movement through aisles with improved light distribution
• Lower accident rates (relevant for insurance premiums)
• Improved staff morale and retention

Even a conservative 2-3% productivity improvement in a warehouse operation can justify the upgrade on its own. For a facility with 20 staff at $30/hour, a 2% efficiency gain equals approximately $24,960 annually.

The Actual ROI Calculation

Let’s use real numbers for our 100-fixture warehouse:

Upfront costs:

• 100 LED high bays at $350 each: $35,000
• Installation (electrical contractors): $8,000
• Total investment: $43,000

Less rebates:

• ESS rebates (conservative estimate): -$20,000
• Net investment: $23,000

Annual savings:

• Energy: $32,844
• Maintenance: $6,000
• Conservative productivity gain: $10,000
• Total annual benefit: $48,844

Simple payback period: 23,000 ÷ 48,844 = 0.47 years, or approximately 5.6 months.

Even without the productivity gain factored in, you’re looking at a payback under 12 months.

What Gets Missed in Basic Calculations

Temperature control matters. Metal halides generate significant heat—your HVAC system works harder during summer months. LED fixtures run much cooler, reducing cooling loads. For large warehouses, this can add another $2,000-5,000 in annual savings.

Power quality improvements also matter. LED drivers with power factor correction can improve your facility’s overall power factor, potentially reducing demand charges on your electricity bill.

Zoning and controls become affordable with LED. Adding motion sensors or daylight harvesting in certain areas can push savings even higher. These features were cost-prohibitive with HID lighting.

Making the Business Case

Present your findings with conservative estimates. Use your actual electricity rates, current fixture count, and confirmed rebate values from accredited providers. Get quotes from at least three commercial LED suppliers.

The numbers typically speak for themselves. With payback periods under 18 months even in conservative scenarios, warehouse LED upgrades are among the fastest-returning capital improvements available to Australian facilities.

Document your baseline carefully—take light readings, photograph current conditions, and save several months of electricity bills. This gives you solid before-and-after data to validate your projections and potentially inform future upgrades.

The question isn’t whether to upgrade warehouse lighting to LED. It’s whether you can afford to wait another year while burning through operational budget that could be redirected to growth initiatives.