How LED Lighting Affects Your NABERS Energy Rating: What Australian Building Owners Need to Know

In July 2025, NABERS updated its methodology to penalise gas-reliant buildings. Knight Frank calculated that roughly 70% of NABERS-rated office buildings saw their energy star rating fall as a result. Simultaneously, from July 2025, all new Commonwealth government office leases over 1,000m² require a minimum 5.5-star NABERS Energy rating. From July 2026, that bar rises to 6.0 stars, and buildings must be all-electric.

If your building has dropped half a star and your biggest prospective tenant now requires 5.5 stars, the gap between your current rating and what the market demands has just widened at both ends. Lighting is often the fastest and cheapest lever available to close it.

This article covers exactly how lighting affects your NABERS rating, what the CBD disclosure obligations require, how the Tenancy Lighting Assessment works, and what a LED upgrade realistically does to your star number and your rent roll.

What NABERS Energy is and how it is scored

NABERS (National Australian Built Environment Rating System) is administered by the NSW Government and provides standardised energy, water, waste and indoor environment ratings for commercial buildings. NABERS Energy for offices is the most commercially significant rating. It uses actual 12-month energy consumption data, adjusted for building size, hours of operation, location, and occupancy, and benchmarks the result against other buildings in the same market.

The rating runs from 0 to 6 stars:

The Australian commercial office market currently clusters between 3.5 and 5 stars for rated buildings. The average unrated building is estimated to perform at around 2 stars. A building that has never been rated, or that has let its BEEC expire, is effectively invisible to tenants with sustainability requirements in their briefs.

The CBD disclosure obligation: what triggers it and what it requires

The Commercial Building Disclosure (CBD) program is federal legislation. It requires that any sale or lease of commercial office space of 1,000m² or more must include a current Building Energy Efficiency Certificate (BEEC). The BEEC has two components:

1. NABERS Energy base building rating covering central services: HVAC plant, lifts, lobby and common area lighting managed by the building owner.
2. Tenancy Lighting Assessment (TLA) covering the power density and control systems of the lighting in each tenancy area.

A BEEC is valid for up to 12 months. It must be in place before the property is advertised, and the NABERS Energy star rating must appear on all advertising material. A building without a current BEEC is in breach of the program and faces penalties of up to $170,000 per contravention.

How lighting is assessed in the CBD program: the Tenancy Lighting Assessment

The TLA measures two things for each tenancy area: the Nominal Lighting Power Density (NLPD) in watts per square metre, and the capacity of the installed lighting control systems. Both are graded.

NLPD: watts per square metre

NLPD is the total wattage of the installed general lighting system divided by the floor area. Lower is better. The TLA Rules introduced a new grade band below 4.5 W/m² in version 4.0 specifically to capture modern LED performance, because existing bands were designed when fluorescent was the baseline.

A standard T8 fluorescent office with magnetic ballasts runs at 9–12 W/m². A quality LED panel retrofit typically achieves 4.5–6 W/m². A well-designed LED fitout with occupancy sensing can reach below 4.5 W/m² and achieve the Excellent grade band.

The TLA result appears on the BEEC alongside the NABERS base building star rating. Tenants and their advisors read both. A "Very Poor" TLA next to a 4-star base building rating is a visible signal to prospective tenants that the tenancy lighting has not been upgraded.

From 2025, TLA certificates are valid for 5 years where the tenancy lighting has not changed, reducing the ongoing cost of CBD compliance for buildings that have completed an LED upgrade.

How lighting affects the NABERS Energy star rating directly

Lighting is not a separate score in the NABERS Energy for Offices methodology. It feeds into total energy consumption, which drives the star rating. In a typical commercial office building, lighting accounts for 25–40% of total energy consumption. That makes it the largest single controllable energy load in most buildings.

Replacing T8 fluorescent with LED typically reduces lighting energy by 50–70%. On a building where lighting represents 30% of total energy, a 60% lighting reduction cuts total building energy by 18%. Depending on where the building sits on the NABERS scale, that single measure can move the star rating by 0.25 to 0.75 stars.

The actual star movement depends on the building's current star rating position within its band, the proportion of energy attributed to lighting, and what other energy measures are already in place. A building at the bottom of its 3-star band moves more than one at the top of that same band. Your NABERS assessor can model the likely outcome before you commit to the upgrade.

The 2025 methodology change: why 70% of buildings just lost half a star

In July 2025, NABERS updated its benchmarks to incorporate the 2024 National Greenhouse Accounts (NGA) emission factors. The 2024 NGA factors reflect Australia's increasingly clean electricity grid. This means the same quantity of electricity now represents fewer greenhouse gas emissions than it did previously.

The practical consequence is significant. Buildings that heat and cool with gas look relatively worse against electricity-powered buildings than they did before the update. For a building using gas for space heating, the expected impact is approximately 0.5 stars lost from the July 2025 update, rising to 1.0 star lost by 2030 as the grid continues to decarbonise.

A building that held 4.5 stars before July 2025 may now sit at 4.0 stars. That half-star drop can be the difference between retaining and losing a government department tenant, or between qualifying and not qualifying for a green lease.

For gas-reliant buildings, the path to recovering or exceeding the previous rating involves a combination of electrification measures and energy reduction. LED lighting is one of the most cost-effective energy reduction measures available, and it improves the rating regardless of the gas/electricity split because it reduces total energy consumption.

Government tenant requirements: the deadline that most building owners have missed

The Commonwealth government is Australia's largest single office tenant. From July 2025, all new Commonwealth office leases for 4 or more years, over 1,000m², require a minimum 5.5-star NABERS Energy rating for both base building and tenancy. From July 2026, that requirement rises to 6.0 stars, and the building must be all-electric.

The government lease requirement also influences private sector tenants. ASX-listed companies, the major banks, law firms and professional services firms with ESG reporting obligations are increasingly applying equivalent sustainability standards to their leasing decisions. A building that cannot meet government lease requirements in 2026 is also falling out of the brief for a significant share of the private commercial market.

The rental premium and property value case

JLL research quantifies the commercial outcome directly. Buildings with 5.5-star NABERS Energy ratings command a 10% rent premium over lower-rated equivalents. Research across more than 300 office sales in Sydney and Melbourne shows NABERS-rated buildings worth an average of 8% more per square metre than unrated buildings. There is also a 7% occupancy rate spread between 4-star and 5.5/6-star buildings.

The numbers above use conservative rent premium estimates from JLL research. In tighter CBD markets and for larger floor plates, the case strengthens further. The LED component of the upgrade ($58,000) is a small fraction of the total project cost but delivers an immediate, measurable contribution to both the NABERS star rating and the energy saving.

Base building vs tenancy: who owns which part of the lighting problem

NABERS Energy can be rated separately for the base building and for individual tenancies. Understanding which is which matters for deciding who funds what.

Base building rating: Covers central services managed by the landlord: HVAC plant, lifts, lobby lighting, carpark lighting, and common area lighting. The landlord commissions and pays for this rating. Lobby and common area LED upgrades improve the base building rating.

Tenancy rating: Covers the lighting and power within individual tenancy spaces. This is where most commercial floor space energy is consumed. A tenant with its own ESG targets may commission a tenancy rating. The TLA (required under CBD disclosure) is effectively a snapshot of the tenancy lighting standard without requiring a full tenancy NABERS rating.

In a gross lease, where the landlord pays all outgoings, the landlord has a direct financial incentive to improve tenancy lighting because energy savings flow to the landlord's bottom line. In a net lease, where the tenant pays energy costs, the landlord's incentive is primarily the rental premium and market competitiveness of the building, while the tenant benefits from lower energy bills. Both positions support the LED upgrade business case, from different directions.

What a LED upgrade realistically contributes to NABERS improvement

LED alone will not take a 3-star building to 5 stars. Lighting is one lever among several. The full set includes HVAC upgrade and electrification, building management system (BMS) optimisation, lift regeneration, smart metering, occupancy sensing and after-hours setbacks. A comprehensive upgrade programme targeting 5+ stars typically involves multiple measures in combination.

Within that programme, LED offers the best cost-per-star-point outcome of any single measure for most buildings, because lighting accounts for such a large share of total energy and because LED capital costs have fallen to the point where the payback is measured in months to low single-digit years rather than decades.

The sequencing matters. LED should typically be the first upgrade completed because it reduces the base energy load against which all subsequent measures are judged. Upgrading HVAC in a building still running T8 fluorescent means the HVAC assessment is inflated by a lighting load that will be removed later. Do the LED first, then model the NABERS position and plan the next phase.

What to ask your lighting supplier before the NABERS upgrade

Not all LED upgrades are equal from a NABERS perspective. These are the questions to ask before committing:

• What is the system wattage per square metre? You need the post-upgrade NLPD to be below 6 W/m² (Good grade) or ideally below 4.5 W/m² (Excellent). Get this figure in writing from the photometric report, not from the fitting label.
• Does the proposal include occupancy sensing and daylight harvesting? Occupancy sensors alone can reduce measured energy consumption by a further 20–30%. NABERS measures actual energy, not installed capacity, so a well-controlled LED installation scores better than a poorly controlled one even if the fixture wattage is identical.
• Can the supplier provide a photometric report? A photometric report (DIALux or Relux output) documents the NLPD calculation and confirms AS/NZS 1680 lux compliance. Your NABERS assessor and TLA assessor will want this documentation.
• What is the product warranty and L80 rating? NABERS assessments look forward as well as backward. A 5-year warranty and L80/50,000-hour driver rating demonstrates the installation will maintain its performance through future assessment cycles.

Getting the NABERS assessment: cost and process

A NABERS Energy assessment for offices is conducted by an accredited NABERS assessor. The assessment uses 12 months of actual electricity and gas billing data, adjusted for building characteristics. The assessor submits the data to NABERS, which calculates the star rating. A certified rating is then issued as part of the BEEC.

Assessment fees typically run $2,500–$8,000 depending on building complexity and the number of floors. Add $800–$2,500 for a TLA depending on the number of tenancies. The BEEC is valid for 12 months. Buildings that complete a major LED upgrade mid-year should time the assessment to capture the full year of post-upgrade consumption data rather than averaging over a transition period.

If a major upgrade has just been completed and you need a BEEC for a pending lease transaction before 12 months of data is available, a NABERS Commitment Agreement can be issued based on modelled performance. This is a temporary instrument that allows the CBD disclosure obligation to be met while post-upgrade data accumulates.