Energy Australia crews have started the 20-week Southern Lights project that will see a 1240 MWh reduction per year in power use in Orange, delivering savings of $485,000 each year in maintenance and electricity costs.

Mayor Reg Kidd said the project was created to look at more efficient lighting, better quality lighting, to save money and to decrease green house gas emissions.

"I think its a great decision to fund it and that should repay itself in five years so I think the cost benefit is fantastic," Cr Kidd said.

VIDEO: Ben Johnson and Beau Sposari from Essential Energy replace a street light...

"About 70 per cent better than the other ones and I think it's better light, better quality light and the maintenance on them is a lot less and they last a lot longer.

"They've got less bits and pieces in them that can be detrimental to the environment."

Cr Kidd said street lighting cost the council about $1.3 million each year.

"LEDs are far more energy efficient, require less maintenance and have a significantly longer life," he said.

"Council is investing $2.5 million to complete the bulk upgrade, with the costs expected to be recouped within a period of five years."

Essential Energy streetlight manager Waide Elliott said the new lights would not need to be replaced for at least 10 years.

"There will be no more changing light bulbs with these lights, they are much more reliable than the old technology," Mr Elliott said.

"It does improve the quality of our service with less outages so we can focus on other services."

Mr Elliott said the new LED lights cost about $550 per light and residents would have little interruption with crews isolating each site and turning the power off to each light as they do the replacement, which including checks took about 10 to 15 minutes to change each light.

"Impact on residents is very low and we implement traffic control on all of our main roads and we may undertake some of those works in the early hours or at night through CBDs," Mr Elliot said.

"This is part of a new strategy for Essential Energy to role out LEDs across the state."

Mr Elliott said street lighting represented between 25 and 70 per cent of any individual local government's corporate energy consumption and greenhouse gas emissions.

"The new LED street-lighting for Orange City Council will not only provide a more reliable, better quality lighting service, but also delivers savings of more than 60 per cent in energy consumption," he said.

"Essential Energy has planned 19 council areas this financial year and with plans for another 33 next financial year."

The project will be delivered over two phases, with the initial installation of more than 3400 lights now under way and a further 1500 to be installed once additional smart enabled LEDs become available.

The new street lights will also provides future potential for other 'smart' applications to be added such as traffic monitoring cameras, CCTV and water meter reading.