The city plans to convert half of Bellevue’s streetlights from incandescent bulbs to light-emitting diodes by 2016, the changeover estimated to save the operating budget $173,000 annually.

A quarter of the $1.1 million project is funded through a state Department of Commerce energy efficiency grant and another $239,000 is coming from rebates through Puget Sound Energy, which owns the lion’s share of streetlights to be converted to LEDs this year.

The city is paying another $600,000 for the project, which city traffic engineering manager Mark Poch said will be paid off through energy cost savings and PSE rebates within 3 1/2 years.

PSE owns 4,066 of the 4,242 streetlights planned for conversion to LEDs — most to be completed this year — which is expected to bring the monthly rate the city pays per streetlight down from $13 to $9. The city owns 3,100 streetlights in Bellevue, and has converted about 170 to LEDs through various pilot projects, Poch said. PSE has already converted 280 of its 5,600 streetlights to LEDs.

The conversion will represent a 50-percent reduction — 1.19 million kWH — in energy consumption through city streetlights, Poch said, adding PSE-owned lights were favored for the rebates and rate reduction offered by the energy company that amounts to a $173,000 annual savings. PSE is set to begin converting streetlights in March.

Many city-owned streetlights, Poch said, require new LED-compatible fixtures. Tackling those conversions will likely take a work program and revolving fund to cover the cost of responding to areas where streetlights have reached the end of their lifespan.