The government has been looking to outsource the management of the territory's 79,000 streetlights since last year, after it decided against full privatisation.

Negotiations have begun with electrical engineering firm Electrix on a seven-year contract, which would see them repair, replace and maintain streetlights across the city.

Electrix has promised to repair blown bulbs within two days instead of the current 10.

New LED lamps will be installed in areas of Canberra that have have the oldest and most inefficient incandescent light bulbs, City Services Minister Meegan Fitzharris said.

The move is expected to cut the streetlight network's power usage by 40 per cent.

The upgraded streetlights will also be able to be monitored in real time so they can detect faults like lamp failures or cable problems.

"This will allow us to fix any fault or outage much sooner and mean fewer problems need to be reported by the public," Ms Fitzharris said.

Streetlights account for one quarter of the ACT government's power usage.

Last financial year the government spent $500,000 upgrading their energy efficiency and more than $300,000 on maintenance.

The streetlight sale was announced in the 2014 budget by Chief Minister and Treasurer Andrew Barr.

However former Liberal chief minister Kate Carnell first floated the idea in the late 1990s.

But the government gave up on trying to sell the streetlights in late 2016, and called for tenders from private companies who wanted to manage the network instead.

That led to a staged procurement process, where companies were progressively knocked out of contention.

Ms Fitzharris said the Electrix contract would be finalised early next year.