The commercial property sector is steeling itself for an uncertain period and facing some tough decisions regarding energy efficiency and impending Government-enforced deadlines.
While the new-build rate is slow in the commercial property sector at two per cent, the sector still accounts for roughly 10 per cent of the UK’s total greenhouse gas emissions, and the UK’s commitment at the Paris Climate Summit to minimise these emissions is the driving force behind calls for the commercial sector to very quickly begin a largescale retrofit of its properties.
Minimum Energy Performance Standards
In truth, this requirement has been in place since Section 49 of the Energy Act 2011 stated that commercial property landlords will be prohibited from renting out properties that don’t meet the new Minimum Energy Performance Standards (MEPS). The deadline for this is April 2018, giving landlords only two years to get their properties on or above a Band E on their Energy Performance Certificate (EPC). The number of businesses renting their commercial properties is on the increase – it is currently over 50 per cent – which makes it challenging for policy makers to enforce the legislation, given the diverse and complex range of properties involved and the fact that there are different stakeholders to consider.
The Energy Act was introduced to speed up energy efficiency upgrades, but by late 2014 nearly one fifth of commercial properties still had an EPC rating of band F or G. Much of this is blamed on landlords’ reluctance to embrace new technology, with a lack of knowledge on how energy efficiency can reduce ongoing running costs. There is also apprehension over the disruption that retrofitting can cause. But landlords face a potential fine between £5,000 and £150,000 if they fail to meet the deadline, and taking London as an example it is clear that there is still a lot of work to be done.
Government Energy Efficiency Initiatives
There are Government initiatives to assist with the cost of retro-fitting, such as the Carbon Trust’s £7m fund made available to small and medium businesses in April 2016, and the Non-Domestic Renewable Heat Incentive (RHI), which rewards the use of ground and water source heat pumps, solar collectors and energy from waste.
Landlords also need to be aware that heating offers the greatest scope for efficiency improvements, with Low-H2O radiators an increasingly common installation. These use a tenth of the amount of water utilised by standard radiators, which gives them a rapid reaction time – thus saving energy – and also makes them lightweight and easy to install. Dynamic Boost Effect (DBE) is a technology that heats a room nine times faster and provides unrivalled heat output, while renewable technologies such as heat pumps will also cut energy costs and help bring a building’s eligibility in line with the requirements.
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