As published in Bisnow on 01 April 2022

The clock is ticking loudly to improve the Energy Performance Certificate ratings of commercial buildings. From April 2023, landlords will not be allowed to continue leasing out a building with an EPC of F or below. From 2027, commercial buildings will be required to have an EPC of C or higher and by 2030 it will need to be a B.

Currently, only 4% of London offices have an EPC that meets energy use requirements that will be introduced in 2030. That leaves a huge proportion of existing properties that need to be overhauled to reduce the carbon they produce.

Despite an industry-wide lack of attention to EPCs to date, many property owners have started to address the challenge, real estate consultancy Hollis Director Karl Stansbie said. Hollis is working with many clients that are refurbishing buildings as part of their net zero carbon goal. For example, the team recently project managed the refurbishment of L&G-owned 43 Eagle Street in London and improved the EPC from an E rating to B, which shows what can be done with a 1950s commercial office in a 43 Eagle Street built-up conservation area.

“Funds such as L&G are already refurbishing buildings to get a B EPC rating, or even pushing harder to achieve an A rating by 2030,” he said. “For lots of clients it’s a process — they might not get there in three years, but they’ll get part of the way there and will push further after that. This is something that every property owner needs to start addressing today.”

Stansbie said that improving an EPC can be broken down into four areas. By chunking work in this way, the job becomes more approachable.

The building fabric
The first thing to do with any asset is to do a stock check — what is the current EPC and what is the client’s target?

“We do lots of modelling to show how a building is performing today, then pull together a list of potential improvements,” Stansbie said. “We score those against cost to decide priorities. We don’t just do everything, we choose what will be most effective and have the biggest impact on the EPC rating.”

Once priorities have been identified, a good place to start is to look at the building fabric, Stansbie said; the walls, floors, roof and floor slabs. If a building is vacant, this is a good time to make interventions.

“You could put in internal wall insulation or triple glazing, for example, or carry out work to improve air tightness or reduce thermal bridges,” he said. “Though this is more difficult in a multi-tenanted, occupied building, it can be done as part of planned maintenance works.”

Mechanical and electrical
A big-ticket item in this area is moving to LED lighting, Stansbie said.

“But you need to make sure you’re not just buying the cheapest system but the most efficient,” he said. “LED lighting needs to be designed to be certain lux levels and densities. You can also install PIR and daylight sensors, for example, to ensure lighting levels adjust around windows and turn off when a room is empty.”

Other technology to install includes CO2 sensors within HVAC systems to minimise energy usage, which adjust the lighting when a room isn’t occupied. While natural ventilation is the best way to ventilate a room, this isn’t always possible, but one option that ticks two boxes is a heat recovery system, which draws heat from stale air and passes it to the fresh air coming in – providing a constant supply of filtered air throughout the building.

“Overall, it’s important to install a centrally-controlled building management system to bring everything together,” Stansbie said. “You can adjust the M&E services depending on occupancy. Setting temperature ranges for a building just a bit lower, you can save a lot of energy.”

Power and heat
Today options to generate renewable energy include photovoltaic panels, wind turbines, or ground and air source pumps. The most suitable option depends on the building.

“All options come with their challenges,” Stansbie said. “While PVs are great for industrial property as you can put panels on 90% of the roof, offices often have a small roof space and challenges around planning, glint / glare and overshadowing often occur. In newer buildings you can put PVs in the cladding, roof tiles, or even windows, so this will likely get more common as more products are developed.”

Many property owners are keen to move away from using gas to heat a building, instead switching to electric systems or heat pumps. However, heat pumps aren’t always suitable for older buildings as they would require large radiators and even then might not create enough heat. A factor to keep in mind, Stansbie said, is that research into hydrogen technology is ongoing.

“In five to ten years hydrogen might start getting us closer to net zero carbon,” he said. “If this is the case, the natural gas infrastructure will be required again to deliver blended hydrogen to buildings.”

Green leases
Increasingly, office leases include clauses that try to ensure tenants’ behaviour doesn’t impact EPC ratings, Stansbie said. They state factors such as maximum energy consumption, and landlords install energy monitoring to allow tenants to see how much power they use. It is also increasingly the case that the tenant has green demands, Stansbie said.

“We see tenants looking for a specific EPC, particularly bigger tenants that have an internal ESG position,” he said. “Increasingly there will be a two-tier market, where landlords can command a greater rent for a green building.”

Stansbie said that he believed a method that will continue to gain prominence in the UK is the NABERS certification. This Australian-created scheme assesses operational energy — how much carbon a building generates once it is up and running — which EPCs don’t address. While some developers are already using NABERS to model energy performance, Stansbie said chances are high it will be used to take the conversation surrounding energy performance further than EPC ratings ever could.

Karl Stansbie

Director
Project management

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