In February 2023, Energy Performance Certificates (EPC) regulations changed significantly in Scotland. There was also the introduction of the New Build Heat Standard (NBHS), which affects new buildings and conversions when building warrants are applied for after 01 April 2024.

We explore these and other future regulatory changes to advise you on how best to navigate this uncertain landscape.

Energy Performance Certificates (EPCs)

Energy Performance Certificates (EPCs) rate buildings on energy efficiency in bands from A (best) to G (worst). The primary metric for non-domestic EPCs is estimated carbon dioxide emissions.

The most significant change in the February 2023 update to EPCs is the carbon factor applied to grid-supplied electricity. The carbon factor assigns carbon dioxide emissions for each kWh of energy that a building uses, depending on fuel type. For electricity, this has been reduced by over 70% to reflect the increasing proportion of low-carbon electricity supplied to the UK grid.

The carbon factor for electricity has been significantly reduced and the range of the bandings has remained the same. As a result, all buildings can expect to receive better ratings than before. This is especially true for buildings with all-electric services, which will typically see a substantial improvement.

Because of this, we’ve seen a rise in buildings achieving an A rating without necessarily having good energy performance. This presents a risk for clients, especially those unfamiliar with the differences between Scottish and English systems and assume an A rated building must have excellent energy performance. New Scottish EPC methodology is expected in the coming years, but the details of what this will entail are unconfirmed.

We predict that the new system will discriminate more effectively between buildings with varying energy performance. This means that buildings which currently hold an A rating may receive significantly worse ratings if reassessed under new regulations.

New Build Heat Standard (NBHS)

From 1 April 2024 new buildings in Scotland cannot use direct-emission heating systems (e.g., gas-fired boilers) and must use alternatives (e.g., heat pumps and electric heating). However, this doesn’t apply to buildings where the building warrant was applied for prior to 1 April 2024; this change is part of the wider Heat in Building Strategy.

From 2045, the Scottish government proposed that direct-emission heating systems will be banned in all buildings. There’s also a planned measure to encourage connections to low-carbon heat networks, and ensures the minimum energy efficiency standards are met. The exact form these regulations will take is currently undetermined.

The importance of strategy and planning

Scotland’s commitment to decarbonisation has been a catalyst for regulatory changes, but the exact nature of future regulation is yet to be confirmed. So, it’s essential to stick to basic, robust principles rather than let the uncertainty around the details of future regulations lead to inaction.

Owners must look ahead and have a strategy in place to improve energy efficiency, end the use of direct emission heating, and make best use of natural trigger points (tenancy breaks or life expired systems). This will minimise costs, allow you to budget effectively and mitigate the risks of future regulation changes.

Implementation of the most feasible solution will require collaboration and understanding of the key stages and breakpoints throughout a building’s life cycle.

With our ‘One Team’ approach, we can guide owners across a range of sectors on the current efficiency of their buildings and make recommendations. We’ll also implement pragmatic and robust steps to meet the new standards.

Our integrated solution incorporates our in-house building surveying, project management, MEP and cost management expertise throughout, ensuring our decarbonisation reports and recommendations are technically reviewed and financially viable to fully support the ongoing planning, strategy and delivery of any upgrades and retrofitting works needed.

Want to learn more about ESG, EPCs and the regulation changes in Scotland? Get in touch with expert ESG Consultant Calum Mackenzie, who can help you with your ESG goals and compliance.