MEES: Top 9 immediate actions to help buildings achieve the likely new ‘B’ minimum EPC rating

Most in the property sector are probably now aware the government is currently consulting on the future of minimum energy efficiency standards (MEES) for commercial buildings.

It proposes, as explained in a recent EVORA GLOBAL blog, that the minimum should move from the current ‘E’ rating on an energy performance certificate (EPC) to a ‘B’ or ‘C’ by 2030, although the government’s preference is for the more ambitious ‘B’ target.

The government argues that setting a more ambitious regulatory trajectory will provide the energy efficiency market with the necessary certainty to scale, innovate and ultimately reduce costs to the customer. Some of this has already been seen in action with the solar power industry.

Even so, such a swift and steep change will be expensive for the sector. Currently only 10% of all EPC ratings issued in the past 10 years have reached a ‘B’ or better according to Carbon Risk Real Estate Monitor (CRREM) data for England and Wales

The government’s own modelling (which some might argue is optimistic) shows improving the commercial building stock in England and Wales to an EPC band B will require a capital investment of about £5bn between 2019 and 2030. This is compared with an estimated investment of £1.5bn to improve stock to an EPC band C. 

Even with such an outlay, the government admits 37% of buildings will still fail.

The government also announced it will consult next year on introducing mandatory in-use energy performance ratings next year. It is unclear what this might entail, and if it would replace an EPC or simply improve it. However, other bodies, such as the EU technical expert group on sustainable finance, currently use measures such as annual energy consumption per floor area. 

While a decade may seem a long time to prepare for the more ambitious ‘B’ target, in long-life  assets such as commercial buildings, that time will pass exceedingly quickly if landlords and asset managers do not make more ambitious changes in their current planned maintenance plans (PMPs) and retrofits.

Even simple changes will take time

The complex nature of mechanical and electrical services in buildings often means that simple changes can have far ranging implications which, in our experience, often exceed asset manager expectations. For example, upgrading a chiller is a project that takes several months not weeks; phasing out gas in a building will require technical assessments of cables and switchgear.

But those buildings that delay adaptation will find the minimum standard can only then be reached via very costly strategies. This will mean early obsolescence and the write-down in value of large numbers of assets.


Here are EVORA EDGE’s top actions to take now to help achieve a ‘B’ by 2030. 

  1. Dynamic simulation modelling on all assets as part of a strategic asset management plan. High capital expenditure should always be considered carefully and modelling each asset will allow decisions to be fully thought through and options compared, as well as provide predicted EPC ratings. DSM modelling will also mean assets are future proofed against any change(s) to EPC’s as DSMs can be calibrated and easily adapted to metrics that measure real world energy consumption.
  2. If an EPC rating has only recently been provided, consider converting existing EPC SBEM models to DSMs. While this is difficult it can be done. For more information read our case study.
  3. Investigate the feasibility of converting buildings to an all-electric strategy. The rapid decarbonisation of the national grid means the ‘carbon factors’, that determine the calculations for EPC ratings, will soon favour electricity over gas. However, be aware that some future tenants, such as laboratories, may still require gas and infrastructure decisions should take this into account.
  4. Greater reliance on passive measures to prevent solar gain and overheating will positively impact EPC ratings. These might include sophisticated window film, brise soleil, shutters or even planting deciduous trees in front of windows that will provide shade during the summer but let in winter sun for heating.
  5. Ventilation systems controlled by demand are the most energy efficient and, where technically possible, should be linked to carbon dioxide (CO2) sensors. This will also ensure good air quality and the wellbeing of occupants.
  6. Install LED lighting with a good control strategy. However, be aware that good quality fittings are required to ensure the LED lights do not distort electric harmonics by more than 10% -otherwise the system could cause flicker, voltage sag, load unbalancing and could potentially lead to higher electricity costs as a result. In extreme cases entire electrical systems can be destroyed.
  7. Begin a cost/benefit analysis of installing renewable technologies, including heat pumps, solar heat and PV This will not only help improve EPC ratings but also reduce real world energy bills.
  8. Develop an ambitious strategy early and align it with a building’s planned maintenance programme. Remember each building is different – use of modelling will allow different solutions to be arrived at, costed and more easily monitored, even across a portfolio of buildings.
  9. Allow time within your strategy to engage with occupiers. There will be scope to improve EPC ratings and save energy through service charges but this rarely happens unless occupiers are properly engaged as stakeholders.

EVORA EDGE can help develop and implement a strategic plan to improve the energy efficiency of buildings through modelling, project management and mechanical, electrical and public health (MEP) consulting.

For more information or a chat about drop us an email info@evoraedge.com  or call on +44 (0)1743 341903

Restricting urban biomass: A chance to improve city air quality

Reducing the volume of emissions for real estate activities and subsequently improving air quality is something EVORA Global supports clients in committing to. Often, this involves changing the way factors such as energy and heat consumption are managed. Switching from traditional fossil fuel to cleaner means is a great way to start, however, alternative means of heating still need to be carefully considered in terms of the overall impacts tied to them. 

Biomass systems are an example of an alternative heating source requiring such attention, due to implications for air quality from what they emit. In this blog we explore the potential issues with biomass and what the alternatives are for asset owners looking to move towards renewable heat. 


UK non-domestic renewable heat

The topic of renewable heat has been rising up the agenda as a key part of UK decarbonisation and net zero targets. According to BEIS it is estimated that a third of energy consumption in the UK is from heating, with  a substantial portion of this stemming from fossil fuel sources. 

Traditionally heating has been sourced predominantly from gas (~78%) in the non-domestic space, with only a small proportion from electricity (~8%) and even less from alternative sources (~6%) according to an Imperial College London and Vivid Economics analysis in 2018. As a result, to advance decarbonisation efforts, subsidy schemes such as the Renewable Heat Incentive (RHI) have been introduced. 

The Non-domestic RHI serves organisations that use alternative heating, incentivising the switch by paying generators for generated heat. In this way, renewable heating systems can be paid for in the long term, due to bill savings and cash flow from set tariffs lasting 20 years. Biomass, organic matter used for fuel, has been the most popular alternative, leading the way in terms of the RHI’s contribution to energy system decarbonisation. In fact, as of the end of August 2019, biomass accounted for 16,776 accredited systems across GB, with a capacity of approximately 4.1GW. This represents around 85% of the total number and generating capacity under the non-domestic scheme as shown in Figure One.

Figure 1 – Proportion of alternative heating installations by number and installed capacity (MW) across GB under the non-domestic RHI. 
Source: BEIS – RHI Monthly Official Statistics Table August 2019

Biomass is a carbon neutral fuel as carbon emitted is offset by that absorbed during the growth of the fuel (assuming that a sustainable supply chain is created with a continuous carbon sink and replenishment strategy in place). When compared to other fuelled boilers in Figure 2, data from the UK Houses of Parliament in 2016 suggests that the direct emitted carbon from biomass is lower than other conventional systems. This builds a strong case for using it in heat intensive settings.

Figure 2 – Average emitted carbon from conventional boilers of different fuel types
Source: UK Houses of Parliament 2016

Issues with air pollution

However, biomass has come under scrutiny due to other emissions which result from the combustion of the wood pellet fuel. Fine particulate matter (PM 2.5), ammonia (NH3), nitrogen oxides (NOX), sulphur dioxides (SO2) and other harmful substances have been found in high volumes on average from biomass systems. 

PM 2.5 is an air pollutant that is a major concern for people’s health and wellbeing due to reducing the quality of the air we breathe, causing respiratory difficulties and affecting lung function in the long term. This is primarily from the particulates themselves, however, PM 2.5 can act as a sink for other toxic substances which are produced from transport and industry which can also be drawn into the lungs. Therefore, it is of interest that the volume of PM 2.5 emissions is reduced in urban areas, due to the general proximity of the public to sources of emissions, as well as the relative density of pollution in these regions and other toxins that can be mixed in.

Data from EMEP/EEA air pollutant emission inventory guidebook 2016 illustrates the issue that biomass presents in Figure 3 below, with PM 2.5 emissions being the second highest of the comparative boiler fuels. When these systems are concentrated in an urban area, the issue is only exacerbated.

Figure 3 – Average PM 2.5 emissions from standard boilers of different fuel sources (*electricity does not factor source combustion)
Source: EMEP/EEA air pollutant emission inventory guidebook 2016

A BEIS consultation – restricting urban biomass

Due to issues arising from the continued rise in popularity around biomass and potential to impact air quality, Government outlined in an October 2018 consultation – Renewable Heat Incentive: Biomass Combustion in Urban Areas – the potential to restrict biomass facilities in urban areas. In effect, this will remove the financial incentive for all new biomass installations including combined heat and power (CHP). It has been a year since this consultation was introduced and Government has yet to provide a public response, however it is be speculated that the commitment to restrict urban biomass will follow through, as the Clean Air Strategy 2019 published in January 2019 reiterated the intention to do so.

These restrictions are aimed at steering potential installers of RHI systems away from biomass toward different measures, namely, those with a zero PM 2.5 emission status, as well as energy efficiency measures. As a result, BEIS suggest that the potential net present value of banning urban biomass from January 2019 could be as much as £89mn, with £23mn sourced from air quality impact savings alone due to lower social resource costs. Furthermore, carbon saving of 0.6MtCO2e per annum could also be achieved if other RHI technologies are deployed instead such as heat pumps and solar thermal.


Alternatives for asset owners to consider

Despite heating systems being a staple in all buildings, the reliance on them is still up for debate. It can be considered that in a temperate region like the UK, the need for external heating systems providing heat to buildings is unnecessary, especially in new builds where most new installations are likely to be targeted. In the case of biomass systems, they may not even need to be considered if energy efficient measures can be designed into a construction in the first instance. Furthermore, when looking at older structures energy efficiency and heat dependence can be improved through retrofitting. 

New build thermal efficiencies are expected to increase in the next decade or so, with the tightening of Part L Building Regulations and promotion of better standards such as Passivhaus including improved insulation, reduced air flow and intelligent design to take advantage of solar thermal energy. This could, in the longer term, negate the need for external heating completely, biomass or otherwise as room temperatures are maintained through the day. Therefore, alternative heating arrangements can be put in place, these being smaller and possibly modular RHI accredited systems which can adapt to a growing company throughout the year. This would promote flexibility, energy savings and reduced emissions overall.

…alternative heating arrangements can be put in place, these being smaller and possibly modular RHI accredited systems which can adapt to a growing company throughout the year. This would promote flexibility, energy savings and reduced emissions overall.

However, for existing buildings, which make up most of the real estate stock, external heating will still be required regardless of energy efficiency measures put in place. But real estate within urban regions can still tap into the benefits of renewable heat while avoiding localised air pollution by investing in other generator types. Air source, ground source and water source heat pumps, solar thermal arrays and geothermal installations are RHI accredited systems that do not combust material and therefore have zero PM 2.5 or carbon emissions as a result. 

Utilising these technologies therefore help investors to contribute to sustainability standards, improve health and wellbeing overall and act as an alternative to sometimes expensive energy efficiency retrofitting as well as receiving subsidy for their contribution. 


In summary, though biomass is a good alternative to carbon emitting fossil fuel boilers, in the urban environment emissions of PM 2.5 are problematic and undesired. As a result of the BEIS consultation, newly installed urban biomass is likely to lose subsidy. However, there are alternatives in place which can keep buildings warm but will help to improve air quality, through either complete replacement of biomass systems, or by using intelligent design to negate the need for large external heating in the first place. 

For more information surrounding urban RHI systems or energy efficiency measures, please get in contact with the team. 

MEES: Consultation calls for EPC rating to be raised to band B for commercial buildings by 2030.

On 15th October 2019 the Government’s Department for Business, Energy & Industrial Strategy (BEIS) published its future trajectory for Minimum Energy Efficient Standards (MEES) for non-domestic commercial buildings. 

The consultation follows the government’s earlier commitments in the year to hit net zero carbon emissions by 2050. Under the current consultation the government propose a new plan to raise the minimum EPC rating from ‘E’ to ‘B’ by 2030.

Under the original MEES legalisation, from 2018 landlords are not permitted to grant any new tenancies or extend/renew any existing properties with an EPC rating of an F or G. Plans to keep the existing regulatory policies are still underway and the legislation will still be extended to ‘all existing leases’ from 1 April 2023.  The consultation to raise the minimum EPC rating from an ‘E’ to ‘B’ by 2030 will significantly impact energy management planning for landlords across the UK. 


MEES: is it all plain sailing from here?

85 percent of existing commercial buildings in England and Wales would need improvements to achieve the EPC band B target, with investment costs up to £5 billion.

Granted there are stipulations in the proposal, for example if the payback period does not meet the seven-year payback rule, the landlord could still apply for an exemption worth five years. The government are also looking for ‘market-led’ solutions in order to tackle any issues regarding tenant consent to prevent landlords essentially attempting a ‘get out of jail-free’ card.

The consultation has also considered the idea of raising the EPC to a ‘C’ by 2030, or alternatively taking an incremental approach, with milestones for landlords to reach the rating of B by 2030 (for example, 2020 D, 2025, C…etc). However, both are deemed less favourable due to fewer emissions savings between now and 2030 and capacity issues. Could there in fact be a way to incentivise landlords to carry out works?

Overall, the fast-paced movement of the consultation appears positive (from an energy / carbon management perspective), it does go without saying though that the implications of such legislation could result in greater risks for business’ today, if no action is taken.

Are you at risk?

The answer is: you may well be

The government intends that responsibility for the energy efficiency of the building will continue to sit with the landlord. Therefore, failure to comply with regulations will result in fines between £5000- £150,000. All types of non-domestic properties may struggle to sublet standard space without undertaking improvement works, and therefore become difficult to let or sell due to their poor EPC rating. It is well known that landlords face many challenges with the current EPC rating system. EPC calculations are linked to building regulations, which means it makes it harder to achieve a satisfactory rating when targets are continually being strengthened. Therefore, business’ need to be able to identify where the gaps are in their data and ensure those most at risk by the new band increase are adequately prepared. 

With the consultation hinting greater rigour in its enforcement, there is no doubt that businesses should look to future proofing their assets against changing regulations in energy efficiency. It’s good to see this as an opportunity! The consultation even announced that the current regulatory framework which only considers the condition of buildings rather than their operational energy efficiency, has now been scheduled in for an additional consultation on the introduction of mandatory ‘in-use’ energy performance ratings in 2020. There is no denying MEES requirements are being accelerated in a short span of time. Therefore, it is expected that we will see more changes in the next coming years.


So, the key question here is how can you as a business combat against this measure? And how can we help you do so?

Well have no fear, EVORA is here…

EVORA have some nifty blogs that explain how your buildings can achieve EPC level B. But for a quick overview:

Landlords should identify where there are gaps are in the data and which are at most risk across their portfolios/funds. Having access to a central database that stores all key information in a consistent format will provide an easily aggregated view of which sites are at risk. EVORA can help clients with the use of its SIERA platform – a proprietary sustainability management software – to provide a cost effective and high-quality EPC service, that ensures accurate and more in-depth analysis of buildings and risk. With a combination of basic EPC information and lease data the SIERA EPC profiler can identify, categorise and rank potential MEES risk for each building. 

Figure 1: EPC MEES risk profiling in SIERA – Overview

Data is stored and displayed in a tabular and graphical format with the capacity to filter analysis based on a range of criteria including EPC rating, EPC expiry, lease event and estimated rental value. As result, the EPC profiler can breakdown risk and provided landlords with a simple and complete understanding of requirements and risks under the MEES regulations. 

Figure 2: EPC MEES risk profiling in SIERA – Filter

EVORA Edge have a multitude of cutting-edge modelling techniques, project management and mechanical, electrical and public health (MEP) consulting that could help mitigate against the implications of raising the minimum energy efficiency standard. Starting with dynamic simulation modelling that could provide predictions on your EPCS to ambitious strategies that align with your buildings planned maintenance programme. By managing MEES risks, landlords can safeguard building value, enhance energy management and promote resilience.


It is undeniable that energy efficiency of buildings is one of the key issues facing investors in the market today and that is why EVORA is here to help mitigate against those risks. For more information or a chat about drop us an email info@evoraedge.com or call on +44 (0)1743 341903.

Don’t forget to renew your heat network registrations.

Under the Heat Network (Metering and Billing) Regulations 2014; organisations must ensure that heat networks remain registered.  There is a requirement to renew every 4 years. For most organisations this deadline will be 31 December 2019.

About the Heat Network Regulations

A heat supplier obligated under the regulations is defined as a person (or organisation) who supplies and charges for the supply of heating, cooling or hot water to a final customer, through either communal heating or a district heating network.

Whoever is supplying the end user with heat is classed as a heat supplier. This includes the supply of heat as part of a package – i.e. through a service contract. The contract does not need to explicitly mention the supply of heat. Shared / multi-let offices and shopping centres where heating and/or chilled water is provided to more than one tenant in a building are identified as obligated examples within the guidance document.

Requirements

Heat suppliers were required to notify the National Measurement Office of the existence of heat networks every four years.  In most cases, the deadline will be 31st December 2019.

Regulatory Update

The regulations also include requirements to complete cost effectiveness calculations for installation of heat meters.  The cost effectiveness tool is currently being revised by the department for Business, Energy and Industrial Strategy (BEIS). Therefore, pending the revision of the tool it is advised that no further assessments should be undertaken.

“The Financial Conduct Authority (FCA) has confirmed that it would not be appropriate for them (the FCA) to impose fines or other disciplinary measures in respect of a breach of the requirement within the heat network (metering and billing) regulations 2014 (as amended), that certain heat suppliers must test whether it is cost-effective to fit heat meters in multi-occupancy buildings, and where appropriate, fit them by 31 December 2016.”

“Furthermore, it is unlikely that the FCA would take other regulatory action (where a heat supplier was separately regulated by the FCA) if the only non-compliance was in relation to the requirement to test for and fit meters where cost effective. As such, it is not considered necessary for a heat supplier to inform the FCA if it has been unable to meet this requirement.”

Questions? Please don’t hesitate to get in touch.

CSR to ESG: an evolution

We’re used to hearing about Corporate Social Responsibility (CSR), it’s been around for years, but when did being responsible turn into something much more for the built environment?

Many years ago now, I began my career at Business in the Community, and so my journey (eventually) into sustainability. Even then, as one of the Princes Trust charities, the message was loud and clear – the biggest and best companies were all talking about CSR. 

“… the idea that a company should be interested in and willing to help society and the environment as well as be concerned about the products and profits it makes.”

Cambridge Dictionary

But at that point, when we talked about ‘the environment’, we were talking about recycling and waste, not really about the physical building. Being environmentally responsible still seemed a fairly new concept when compared to diversity and inclusion or, local communities or ethics.

 ‘Green wash’

After a segway into other countries and sectors, about eight years ago, I found myself working for a large construction company and landed smack in the age of Health and Safety. CSR was evolving into charitable events and effective communications with local communities. People before profit.

I’m not sure I ever heard about sustainability. The key word then, I suppose, was ‘green’. In doubt? Want to charge more money? What to sound innovative? Say it’s green.

“Also known as “green sheen,” greenwashing is an attempt to capitalize on the growing demand for products that are environmentally sound.” 

Investopedia

But no one was really willing to pay for it yet. Green projects or proposals had to be taken to the Board, and you had to justify the business case and show the return on investment. Only the leading companies had a team who worked on it, and even then, it was probably only one person.

At the same time there were companies dressing up services or initiatives that were environmentally friendly and ‘green’ without any real substance to whether they actually were or not.

The business case for sustainability

It wasn’t until a few years later, when I joined UKGBC that the momentum really picked up. The early adopters and the pioneers of the green building agenda were no longer content to just say they were doing something, they wanted to really show they were walking the talk. They were really doing what they said they were doing, and they wanted to prove it to you.

Increasingly, more companies were realising that there was in fact a business case for green, and it wasn’t just about making more money.

“A built environment that enables people and planet to thrive…” 

UKGBC

As soon as the penny started dropping on the long-term benefits of building green and of retrofitting existing buildings (giving them a new lease of life!), the conversation really began. Suddenly, it wasn’t just about green, it was about sustainability.

I believe that a huge part of getting the sustainability conversation more mainstream in the built environment sector, was health and wellbeing. 

Here was the real business case for those lagging behind – happier, healthier staff who stayed with the company longer, had less time off, were more productive and therefore made the business more profitable. There’s the hook.

An ESG (re)evolution

Since joining EVORA two years ago, I’ve seen the biggest shift in opinion. Not just in the industry, but the whole conversation of sustainability, responsibility to the environment and climate change. 

 ESG stands for Environmental Social and Governance, and refers to the three key factors when measuring the sustainability and ethical impact of an investment in a business or company.” 

Market Business News

As consumers and customers wake up to the state of our planet and the environment, the pressure on companies to act in a responsible way has really ramped up. But what does this mean for the built environment?

People are beginning to insist that the built environment in which they live, work, shop and spend much of their time, puts their health and wellbeing – as well as the future of the planet – at the heart of everything. And it’s not just about the places; increasingly, people are making their decisions on who to do business with, based on a company’s green and ethical practices. 

A recent study found that nearly two-thirds (64%) of millennials said ESG issues are important in their investing decisions with Gen Xers not far behind at 54% and Baby Boomers at 42%. In addition, majorities across all generations say ESG is a key factor in which companies they choose to do business with.

With this in mind, ESG is going to play a critical role in how the built environment is managed going forwards. From inception, through design, build, occupation and disposal. ESG needs to be fully embedded into an organisation’s decision-making. Those that fail to integrate ESG into their practices face the risk of finding themselves obsolete in the future. ESG is here to stay and will be at the forefront of tackling climate change and ensuring a sustainable future.