Posts

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

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.

Why sustainability cannot be ignored by the real estate industry

A key motivation when we started this business was for sustainability to be seen and accepted as a valuable asset management tool by the property industry. Seven years on, has our goal been achieved? Read on!


What is sustainability in Real Estate?

Sustainability can mean many different things to many different people so to keep it simple, I see sustainability in Real Estate as delivering enduring value. For the real estate industry, ultimately, for a building to be sustainable it needs to be occupied both now and for the foreseeable future, delivering an acceptable return to the investors.

Delivering value comes down to the key drivers of occupancy, rent, lease length and covenant strength so if a sustainable approach can enhance any of those key elements it will deliver value, in the same way as any other asset management tool. That has been my approach for the last seven years although I hope some of our methodologies have matured!

Sustainability is far more than managing energy, water and waste. Don’t get me wrong, these are important aspects, which can reduce the operating costs of a building and improve its resilience, all of which should be attractive to the occupiers.

Does this deliver quantitative returns?

The answer is not obvious in Europe, although the award-winning study entitled “Decomposing the Value Effects of Sustainable Real Estate Investment: International Evidence” measured the impact of sustainable investment on the value and performance of listed real estate investment firms (REITs) and found that strong sustainability practices are associated with superior investment performance.

[click_to_tweet tweet=”If you ignore sustainability you marginalise your ability to attract the broadest scope of occupiers, potentially those most likely to have the best covenant strength who often also have the strongest CSR credentials” quote=”If you ignore sustainability you marginalise your ability to attract the broadest scope of occupiers, potentially those most likely to have the best covenant strength who often also have the strongest CSR credentials”]

More importantly, if you ignore sustainability you marginalise your ability to attract the broadest scope of occupiers, potentially those most likely to have the best covenant strength who often also have the strongest CSR credentials. We have experienced, on a number of occasions, corporates matching this profile, willing to commit to longer leases for buildings which have excellent green credentials. This is of course not a one size fits all.

What does this mean?

At a regulatory level, in the UK it is now unlawful to let a building if it does not have a minimum EPC energy rating of an E. In addition E rated properties may still be at risk from MEES regulations. This is significant. For the first time we have energy efficiency regulation that impacts rental income and value. It will be interesting to see if this transitions into Europe in the future.

Interestingly though, we have seen greater uptake of sustainability through voluntary reporting than enforced regulation. GRESB, the global sustainability benchmark survey has mobilised the real estate industry over the last few years with 850 portfolios participating in 2017, representing more than USD$3.7 trillion in assets under management. GRESB is investor driven, to assess the environmental, social, governance (ESG) performance of their investment managers, where many see ESG as a fiduciary duty to protect and enhance future value of their investments. It is also interesting to note that research in July 2017 by Dirk Brounen and Maarten van der Spek identified a return premium of 3% between the highest and lowest GRESB scoring participants.

What practically should we be thinking about for the future?

So there appears to be some quantitative correlation to performance if enough research is done. But what practically should we be thinking about for the future?

For me, the three big impacts to plan for will be climatic change, technological advances and a generational shift in behaviour. I’m not going to dwell on climate change but the combination of rapidly advancing technology with a changing work culture will see a move away from honest work for honest pay to meaningful work in a meaningful environment. The advent of health and wellbeing to deliver a ‘meaningful environment’ is already upon us and my instinct tells me this will be the new face of sustainability, which will mobilise the industry far more quickly than just measuring energy.


To speak to a member of the team about how we can support you, please contact us.

Publication of Energy Performance Certificate (EPC) Data

In an effort to make more data publicly available, the Department for Communities and Local Government will be releasing cumulative EPC data for domestic and non-domestic buildings.

Until 30th June 2016, owners and occupiers of commercial property who hold EPCs are able to opt-out of the data release should they not want their EPC information to be released to the public.

However, EVORA advises against blanket opt-outs, without careful consideration and defined reasons, on the following grounds:

  • Each EPC must be opted out individually – the opt-out process becomes very time consuming.
  • The reuse of addresses for other purposes (including marketing) is prohibited.
  • The information is valuable to researchers, whose goal will be to advise on the effectiveness of the regime and will help inform future government policy and the real estate industry is crying out for better informed Government Policy.

Information is still available via the national non-domestic EPC register (where it is possible to search for EPCs on an asset-by-asset basis – so interested parties can still check for individual asset EPCs).

Data was previously released in January 2015. You can download the data to see how it is displayed here.

Holders of EPCs can opt-out of the data release and can do so by visiting this site.

More information on this subject is provided here.

For further information or guidance please contact Paul Sutcliffe: psutcliffe@evoraglobal.com or 07557 529 104.


Follow us on LinkedIn: