Photo by Austin Distel

Changes to how the energy performance of non-domestic buildings is assessed are causing challenges for commercial property owners working to get their buildings to the required minimum energy efficiency standard, a sustainable energy expert has warned.

The software used to generate Energy Performance Certificate (EPC) ratings for non-domestic buildings has recently been amended with the latest software resulting in significant changes to the rating of buildings.

The key change in the software has been to the ‘carbon emission factor’ for grid-supplied electricity. Emissions in the generation of grid electricity have been roughly halved since the last software update, due to the increase in proportion supplied by renewable technologies such as wind power and solar PV, which means buildings primarily heated by grid electricity are seeing improved EPC ratings under the new software.

But those heated by gas which is widely used for commercial heating could see their EPC ratings drop when reassessed under the new software. The decline in rating conflicts with ever-tightening EPC regulation and may require many to switch to electric heat pumps for heating to get their EPC rating back to where it needs to be.

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By April 1st 2023, all non-domestic properties need to be at least a Band E, which means there is not much time to get a property portfolio compliant.

Tom Beeley, Senior Surveyor at leading property consultancy Fisher German and a key member of its Delivering Net Zero team, feels the speed of the changes and lack of consultation with the property sector may have caught many commercial property owners off-guard.

He said: “Owners of properties mainly heated by electricity will likely benefit from these changes, but the many gas-heated buildings could see ratings drop significantly, especially those with poor insulation.

“Although current EPC ratings made using the old software are still valid, there is a real danger that gas-heated properties could become illegal to let when they are reassessed under the new software.

“Switching to more carbon efficient electric heat pumps heating may be required in some which has cost implications and is not always practical.

“And previous quick solutions to boost EPC ratings, such as installing LED lighting, are no longer as effective as they once were.

“The changes have been communicated to the property sector very poorly, which means many property owners will be caught unawares due to how quickly these changes were implemented.

“This is not so much a case of moving the goal posts, but more a case of resetting the start line for many landlords.

“Decarbonising a building is not a simple process and the system of regulation needs to enable building owners and managers to plan improvements over time.

“There will no doubt be some difficult conversations to be had as property managers try to explain why ratings have changed so dramatically and the investment needed to correct the issue has increased.

“We’d advise anyone involved in commercial property agency or financing to carefully review the EPC rating of any assets and to commission updated performance assessments under the new software on any assets they are thinking of acquiring.”

Fisher German’s Delivering Net Zero team can assist commercial property owners and managers in reviewing and understanding the energy performance of their building stock as well as identifying gradual steps to improve the rating as pressure mounts to demonstrate compliance and the sustainability of assets.

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