Energy Performance Certificates (EPCs) rate the energy efficiency of commercial and residential buildings in the United Kingdom. Unlike rating systems created by private companies like LEED, NABERS, and BREEAM, commercial EPC ratings were introduced by the UK government in 2008.
Commercial EPCs function similarly to the energy labels on new appliances, offering a clear and color-coded snapshot of a building's energy efficiency. They rate a building's energy performance on a scale from A, signifying high efficiency, to G, indicating low efficiency.
Much like a guide, they provide insights into the potential costs of heating and lighting a property, along with its expected carbon dioxide emissions.
The UK Government estimates that the proportion of rented commercial property covered by commercial EPC requirements will increase from around 10% to around 85% in 2030 (approximately 1,000,000 buildings across England and Wales).
Commercial EPC vs Residential EPC
While both residential and commercial EPCs follow a similar grading system, commercial EPCs are tailored specifically for business premises. These include office buildings, retail spaces, and other commercial properties. Unlike residential EPCs, which might suggest small-scale improvements like changing light bulbs, commercial EPCs often involve more extensive recommendations, suitable for larger-scale operations.
When is a Commercial EPC Required?
As a result of the Minimum Energy Efficiency Standards (MEES) directive coming into place, all commercial properties let or sold in England or Wales, are required to have an EPC score. The UK government specifies that all commercial properties must have an EPC if:
- You rent or sell the property
- A new building has been finished
- Changes have been enacted in building use that affect heating, air conditioning, or mechanical ventilation systems.
How is an EPC for Commercial Property Calculated?
The Energy Performance Certificate (EPC) rating for a commercial property is derived from a comprehensive assessment that scrutinizes the building's energy efficiency. Here's an insight into the calculation process:
A certified assessor begins with a meticulous inspection of the commercial property. This initial phase involves analyzing the building's dimensions, design, construction techniques, and chronological age—all foundational factors that influence energy efficiency.
Evaluation of Key Components
The assessor then delves into the core systems within the building:
- Heating System: The efficiency, type, and control of the building's heating systems are evaluated for their energy consumption patterns.
- Cooling Systems: Any cooling apparatus, such as air conditioning units, are reviewed for their efficiency ratings and operational mechanisms.
- Ventilation: The building's ventilation strategies are examined to understand their role in maintaining energy efficiency.
- Lighting: The types of lighting, with a focus on those in communal areas, are assessed to gauge their energy efficiency levels.
Next, the assessor conducts a thorough check of the property's insulation:
- Wall Insulation: The materials, thickness, and installation of wall insulation are scrutinized.
- Roof Insulation: Insulation presence and quality in roof or attic areas are evaluated.
- Window Type: The types of windows, such as double-glazing, are considered for their thermal retention capabilities.
Energy Consumption and Emissions
The assessor then examines the building's operational aspects:
- Actual Energy Use: Available data on the building's energy consumption is collected to understand usage patterns.
- Carbon Dioxide Emissions: The CO2 emissions are estimated, reflecting the building's environmental impact.
- Renewable Energy Integration: If applicable, the use and efficiency of renewable energy systems are assessed.
Finally, the assessor compiles all the data into advanced analytical software. This program calculates the property's energy efficiency by juxtaposing its features with established benchmarks, resulting in the EPC rating.
The EPC rating, thus, encapsulates the physical attributes of the building and the operational habits of its occupants, recognizing that actual energy usage significantly sways the final score.
An Example EPC Score for Commercial Property
In the following screenshot, we can observe an example of an EPC rating for one of London’s most iconic commercial properties, The Shard.
This overview is digitally posted on the UK Government’s, Find an EPC rating website.
You can see the address, including the total amount of floors covered by the certificate, the energy rating, and the expiry date. Additional, high-level categorical information is available below with both the property type and total floor area noted.
Next, we can see the property’s current rating within the grading scale.
After that, the property is shown in comparison to similar properties:
Then, you can see a breakdown of this property’s energy performance complete with the primary fuel source, cooling capabilities, building emissions rates, and energy usage rates.
Finally, the report finishes with a recommendations report, the contact details of the assessor, and the accreditation scheme.
EPC Requirements Commercial Property
Commercial EPC requirements are derived from Minimum Energy Efficiency Standards (MEES), which is a framework mandated by the UK government to ensure commercial and residential buildings meet energy efficiency standards. MEES has significantly reshaped the landscape of energy performance in commercial real estate.
For landlords and property managers, understanding and adhering to these standards is now a key part of property leasing and management.
Current EPC Requirements for Commercial Property
Minimum EPC Rating for Commercial Property in 2023
As of April 1st, 2023: It's mandatory for all privately rented non-domestic properties to have an Energy Performance Certificate (EPC) rating of E or above.
This rule applies to all types of leases, encompassing both new and existing agreements.
Today, leasing out properties with an EPC rating below E (F or G) is now prohibited, affecting both new and existing tenancies.
Because of this requirement, it is estimated that 8% of London commercial stock could be declared unlawful for new lettings and unlawful to let from April 2023.
Upcoming Changes in MEES Regulations
The standards set by MEES are scheduled to tighten further, with higher minimum EPC ratings required shortly:
Minimum ‘C’ Rating for Commercial EPC in 2027
By 2027, all non-domestic rented buildings must have improved the building to an EPC rating of a ‘C’ or above, or have registered a valid exemption.
Minimum ‘B’ Rating for Commercial EPC in 2030
By 2030, all non-domestic rented buildings must have improved the building to an EPC rating of a ‘B’ or above, or have registered a valid exemption.
To comply with these evolving standards, landlords may need to invest in their properties, potentially overhauling energy systems or improving building insulation.
According to Savills, 87% of the office stock in the major UK office markets has an Energy Performance Certificate rating of "C" or below, so there is a significant amount of work needed to ensure compliance in 2027 and beyond.
As it stands today, over 50% of inner London commercial stock would be ‘unlettable’ in 2027 as MEES legislative changes loom
Obtaining a Commercial Energy Performance Certificate (EPC)
To acquire a Commercial Energy Performance Certificate (EPC) for your business premises, follow these steps:
- Locate a Commercial Energy Assessor: Find an assessor specialized in commercial properties. You can search online via the UK government's commercial accessory registry, or consult directories from accreditation schemes specializing in commercial energy assessments.
- Arrange the Assessment: Contact the chosen assessor and schedule a time for them to evaluate your commercial property. Be prepared to provide access to all areas of the building and relevant documentation, such as building plans or previous energy reports.
- Undergo the Inspection: The assessor will inspect various features of your property, including heating and cooling systems, insulation, windows, and lighting, specifically focusing on aspects relevant to commercial buildings.
- Review the Report: After the inspection, the assessor will produce a detailed report that includes your property's EPC rating and suggestions for enhancing energy efficiency tailored to commercial premises.
- Receive Your EPC: The final EPC, valid for 10 years, will be provided to you. This should be made available to any prospective buyer or tenant when selling or leasing the property.
- Display Requirements: If your commercial building has a total useful floor area of over 500 square meters and is frequently visited by the public, you're required to display the EPC prominently.
Selecting a qualified and experienced commercial energy assessor is crucial for obtaining an accurate and effective EPC for your commercial property.
How Much Does a Commercial EPC Cost?
The price of a commercial EPC depends on the size and complexity of the building being evaluated but typically ranges from £150 to £500.
EPC Exemptions for Commercial Properties
Under the Minimum Energy Efficiency Standards (MEES), there are specific circumstances where a commercial property can be exempt from meeting the required Energy Performance Certificate (EPC) ratings. Understanding these exemptions is crucial for landlords to navigate their legal responsibilities effectively. Here's a detailed look at the various EPC exemptions:
1. Devaluation Exemption
Criteria: If improvements necessary to meet the minimum EPC rating would decrease the market value of the property by more than 5%, an exemption can be claimed.
Evidence Required: A report from an independent surveyor is needed to support this claim.
2. All Improvements Made
- Criteria: If all possible energy efficiency improvements have been made and the property still doesn't meet the minimum EPC rating, an exemption can be registered.
- Evidence Required: Documentation proving that all relevant improvements have been undertaken is necessary.
3. Consent Exemptions
- Criteria: If consent from tenants, mortgagees, or other parties is required for energy efficiency improvements and such consent is denied, or is given with unreasonable conditions.
- Evidence Required: Written evidence of the refusal or the unreasonable conditions attached to the consent must be provided.
4. Seven-Year Payback Test
- Criteria: If the expected payback period for energy efficiency improvements is more than seven years, this can be grounds for exemption.
- Evidence Required: Detailed financial calculations demonstrating that the payback period exceeds seven years.
5. Temporary Exemption for New Landlords
- Criteria: New landlords can claim a temporary exemption for a period of six months under certain circumstances.
- Evidence Required: Proof of the date when they became the landlord and the qualifying conditions for the exemption.
6. Listed Buildings and Certain Protected Properties
- Criteria: Listed buildings or properties in conservation areas might be exempt if compliance with minimum energy efficiency requirements would unacceptably alter their character or appearance.
- Evidence Required: Documentation confirming the building's listed status or location in a conservation area, along with an expert assessment of the impact of compliance.
Registering an Exemption
Exemptions must be registered in the national PRS Exemptions Register. They are typically valid for five years and are not transferable to new landlords.
It's important to note that these exemptions are not automatically granted and must be carefully substantiated with appropriate evidence. Landlords should carefully evaluate their situation and, if considering an exemption, ensure that they fully understand the criteria and evidence requirements. Misinterpreting these exemptions can lead to non-compliance, resulting in penalties.
Top Ways to Improve EPC Ratings in Commercial Properties
Improving the Energy Performance Certificate (EPC) rating of a commercial property is crucial for reducing energy consumption, lowering operational costs, and enhancing the building's overall value. Here's a listicle on the top ways to enhance EPC ratings, with a special focus on the value of an Energy Management System (EMS) like CIM, especially for buildings over 10,000 square meters.
1. Install LED Lighting
- Impact: LED lights consume up to 90% less energy than traditional bulbs and last up to 25 times longer.
- Benefit: Significant reduction in energy costs and less frequent need for replacements.
2. Upgrade Heating and Cooling Systems
- Impact: Modern, high-efficiency boilers or air conditioning units drastically cut down energy usage.
- Benefit: Enhanced energy efficiency and reduced operational expenses.
3. Insulate the Building
- Impact: Proper insulation in walls, floors, roofs, and windows minimizes heat loss.
- Benefit: Improved comfort levels for occupants and lower heating costs.
4. Utilize Renewable Energy Sources
- Impact: Solar panels or wind turbines provide clean, sustainable energy.
- Benefit: Reduced dependence on grid electricity and potential energy cost savings.
5. Improve Ventilation
- Impact: Effective ventilation lowers humidity,odorss, and pollutants, enhancing indoor air quality.
- Benefit: A healthier environment for occupants and potential energy savings from more efficient heating and cooling.
6. Invest in a Building Analytics Solution
- Impact: Comprehensive energy control, real-time monitoring, data-driven insights, and automated optimization
- Benefit: Substantial cost savings and environmental sustainability.
Maximizing Your EPC Score with CIM's Building Analytics Platform
While the steps mentioned above are crucial for enhancing your EPC (Energy Performance Certificate) rating, the integration of CIM's Building Analytics Platform takes your energy efficiency journey to the next level. Here's why CIM's building energy management system is instrumental in boosting your EPC score and delivering substantial value to your commercial property:
- Real-Time Monitoring: CIM's platform provides continuous, real-time monitoring of energy consumption and building performance. This feature enables immediate adjustments and optimizations, ensuring your building operates at peak efficiency at all times.
- Data-Driven Insights: Leveraging advanced data analytics, CIM's platform identifies inefficiencies and areas for improvement that might otherwise go unnoticed. This data-driven approach empowers you with the knowledge needed to make informed decisions and take targeted actions for energy savings.
- Automated Controls: CIM's EMS seamlessly integrates with your existing building systems, allowing for the automation of heating, cooling, lighting, and ventilation. Automation ensures that energy is used optimally, reducing waste and operational costs.
- Cost-Effectiveness: One of the most significant advantages of CIM's platform is its ability to deliver substantial cost savings. By intelligently managing energy consumption, you can expect a significant reduction in energy expenses, improving your bottom line.
- Sustainability: CIM's platform contributes to environmental sustainability by minimizing energy waste. With reduced energy consumption, your carbon footprint shrinks, aligning your building with green and sustainable practices.
Incorporating CIM's Building Analytics Platform into your energy efficiency strategy not only enhances your EPC score but also brings about tangible benefits.
You'll experience improved cost-effectiveness, more sustainable operations, and a competitive edge in the commercial property market.
Don't miss out on the opportunity to make your building smarter, more efficient, and environmentally responsible with CIM.
Changes to EPC Regulations
In his speech on Net Zero on September 20, 2023, UK Prime Minister Rishi Sunak announced significant changes to the Minimum Energy Efficiency Standards (MEES) relating to residential properties. He emphasized the importance of energy efficiency but stated that the government would not force property owners to make expensive upgrades. Specifically, Sunak said, "While we will continue to subsidize energy efficiency - we’ll never force any household to do it".
Regarding the distinction between residential and commercial properties, it's important to note that the announcement primarily focused on residential properties. The loosening of EPC regulations under Sunak's announcement is limited to residential properties, and there was no explicit mention of similar relaxations being applied to commercial properties in the same speech.
Frequently Asked Questions About Commercial EPCs
When is an EPC not required for commercial property?
An EPC is not required for certain types of commercial properties, such as places of worship, temporary buildings with planned use times of two years or less, industrial sites, workshops, and non-residential agricultural buildings with low energy demand.
Do commercial properties need an EPC?
Yes, most commercial properties need an EPC when they are sold, rented, or constructed.
What is the minimum EPC rating for commercial property?
The minimum EPC rating for commercial properties is typically an 'E', though this can vary depending on local regulations.
Do I need an EPC for a commercial lease renewal?
Yes, an EPC is required for a commercial lease renewal unless exemptions apply.
How much does a commercial EPC cost?
The cost of a commercial EPC can vary widely depending on the size, complexity, and location of the property. It could range from a few hundred to several thousand pounds.
How to improve a commercial EPC rating?
Improving a commercial EPC rating can be achieved by installing LED lighting, upgrading heating and cooling systems, adding insulation, utilizing renewable energy sources, improving ventilation, and implementing an Energy Management System (EMS).
Is an EPC required for a commercial lease renewal?
An EPC is generally required for a commercial lease renewal unless the building is exempt.
Who is responsible for a commercial EPC – the landlord or tenant?
The responsibility typically falls on the landlord; however, if a tenant makes changes affecting the energy performance, they may need to obtain an EPC.
Can you sell a commercial property without an EPC?
Selling a commercial property without an EPC is generally not allowed unless the building is exempt from needing one.
Do all commercial properties require an EPC?
Not all, but most commercial properties will require an EPC when being sold, leased, or constructed. There are specific exemptions as noted above.