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Energy Performance Certificates (EPC's)

The purpose of the EU Energy Performance of Building Directive is to improve the energy performance of new building design, to rate the energy performance of existing buildings and identify areas for improvement. Enforcement is by Trading Standards for existing buildings and Building Control for new build and refurbishment. The intention is that market forces will promote higher asset / rental values for more energy efficient buildings.

The EPC is an energy rating in the same style as those found on white goods and cars (A-G). The rating is an asset rating based on the insulation values of the building fabric and the efficiency of the heating and cooling systems. The rating is calculated using the simplified building energy model (known as SBEM) provided by the Building Research Establishment. The rating system is based on the predicted energy use patterns of a hypothetical building having the basic physical characteristics of the building being assessed. It enables direct comparison between different buildings' energy rating but it does not attempt to certify actual energy use, which to a large extent, depends on how the building is managed and used.

It will also contain recommendations for enhancements, based on a checklist.

The certificate is valid for 10 years and copies have to be submitted to a central register managed on behalf of the Government. This has given rise to the belief that, in time, the Government will tax buildings with low energy efficiency ratings?

For developers of new buildings the building control process will guarantee the production of an EPC by preventing the issue of completion certificates until an EPC is produced.

It is expected that tenants will be more attracted to buildings with good EPC ratings. This will feed through to rent and yields, opening up a premium market for the best buildings and, equally, leaving a secondary market of older inefficient buildings.

The onus for obtaining an EPC rests on the 'relevant person'. This would be the vendor in the case of a building being sold and the prospective landlord where a letting, subletting or assignment of the whole or part is being sought.

In order to undertake EPC's the Energy Consultant must have undertaken the appropriate training. Accredited courses are taking place from January / February 2008 by the following institutions; RICS, BRE and CIBSE. This process has been delayed and is likely to cause a logistical problem in the short term, given the amount of commercial property to be assessed and the number of accredited surveyors.

The consequences of not being able to present an EPC could be expensive. The regulations provide for a series of fines to be levied by Local Authority Weights and Measures who can require the production of an inspection copy of the certificate up to 6 months after it was required. The penalties include a fine of 12.5% of rateable value, subject to minimum and maximum penalties of £500 and £5000 respectively.

There are, in essence two stages in preparing and producing an EPC, the first being a site based survey 'data collection' and the second a desk exercise 'analysis and production of the energy performance certificate'. These are described in more detail below:

Site survey to determine the building fabric, dimensions and usage zones with different energy consumption rates depending on orientation and depth etc. in order to generate electronic plans. Prepare inventories and specifications of plant and equipment present such as air conditioning, boilers, air handling, pumps and ancillary equipment, lighting etc. This phase represents a substantial proportion of the work involved in the EPC process.

The building data is inputted into the Simplified Building Energy Model (SBEM) developed by the Building Research Establishment. The model calculates the building energy consumption based on a standardized use thereby allowing direct comparison between different buildings. The model has been extended for use on existing buildings from its initial use in the production of EPC's for new build by the inclusion of libraries or inference values for insulation and heating and cooling efficiencies where this information can not be accurately determined by survey. Finally the model produces a 'Recommendation Report' by comparing energy usage associated with fabric insulation, heating, cooling, lighting etc to standard consumptions thereby identifying opportunities for energy conservation.

The Energy Performance Certificate is produced by an accredited assessor and posted to a website managed on behalf of government. This latter process allows for sample auditing before the Certificate is posted. The process should be almost instantaneous on most occasions. The EPC will follow the format for white goods, being a simple 'A-G' design.

SM&MS are currently working on a number of mutually beneficial EPC pilot schemes with property clients in order to allow clients to get ahead of the market.

These pilot schemes are allowing us to begin the data collection, with the understanding that we will provide the EPC once our assessors have completed the accreditation process, which is anticipated in March. We currently have Environmental consultants booked onto both the BRE and CIBSE courses in order to ensure compliance.

First mover advantages will allow clients to get a feel for likely outcomes allowing you to start to manage your portfolio mix:

• Sell poor performers
• Add energy efficiency gains to refurbishment schemes as they occur
• Save Money - Typical energy savings are of between 5 - 20%