This performance-based policy framework can be the Holy Grail for Commercial buildings in the UK

On 17th March, Department for Business, Energy & Industrial Strategy, UK recently released a proposal to introduce a performance-based policy framework for rating the energy and carbon performance of commercial and industrial buildings in the UK.

According to the framework, commercial spaces of a size larger than 1,000m² will have to declare their annual energy consumption in order to achieve the energy ratings. This will be a mandatory exercise for all the eligible buildings, which according to a survey covers only 7% of the commercial properties in the UK but responsible for 53% of all the energy consumption in commercial and industrial buildings.  

The framework came on the backdrop of the UK’s pledge to achieve net-zero greenhouse gas emissions by 2050. This will complement or rather add more value to the existing Energy Performance Certificate rating (EPC) and reproduce NABERS’s performance benchmarking structure for building in the UK. 

The BEIS is following a consultative approach to hear from building proprietors, occupants, landowners, investors, asset management consultancies. Since this is a highly celebrated step by the UK Government, we thought of sharing a breakdown of the framework and key takeaways for the quick read.      

1. The advantage over ECP:

Energy Performance Certificate (ECP) has been there for a long time to evaluate the standard of the building’s fabric and services. However, when it comes to energy consumption or emission, evidence suggests that there is almost no correlation between a building’s EPC score and its actual energy and carbon performance in practice. It’s a difference between theoretical modeling and practical energy usage. Hence there was a requirement to develop the framework that counts on ‘how the building has been operated and not just designed’. Performance-based schemes place the occupant at the center of the equation. In order to reach a fair assessment, performance-based schemes will typically look at a building’s energy intensity on an m² basis (in order to standardize for size) and factor in the building’s operating hours and the number of people using it.

2. Dynamic benchmarking:

Unlike other green building standards and certificates, the Proposed performance-based rating system is dynamic in nature (types of building benchmark) and needs to be renewed annually. Energy use and carbon emissions from a building will be benchmarked against similar building types and rated on a scale of 1 to 6 stars where 6 stars could represent the best and 1 the worst. 

3. Transparency in assessment:

Eligible buildings would need to disclose their performance score to everyone, which will make sure that the large businesses and organizations are transparent on their environmental commitments and ready to make informed decisions to improve them further. Building owners or tenants can voluntarily choose to share their first year’s rating with the public however from the second year onwards they will be obligated to share it with everyone. Although most of the global organizations publish their sustainability measures through annual reports and participating in EP100, RE100 or other target-setting initiatives this mandatory policy will bring that transparency to mid-size businesses.    

4. Incentivizing Performance:

The government believes that the framework will help investors, tenants, building owners take that extra step to improve their building’s performance which can later be translated into increased asset/property value, lower insurance premiums, or performance-driven financing packages, etc. government will also think upon rewarding those buildings who have improved the performance over the period of time or market-driven mechanism to penalizing low performing buildings.   

5. Adoption from the NABERS scheme:

NABERS, Australia has been one of the most successful performance-based schemes for commercial buildings. Since their inception office buildings in Australia have seen their energy use per square meter reduce by 38%, including a 34% reduction over the last decade. It measures actual impact (reduction of energy intensity) rather than predicted value according to the building’s design.

Ratings are primarily divided into two categories A) Base building rating which covers the performance of central building services, for individual tenants controlling a particular portion of the building. B) ‘Whole building’ rating to measure all the energy use in the building, ideal for the building owner/occupiers or single tenants

With this framework, the building’s performance rating will showcase how the building is performing, on emission indicators against similar building types to prospective buyers and tenants providing insights on the running costs they can expect if they occupy the building. A performance-based rating will provide more reasons and data points to a potential buyer to make a precise and reliable purchasing decision.

Are you managing any properties that come under the eligibility criterion of this scheme? Do you think this type of national-level benchmarking will create a market-driven environment to accelerate the adoption of energy efficiency measures in commercial buildings? Do you think your building needs a building analytics software for energy efficiency? Let us know your thoughts.