In our last article we looked at the changing landscape of Energy Management and how things might look going forward. In the second part of our exploration our Head of Resources & Energy, Alexander Creed has the following advice to give property owners and occupiers.

Landlord and tenants will have to work together

The new regulations will not just apply to new lettings of vacant buildings but also to lease renewals. This creates a very interesting discussion point between landlords and occupiers for that time, and considering there is a hard stop date of 2023 for landlords to improve their properties, we believe there will be a lot more engagement between landlord and tenant on energy matters. This makes the active management of leases even more important.

There is 684 million sq.ft. of commercial properties in the UK and that 18% are considered to be an F or G – equalling over 123 million sq.ft. - we also need to remember that only a small percentage of buildings have EPC’s, so you can see why this is going to become a major discussion point going forward.

If you combine this driver for landlords with large occupiers being required to participate in ESOS you can see how we might be at the tipping point where the energy performance of a building is going to become a regular agenda item for property and facilities managers in their discussions about buildings and in their business strategy planning. 

Data needs to be streamlined

During the ESOS process, the biggest challenge has not been the physical auditing of properties, but instead the accumulation of the necessary data. 

This has highlighted one of the disconnects common in many businesses between property and facilities managers, energy managers and finance teams. Certainly one of our key recommendations to clients has been to ensure that systems are put in place to keep future records of energy used with granular detail of where, when and how it is used.

This need for better detail brings us onto metering; up until relatively recently, metering was only important to record the fuel that came into a site and to be able to pay the bills for it. With the introduction of renewables, we have seen many changes to meters with the introduction of export meters at a number of sites and also a progressive change to half-hourly meters.

These changes are only going to continue with the introduction of a regulation, known as P272. This regulation covers all meters in class 05, 06, 07 and 08. Between now and Spring 2017, this type of meter will be changed over to half hourly digital metering. This will help with the understanding of electricity use on-site, but is also another reason to implement a metering strategy. 

Recently it has been suggested that the UK may need to move to 15 minute metering and electricity trading to bring us into line with Europe as more electricity is exchanged over inter-connectors.

ESOS and our wider energy auditing work for clients has highlighted a need for on-site accurate metering of all fuel use. 

To Sum up

The point is that we believe energy management in property is at a pivotal point.  It is going to become a much more critical aspect driven by occupiers being required to look at the energy they use and start to demonstrate how they are reducing it. With Minimum Energy Efficiency Standards landlords will also be required to improve their buildings if they are not up to standard.

Don’t forget that regulations will tighten again by 2030 beyond the current F or G.  Our recommendation is that you review your portfolio, engage with your landlord or tenant and resolve the energy challenges as it will provide a direct benefit to the bottom line of both your businesses.