"EEDO is excellent news for the energy efficiency sector, giving it equal status and government support as renewable and nuclear power."

The Energy Efficiency Deployment Office will provide a stable policy framework for the industry and will provide a platform for ESCOs (Energy Service Companies) to access the huge savings locked up in UK real estate and create an environment for a new real estate investment class according the Strutt & Parker's resource and energy team.

The Energy Saving Contract approach, which has primarily operated in the US and more recently developed in Germany and France, seeks to provide a single vehicle solution incorporating diagnosis, solution, implementation and operation to retro-fit energy efficiency projects, financed through the guarantee of savings. When structured correctly these can provide off balance sheet solutions for building owners without available capital resources. Projects are currently being piloted in the UK and the legislative and financial support from EEDO will allow the property industry to tackle the huge numbers of older buildings that need to upgrade obsolete systems and reduce their energy consumption, not only to shrink costs but to meet legislative targets contained in the Energy Act 2011 which mean that 20% of commercial buildings will not meet the required standards to be let in 2018.

Simon Crowe, partner in Strutt & Parker's resources and energy team said: "EEDO is excellent news for the energy efficiency sector giving it equal status and government support as renewable and nuclear power. We have been promoting ESCOs and Energy Saving Contracts as a solution for the issues the property industry faces with regards improving the energy performance of existing buildings, and we are delighted the Government has established EEDO which will help provide a recognised framework for delivery. ESCOs represent an excellent opportunity to retro-fit energy efficiency measures across portfolios realising IRR's of 8-13%, and they can bridge the gap between landlords and tenants by delivering effective, whole building, carbon reduction strategies."