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Government Consultation: Rating Energy Performance of Commercial Buildings

by Clair Mooney | 2 May, 2021 | Sustainability, Technical

The Department for Business, Energy and Industrial Strategy (BEIS) has opened a consultation on introducing a performance-based policy framework in large commercial and industrial buildings. This consultation sets out the government’s proposals to introduce a national performance-based policy framework for rating the energy and carbon performance of commercial and industrial buildings above 1,000m² in England and Wales, with annual ratings and mandatory disclosure as the first step. The consultation closes on 9 June.

In the impact assessment document it is asserted that information failures, behavioural barriers and split incentives, mean the operational performance of commercial and industrial buildings in terms of how well they use energy, is inefficiently poor, and not net zero consistent. This causes overuse of energy, and hence higher Green House Gas emissions. A key part of resolving this is having a consistent means of assessing buildings’ operational performance.  Existing measures of building performance, such as the Energy Performance Certificate, do not adequately reflect their real performance, and this is particularly acute for larger buildings. Government intervention is required as this information must be developed at the level of the entire stock, and existing market-driven interventions cover a small minority of the stock.

The consultation is in 2 parts:

• the strategy paper outlines the rationale for the policy, its aims and proposals on how to implement it
• the consultation on phase one of the policy, which sets out proposals for implementing annual performance-based ratings in commercial and industrial offices above 1,000m² in England and Wales

The impact assessment accompanies the Phase One: Office Sector consultation and provides supporting analysis on the proposals.

We welcome responses from all contributors with an interest in these proposals, but would like to hear in particular from:

• owners and tenants of commercial and industrial buildings above 1,000m²
• investors, asset managers and lenders
• energy consultants
• facilities management companies
• businesses involved in retrofit of these buildings
• the wider market

For more information and how to respond

For more information and to respond to the consultation click here.  If you are responding, it would be helpful if you could direct key points to FIS to support any response we make on behalf of the community.  Key questions from the consultation are provided below.

Consultation Questions

1. Do you have any evidence which supports, disputes, or could add to, the evidence presented by the Government in this chapter? In terms of the evidence presented in this chapter, do you support the Government’s analysis?
2. Do you support the rationale set out in this chapter? If so, are there any changes you would make or considerations you would add to the rationale the Government has set out? If not, could you please explain why, providing evidence where possible.
3. Do you support the Government’s proposal to underpin a performance-based policy framework with a rating that looks to modernise the DEC, in the ways set out above? If so, are there any changes you would make or considerations you would add to the proposal? If not, could you please explain why, providing evidence where possible.
4. The Government proposes that, as a first step, building owners and single tenants should be required to obtain an annual performance-based rating, and disclose that rating online. Do you support this proposition? If so, are there any changes or amendments you would make to the proposal? If not, could you please explain why, providing evidence where possible.
5. What is the best way to support Small and Medium Enterprises in obtaining annual performance based ratings, where the owner of the building or the single tenant is an SME?
6. Should the Government:

• Allow owners of buildings above 1,000m² to use their annual performance-based rating to satisfy their existing regulatory obligation to present a valid EPC before a building is sold or let. As set out above, under this option the Government would continue to collect data about fabric and service improvements. Where prospective buyers or tenants want information about the building fabric and services, EPCs can be obtained on a voluntary basis.
• Continue to require owners of buildings above 1,000m² to present a valid EPC where the building is sold or let, recognising that the EPC and a performance-based rating assess different things, and can collectively provide a better level of information about the building than either rating would in isolation.

Please outline your preferred option and your reasoning, providing evidence where possible. Please set out any changes or amendments you would make to the options, or if you would favour a different option. An appraisal of the benefits and risks of both options, providing evidence where possible, would help inform the Government’s decision making.

7. Recognising that the Government has committed to review the threshold for each sector, do you consider 1,000m² to be a sensible starting position for determining which buildings should be required to obtain annual performance-based ratings?
8. Should the Government consider expanding the performance-based rating to cover factors such as water, waste and indoor air quality? What do you consider would be the benefits of this approach? Would there be any drawbacks?
9. Has the Government identified what you consider to be the right objectives for a successful delivery model?
10. Do you support the Government’s proposal that the annual rating should not be accompanied by recommendations for improving the rating? If so, are there any changes you would make or considerations you would add to the proposal? If not, could you please explain why, providing evidence where possible.
11. Do you support the Government’s proposal that exemptions should be limited to a relatively few buildings? Are there any grounds for an exemption that you feel are appropriate, which the Government has not considered? Ahead of the findings from the Government’s research project we also welcome views on how the requirement to obtain and disclose an annual rating could be enforced most effectively.
12. Are there any considerations you would like to add to the Government’s analysis of the factors that are likely to drive improvements in ratings? Do you support the Government’s proposals to improve ratings from day one?
13. Do you consider that linking a clear financial incentive, or disincentive, to annual performance[1]based ratings would be an effective way to drive improvements in those ratings?
14. What do you consider would be the impact of the incentives and interventions that have been suggested? Are there ways you think those incentives or interventions could be made more effective? Are there other incentives or interventions that the Government has not considered here, which you believe would be more effective at ensuring ratings improve over time?
15. Do you agree with the Government’s assessment and preferred approach? Please provide evidence or case studies, where possible, in your response.
16. Do you agree that flexible energy use should be a core component of the rating? What is the best way, technically, to reflect flexible energy use in the rating structure?
17. Do you agree with the Government’s preferred option to use a star rating format? Are there any formats which the Government has not considered that you believe could be more effective?
18. The Government welcomes feedback on the considerations outlined above. What are the key factors that the Government should consider in determining fair and effective rating benchmarks and a fair and effective rating scale? Where possible, please provide evidence, or case studies, to support your feedback.
19. Subject to the outcome of this consultation, the government will work with the ratings administrator, and with industry experts, to tailor the framework appropriately to each sector. At this stage, the Government welcomes any additional feedback on the high-level technical considerations outlined in this chapter, especially where there may be key considerations that we may have not addressed, or not been able to cover. Where possible, it would be helpful if you could provide evidence and case studies to support your response.