A True Measure of Performance?

Article on Energy Performance Certificates (EPCs) for UK-GBC supplement ‘Building for the Future’, published in The Times, 22 September, 2009

In much the same way as GCSEs are intended both to drive academic performance across the Education sector as a whole and inspire effort and achievement in individuals, so should EPCs (and DECs) raise standards in Property and Construction and deliver better buildings and dwellings. Certification in theory is the answer, but the question is, will it work in practice?

No vision for a low-carbon economy can carry any credibility without strategies in place for delivering on aspirations for CO2 reduction and energy efficiency in the built environment. The process of turning such aspirations into achievements calls for targets to be first set, then met. So, how do we measure success?
One simple solution is to award grades in recognition of levels of achievement and performance, operating a comparative assessment and rating system.
Introduced as part of the European Performance of Buildings Directive, an Energy Performance Certificate (EPC) is now required when any building (over 50sq m) is sold, rented out or constructed, and in some cases following refurbishment. EPCs rate properties on a descending sliding scale from A to G and come complete with a Recommendation Report. Only qualified and accredited energy assessors or certified home inspectors can produce EPCs, which also form an essential part of the Home Information Pack (HIP) for domestic properties marketed for sale. In addition, certain public buildings must have a Display Energy Certificate (DEC) on show.
“Of course, Energy Performance Certificates (EPCs) should help improve compliance with buildings regulations”, acknowledges Dr Martin Gibson, Director of Government-approved provider of energy-assessor software, BuildDesk. “The theory is that people will start to make use of the EPCs in their buying decisions and though there doesn’t seem to be much evidence of this yet, it is still early days.
“I remember the early days of energy labels on white goods and it took a few years before people started to shy away from lower grades. However, the market for white goods has now been transformed and it is hard to buy anything worse than an appliance rated A or B. Who, after all, wants to admit to buying second best?”
Establishing the value of excellence in energy performance of commercial buildings and demonstrating benefits to owners and occupiers is vital to stimulating demand for certification and driving up standards. The accompanying Recommendation Report is arguably the most important part of an EPC, laying the foundations for ongoing improvement. It is however all too often ignored once the lowest-cost base rating is safely in the bag. If the scheme is to operate effectively going forward, buy-in on the part of clients is key, as Terry Dix, Director at Arup, explains:
“EPCs are only an effective measure for new buildings and even then only if clients set ambitious targets by doing more than getting a simple pass – in other words, more than just complying with minimum legal standards.”
Certification costs both time and money and clients need to be confident the effort is worth it. Seeking to sweat physical assets harder, corporate property owners and developers will be looking to EPCs to satisfy the demands of two audiences: one upstream, made up of investors and perhaps pension funds; the other, downstream, comprising letting agents and tenants. Badly performing buildings are hard to let and uncomfortable to occupy. They represent an unattractive prospect from both perspectives: Mergers and Acquisitions teams do not like liabilities on the balance sheet in the shape of unsaleable and unlettable property; tenants are concerned about committing to bottom-line cost impacts over time. Futureproofing against excessive utilities bills is good news for everyone, as is the promise of an indoor working environment that is conducive to staff health and wellbeing, minimising levels of absenteeism, maximising output.
There is a virtuous spiral in play here: Happy tenants make for happy owners and happy investors. When all are talking commercial building performance, certification is the common language. At present, though, there remains a sales job to be done for the metrics.
Selling the benefits of certification to developers and owners is an issue In the residential sector too. Amongst consumers in general, there is growing awareness of the advantages of labelling. With developers, homeowners and landlords, however, there is a need to establish a more positive attitude towards enhanced (re)sale and rental returns, based on strong certification ratings, consolidating and raising demand on the part of the prospective buyer or tenant. Achieving higher levels of energy performance in dwellings needs to be communicated as a matter of investment, not cost, as Chief Executive of the Energy Saving Trust, Philip Sellwood explains:
“We know that people are going to be looking to rent out places that are cheaper to run – it’s hardly rocket science. A poorly insulated three-bedroom semi-detached house could move from band F to C saving a tenant £700 a year on energy bills if the landlord installed straightforward energy-saving measures like insulation.
“There is no good reason for landlords to pass the cost of upgrading a property to meet energy efficient criteria to their tenants – there is financial support available which can help recoup any financial outlay involved.
“We urge all landlords to see this new legislation as an opportunity not a challenge. All the evidence points to the fact that an energy-efficient home will be much more appealing to prospective tenants.”
One thing is certain: There is no shortage of qualified and accredited assessors. Government targets for professional numbers have been exceeded several times over, with initial fears of a shortfall in personnel proving quite unfounded. A whole army of energy performance troops has effectively been enlisted in the fight for carbon reduction and energy efficiency in buildings. As the government wages war on Climate Change, it is the frontline battle for the hearts and minds of clients, owners and developers that still remains to be won.

To view the full Supplement online, please click here.

Author: Jim McClelland