£93bn of Commercial Real Estate is at Risk, Here’s What To Do

UK’s Emerging Energy Challenge

Imagine waking up to a reality where some of your most valuable assets are on the brink of becoming non-performing. Sounds alarming? Well, for a vast portion of the UK's real estate sector, this isn't a hypothetical situation; it's a pressing reality. A new energy mandate threatens to reclassify £93 billion worth of real estate assets, potentially rendering them vacant. But why? And what's the broader implication?

The Root of the Crisis

Digging deep, you'd find the crisis isn't just about old buildings failing modern standards. It's about a vision the UK has for a sustainable, zero carbon emission future.

The Progressive Tightening

Today, it's grade "E". By 2027, it'll be "C", and the endgame by 2030? A commendable "B" rating. It's a clear message – evolve or face obsolescence.

Global Echoes: Not Just a UK Concern

Think the UK's being too ambitious? They aren't alone. The global winds of change are pushing for similar mandates.

New York's Local Law 97

Hopping across the pond to the Big Apple, the story sounds eerily familiar. Under the banner of Local Law 97, New York is also on the path to publicize buildings that under-perform in terms of energy consumption. And, as with the UK's mandate, there are financial penalties at play.

Turning Challenges into Opportunities

Every challenge conceals an opportunity, and this energy dilemma is no exception. So, where do you get started?

Everything You Need to Know About EPCs

Before you can improve your EPC, you’ll need to have an EPC. You can only get an Energy Performance Certificate (EPC) from a commercial energy assessor.

The type of assessor you’ll need will depend on the complexity and features of the building. If you need advice on choosing one, speak to a commercial (non-domestic) energy assessor or contact the approved accreditation scheme they belong to.

Once your EPC has been issued, it is then valid for ten years. Once it runs out, you do not need to get a new one unless you are entering a new tenancy with new tenants or selling the property.

Your EPC will also come with a recommendation report containing advice and improvements that will make your property more energy-efficient. Your assessor’s suggestions may include:

• Installing cavity wall and loft insulation
• Draught-proofing windows and doors
• Insulating pipes and tanks
• Installing a condensing boiler
• Reducing water usage
• Considering energy efficient glazing
• Considering renewable energy technology such as a wood fuelled heater, solar panels or wind turbines
• Installing low-energy usage light bulbs

The Journey Doesn’t End There

The above measures are material in nature, they don’t address any real areas of efficiency. It’s simply improving the quality of the individual technology or material, not how they can perform better. This is where technology has a large role to play. 

Occupancy Based Energy Automation

Occupancy Based Energy Automation is where the real savings and efficiency lies. This has the potential for big savings in energy consumptions and cost as well as carbon emissions.

A University Campus Use Case

In the example below, it showcases the operational times of the HVAC system in a university campus. 

The pink line measures when the HVAC system is turned on and the blue line is measuring when classes are scheduled. 

In this particular lecture hall, classes were booked for an average of 7 hours per day while the HVAC system was running for 13 hours per day. That’s an additional run time of 6 hours per day. There is opportunity for an improvement in efficiency of the HVAC system to align more closely to the schedule of the lecture hall. 

The issue with the HVAC system is that it is not “smart” enough to know when classes are running. It operates on a set schedule every day. 

PlaceOS is able to integrate with the HVAC system and class schedules, opening the lines of communication between otherwise disparate systems. 

PlaceOS is then able to apply logic to create workflow automation of the HVAC system to run more efficiently in line with class schedules. This efficiency reduces the HVAC system run time down from 13 hours to 10 hours a day. That’s:

• 3 hours a day
• 15 hours a week
• 780 hours a year

Predictive models show that this decrease in consumption, based on previous energy data & assumptions, would result in the following savings for the single 200_m2 room:

• Electricity: ∿ 6 MWh/year
• NG: ∿ 20 MWh/year
• Total: ∿ 26 MWh/year

Multiply that out to the entire campus:

• Electricity: ∿ 4,000 MWh/year 
• NG: ∿ 18,800 MWh/year
• Total: ∿ 22,800 MWh/year

Now let’s look at this in dollar value for the entire campus: 

_{To calculate potential savings in terms of money, the figures shown above have been multiplied by the current gas and electricity rates - based on the cheapest supply to be conservative. The values are as follows: 23.0333 ¢/m3 for gas and 10.9 ¢/kWh electricity (an average of off-peak, Mid-Peak and On-Peak).}

• Electricity: ∿ 436,000 $/year
• NG: ∿ 1,746,000m3*0.230333 ¢/m3 ∿ 402,100 $/year

Total: ∿ 838,100 $/year

Emissions

An average CHP plant that burns NG has an emission factor equal to 0.217 kg CO2/kWh. There are different factors that are unknown at the moment of this study (i.e. COP of the plant).

Making the assumption that all the energy load is used to meet heating and electricity demand, the figure that we would get is 22,800,000 kWh*0.217 kg CO2/kWh = 4,947,600 kg CO2 saved which means 4,947 tonnes of CO2 saved annually.

In Conclusion

The UK's energy mandate is more than just a regulation; it's a catalyst for innovation in sustainable real estate. As showcased here, the potential of smart technology is vast, transforming buildings into responsive, intelligent entities. This isn't just about compliance—it's a stride towards a greener, smarter future. Embracing today's challenges means actively shaping a brighter tomorrow.